The reports are an outcome of the UKEB’s comprehensive research project on accounting for intangibles that explored UK stakeholders’ views on the accounting for intangibles under international accounting standards, reviewed the nature and extent of current reporting practices for intangibles, and engaged with investors. An earlier report resulting from the project was the March 2023 Accounting for Intangibles: UK Stakeholders’ Views.

The first report Accounting for Intangibles: A survey of users’ views builds on a survey of users that was carried out in September 2023. The main message was that intangibles are economically important. While specific concerns were voiced regarding limited disclosure/connectivity, inconsistent categorisation, lack of comparability, and the subjectivity of measurement, users wanted no radical changes to recognition and measurement requirements, but rather more granular disclosures - preferably in the financial statements or the notes rather than narrative. Interestingly, while users noted that current accounting is not particularly useful for their investing and lending decisions and could be improved, they also indicated that they are utilising narrative information and making their own calculations, which in some cases would even give them a "competitive edge".

The second report Accounting for Intangibles: A quantitative review of UK Listed Entities was compiled following an examination of financial statement data on intangible assets reported by UK listed companies, a review of intangibles financial statement data of a sample of companies for, an investigation of M&A transactions, and an estimate of the value of unrecognised intangible assets in UK listed companies. The report notes that while intangible assets are widespread and increasing in value, they still only represent ~3% of the balance sheet, a few companies, particularly those that have grown through acquisition, hold most of the value of recognised intangibles, differences in accounting treatment for internally generated and acquired intangibles hamper comparisons of companies, and differences between recognised and estimated unrecognised intangible assets could indicate the existence of an intangible assets’ recognition gap.

Questions and reactions from the audience included that there is a difference between intangible assets and intangibles that don't meet the definition of an asset. In essence, it was agreed that there are three classes of intangibles: those that meet the definition of an asset and are recognised, those that would meet the definition, but are currently not recognised, and those that will never meet the definition. It was noted that it will be crucial for the IASB, that will commence its project on intangibles at the IASB meeting next week, to consider very carefully what sort of items will come under the project scope. It was also noted that it would be beneficial for the IASB to have similar research from other jurisdictions.

The reports will be published later this month. They will be available on this subsite of the UKEB website.

The interpretations now considered are:

• IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities
• IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
• IFRIC 7 Applying the Restatement Approach under IAS 29 'Financial Reporting in Hyperinflationary Economies'
• IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
• IFRIC 21 Levies

Going forward, the IPSASB will consider the applicability of future IFRIC Interpretations as they are issued.

Please click to access ED 89 Amendments to Consider IFRIC Interpretations through the press release on the IPSASB website. Comments are requested by 17 June 2024.

In its final comment letter EFRAG welcomes the IASB's efforts and approach to address issues that arise in practice related to IAS 32 by clarifying some of the underlying principles in IAS 32 and adding application guidance to facilitate consistent application of the principles.

EFRAG agrees with many of the proposed amendments. 

However, EFRAG suggests some improvements in several areas.  It suggests that the IASB should:

• discuss further measurement issues of financial liabilities with contingent settlement provisions under the scope of IAS 32; 
• allow reclassification if the terms and conditions become, or stop being, effective with the passage of time; and 
• ensure that proposed disclosure requirements are clear, can be implemented by entities and ensure an adequate cost-benefit balance, particularly on disclosures of terms and conditions related to priority on liquidation. 

The update reports on the EFRAG Financial Reporting Board (EFRAG FRB) meeting on 22 March 2024, EFRAG Financial Reporting Technical Expert Group (EFRAG FR TEG) meetings on 06 March, 14 March and 20 March, EFRAG FR TEG and EFRAG Consultative Forum of Standard Setters (EFRAG CFSS) joint meeting on 13 March 2024.

The update also lists EFRAG publications issued in March-April including:

• EFRAG's final comment letter on IASB's exposure draft 'Financial Instruments with Characteristics of Equity'

The update also covers EFRAG's sustainability reporting and related activities.

Please click to download the March 2024 EFRAG Update from the EFRAG website.

A proposed new standard, ED/2021/1 Regulatory Assets and Regulatory Liabilities, was published by the International Accounting and Standards Board (IASB) in January 2021.  When issued by the IASB, the new Standard would replace IFRS 14 Regulatory Deferral Accounts.

The study concludes that the IASB's accounting proposals in the ED, as amended by tentative decisions up to December 2023, are not expected to lead to any major macroeconomic effects in the UK.  It concludes that overall, the proposals are expected to lead to some improvement in financial reporting for companies within scope. 

However, it also highlights that in certain circumstances the proposals may not lead to an improvement in UK companies’ financial reporting, due to: the non-recognition of regulatory assets/liabilities in the absence of a direct relationship between an entity’s property, plant and equipment and its regulatory capital base; the treatment of inflation indexation; and the treatment of deferred tax. As a result:  

• generalist investors may not benefit from the intended improvements in accounting for companies undertaking rate regulated activities;
• comparability between companies and jurisdictions may be impaired; and
• any anticipated cost of capital reductions may be smaller than if the proposed accounting fully reflected the underlying economics.

The UKEB notes that the preliminary assessment is subject to change as the IASB deliberates on additional topics in anticipation of a standard being published in 2025.

The final report is available on the UKEB website. 

The webinars will be held on 7 and 11 June, respectively. Please click for more information and registration in the press release on the EFRAG website.

The full agenda for the meeting can be found here. We will post any updates to the agenda, our com­pre­hen­sive pre-meet­ing summaries, as well as observer notes from the meeting on this page as they become available.

The Board will discuss the following:

• Climate-related and other uncertainties in the financial statements
• Second comprehensive review of the IFRS for SMEs Standard
• Intangible assets
• Rate-regulated activities
• Post-implementation review of IFRS 9 — Impairment
• Post-implementation review of IFRS 15 — Revenue from contracts with customers
• Provisions — Targeted improvements
• Maintenance and consistent application
• Disclosure initiative — Subsidiaries without public accountability: disclosures
• Board work plan update

The full agenda for the meeting can be found here. We will post any updates to the agenda, our com­pre­hen­sive pre-meet­ing summaries, as well as observer notes from the meeting on this page as they become available.

The resources include:

• sector-specific transition plan guidance for asset owners, asset managers, banks, electric utilities and power generators, food and beverage, metals and mining, and oil and gas;
• sector summary guidance, with high level guidance for 30 sectors of the global economy;
• guidance on the how to undertake a transition planning cycle;
• a paper on the opportunities and challenges of transition plans in emerging markets and developing economies; and
• independent advisory papers, prepared by TPT Working Groups on the subjects of adaptation, nature, JustTransition and SMEs, exploring how transition planning can extend beyond realising net zero.

These new resources complement existing publications including the TPT Disclosure Framework and supporting guidance, issued in October 2023.

While the TPT Framework is not mandatory in the UK, the Financial Conduct Authority has stated its intention to consult on the introduction of guidance for listed companies’ transition plan disclosures, with specific reference to TPT publications. The UK Government has also set out its intention to consult on transition plan disclosures for certain companies, drawing on the output of the TPT.

The full suite of TPT resources can be found on the TPT website.

In the article, IASB member Ann Tarca and ISSB member Bing Leng explain (i) what digital financial reports are and how they are created, (ii) the benefits of digital financial reporting for investors, companies and regulators, and (iii) the importance of the IFRS digital taxonomies.

The new subsite contains all materials about digital financial reporting and the IFRS digital taxonomies — the IFRS Accounting Taxonomy and the forthcoming IFRS Sustainability Disclosure Taxonomy.

Please click to access the following information on the IFRS Foundation website:

• Article on digital reporting
• Video explainer — what are the IFRS digital taxonomies?
• New subsite with material on digital reporting