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IASB finalises amendments to IAS 1 to clarify the classification of liabilities

23 Jan, 2020

The International Accounting Standards Board (IASB) has issued 'Classification of Liabilities as Current or Non-current (Amendments to IAS 1)' providing a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date.

 

Background

The issue was originally addressed as part of the annual improvements project 2010 -2012 cycle. Exposure Draft ED/2012/1 Annual Improvements to IFRSs (2010—2012 Cycle), published in May 2012, proposed amendments to IAS 1.73 to clarify that a liability is classified as non-current if an entity expects, and has the discretion, to refinance or roll over an obligation for at least twelve months after the reporting period under an existing loan facility with the same lender, on the same or similar terms. During 2013, however, the IASB decided not to finalise the amendment, but instead pursue a narrow-scope project to refine the existing guidance in IAS 1 on when liabilities should be classified as current.

In February 2015, the Board published its proposals in the Exposure Draft  ED/2015/1 Classification of Liabilities (Proposed amendments to IAS 1). The Board discussed feedback on the ED from December 2015 to September 2019, pausing the project between 2016 and 2018 while it finalised revisions to the definition of a liability in the Conceptual Framework. As a result of these discussions, the Board made no fundamental changes to the proposed amendments but decided to clarify some aspects of them.

 

Amendments

The amendments in Classification of Liabilities as Current or Non-current (Amendments to IAS 1) affect only the presentation of liabilities in the statement of financial position — not the amount or timing of recognition of any asset, liability income or expenses, or the information that entities disclose about those items. They:

  • clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and align the wording in all affected paragraphs to refer to the "right" to defer settlement by at least twelve months and make explicit that only rights in place "at the end of the reporting period" should affect the classification of a liability;
  • clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and
  • make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.

 

 

Effective date and transition

The amendments are effective for annual reporting periods beginning on or after 1 January 2022 and are to be applied retrospectively. Earlier application is permitted.

 

Additional information

Please click for:

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IFRS Interpretations Committee holds January 2020 meeting

23 Jan, 2020

The IFRS Interpretations Committee held a video meeting on Tuesday 21 January 2020 to finalise one agenda decision. We have posted Deloitte observer notes for the technical issues discussed during this meeting.

Agenda decision to finalise

IFRS 16 Leases—Definition of a Lease-Shipping Contract: The Committee decided, by a vote of 11, to finalise the agenda decision with two amendments to wording.

Work in progress

There were no new matters that have not yet been presented to the Committee.

More information

Please click to access the detailed notes taken by Deloitte observers.

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ICAEW webinar on the TCFD recommendations

22 Jan, 2020

The Institute of Chartered Accountants in England and Wales (ICAEW) will be hosting a webinar looking at the Task Force on Climate-related Financial Disclosures' recommendations in more detail.

Further details are available on the ICAEW website.

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ICAEW UK GAAP update webinar

22 Jan, 2020

The Institute of Chartered Accountants in England and Wales (ICAEW) will be hosting a webinar outlining latest developments and implementation issues in UK GAAP and also recent changes to reporting regulations.

Specific topics to be covered include:

Further details are available on the ICAEW website.

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WEF consultation paper on common metrics for sustainability reporting

22 Jan, 2020

At the 2020 annual meeting in Davos-Klosters, the World Economic Forum (WEF) released a consultation paper titled 'Toward Common Metrics and Consistent Reporting of Sustainable Value Creation'. The paper proposes two related sets of metrics, a set of core metrics and a set of expanded metrics.

The metrics are drawn wherever possible from existing standards and disclosures (such as GRI, SASB, TFCD, etc.):

  • Core metrics: A set of 22 well-established metrics and reporting requirements. These are primarily quantitative metrics for which information is already being reported by many firms (albeit often in different formats) or can be obtained with reasonable effort. They focus primarily on activities within an organisation’s own boundaries.
  • Expanded metrics: 34 metrics. These tend to be less well established in existing practice and standards and have a wider value chain scope or convey impact in a more sophisticated or tangible way, such as in monetary terms. They represent a more advanced way of measuring and communicating sustainable value creation, and companies are encouraged to report against them as well, when material and appropriate.

The paper is open for comments until 5 June 2020.

Please click for the following additional information on the WEF website:

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FRC Lab report shows need for improved workforce reporting

20 Jan, 2020

A new report from the Financial Reporting Lab of the Financial Reporting Council (FRC) reveals that reporting on workforce-related issues needs to improve to meet investor needs.

The Lab’s report provides practical guidance and examples on how companies can provide improved information to investors. It encourages companies to think of the workforce as a strategic asset and explain how it is invested in. Alongside the report, the Lab also published a summary of the report covering questions companies should ask themselves about their reporting on workforce matters.

Please click for the following additional information on the FRC website:

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IFRS Foundation appoints new IASB Board member

20 Jan, 2020

The Trustees of the IFRS Foundation have announced the appointment of Bruce Mackenzie as IASB Board member.

Mr Mackenzie is currently serving as a member of the IFRS Interpretations Committee, where his term ends 30 June 2020. He is a chartered accountant and registered auditor in South Africa, has been a member of the Financial Reporting Standards Council of South Africa, and chairs the Pan African Federation of Accountants’ (PAFA) technical standard-setters forum. Mr Mackenzie will fill the Africa seat, succeeding Darrel Scott, who steps down at the end of September 2020.

For more information, please see the press release on the IASB website.

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Global accountancy bodies call for improved SDG disclosures

20 Jan, 2020

The International Federation of Accountants (IFAC), the Association of Chartered Certified Accountants (ACCA), the Institute of Chartered Accountants of Scotland (ICAS), the Chartered Accountants Australia and New Zealand (CA ANZ), the International Integrated Reporting Council (IIRC) and the World Benchmarking Alliance have jointly published a report calling for improved UN Sustainable Development Goals (SDG) disclosures.

The report follows on the consultation paper Recommendations for SDG Disclosures and considers feedback from the consultation. The recommendations for SDG Disclosure are designed to be both used in conjunction with existing reporting frameworks and neutral with respect to them. The recommendations are also SDG specific, recognising the complexity and interconnectedness of the sustainable development issues that the SDGs address.

Please click for the following information on the IIRC website:

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CMAC seeks members

17 Jan, 2020

The Capital Markets Advisory Committee (CMAC) is seeking new members and welcomes applications from analysts and investors from all over the world.

New members will start on 1 January 2021 for a term of three years, renewable once for a further three years. For more information, see the press release on the IASB website.

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FRC amends eight ISAs to reflect conforming amendments arising from the revision of ISA (UK) 540 (Revised)

16 Jan, 2020

The FRC has released eight updated ISAs (UK), amended to include conforming amendments arising from the revision of ISA (UK) 540 (Revised) – Auditing Accounting Estimates and Related Disclosures.

All of the conforming amendments have an effective date of 15 December 2019, and were approved by the FRC Board in December 2018. The conforming changes were included as an Annexure to ISA (UK) 540, and have now been added to the text of each standard.
 
The revised ISAs (UK) are:  200, 230, 240, 260, 500, 580, 700 and 701.

A link to the updated ISAs is available on the FRC website here.

A link the eight updated standards is available on the FRC website here.

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