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News

UK Endorsement Board (UKEB) Image

UK Endorsement Board secretariat publishes its final comment letter on the IASB's Exposure Draft ED/2020/4 Lease Liability in a Sale and Leaseback

12 Apr 2021

The UK Endorsement Board secretariat has published its final comment letter in response to the International Accounting Standard Board's (IASB's) Exposure Draft ED/2020/4 'Lease Liability in a Sale and Leaseback (Proposed amendment to IFRS 16)'.

The proposed amendment aims at clarifying how a seller-lessee should apply the subsequent measurement requirements in IFRS 16 Leases to the lease liability that arises in a sale and leaseback transaction.

In its final comment letter the UK Endorsement Board secretariat :

  • Supports the proposals in the ED as they provide guidance on an area not covered by the existing Standard which should reduce diversity of practice leading to consistency and comparability of financial statements.
  • Observes an inconsistency in the definition of a variable lease payment between that used in IFRS 16 and that proposed in the exposure draft, which could lead to potential inconsistency in financial reporting. 
  • Recommends that the IASB resolves this discrepency either during the finalisation of the ED or during the post implementation review of IFRS 16.  It proposes two potential solutions to the IASB. 

The final comment letter is available at UKEB website.

EFRAG (European Financial Reporting Advisory Group) (dk green) Image

EFRAG's final comment letter on the IASB's proposed amendments to IFRS 16

12 Apr 2021

The European Financial Reporting Advisory Group (EFRAG) has issued its final comment letter in response to the International Accounting Standard Board’s (IASB's) Exposure Draft ED/2020/4 'Lease Liability in a Sale and Leaseback (Proposed amendment to IFRS 16'.

The proposed amendment aims at clarifying how a seller-lessee should apply the subsequent measurement requirements in IFRS 16 Leases to the lease liability that arises in a sale and leaseback transaction.

EFRAG considers that the ED provides evidence of a broader conflict of principles in IFRS 16 regarding the accounting for sale and leaseback transactions and the definition of lease payments.  It encourages the IASB to consider the matter more broadly possibly as part of the future post-implementation review of IFRS 16 or the IASB's project on Variable and Contingent Consideration. 

EFRAG notes that there are complexities and operational challenges associated with the proposals in the ED, in particular regarding the level of judgement involved in estimating the future variable payments. 

As this area is not addressed in IFRS 16, EFRAG can accept a temporary solution prior to a more holistic review of the matter.  However, it encourages the IASB to consider a simplified solution by recognising the profit attributable to the retained interest in the right-of-use asset as a non-lease liability or deferred income rather than a lease liability.  EFRAG indicates that this would avoid introducing the use of two different definitions for lease payments depending on whether leases are entered into directly or via a leaseback. 

EFRAG suggests that a further simplification for sale and leaseback transactions with variable payments only could be considered by the IASB and suggests a possible approach for subsequent measurement that the IASB could additionally explore.  Finally EFRAG supports the proposed transition requirements and in particular the retrospective application of the proposed amendments, unless in circumstances where such retrospective application cannot be done without the use of hindsight. 

The press release and the Final Common Letter are available at the EFRAG website.

UK Endorsement Board (UKEB) Image

UK Endorsement Board secretariat launches survey on the IASB BCUCC DP

07 Apr 2021

The UK Endorsement Board secretariat has launched a survey on the International Accounting Standard Board’s (IASB’s) Discussion Paper ‘DP/2020/2 Business Combinations under Common Control’ (BCUCC).

The survey seeks to understand stakeholders’ views on the proposals in the DP as well as stakeholders’ experiences with BCUCC. It is open until 30 April 2021.

The survey is available here.

IASB (International Accounting Standards Board) (blue) Image

IASB pushes publication of management commentary ED to May

07 Apr 2021

While the work plan of the IASB so far stated that an exposure draft (ED) for a revised Practice Statement 1 'Management Commentary' was expected in April 2021, the IASB has now released a statement that the expected publication date has been moved to May 2021.

Since the IASB's deliberations in the project have already been completed, the shift in publication date must be attributed to an attempt to balance out comment letter periods on different consultations.

During the March 2021 IASB meeting, which discussed the comment letter period for the management commentary ED, the IASB noted the difficult balance and the constraints on respondents' capacities:

  • The IASB has several consultation documents outstanding and plans to publish several more.
  • The COVID-19 pandemic has placed constraints on stakeholder resources.
  • Respondents to the ED may also develop responses to forthcoming proposals by the Trustees to change the Foundation’s Constitution to form an international sustainability reporting standards board within the existing governance structure of the IFRS Foundation and may find it difficult to respond to both documents at the same time.

Please click for the press release on the IASB website announcing the postponement.

IASB webcast Image

Report and video of an EAA workshop on the post-implementation review of IFRS 10, IFRS 11, and IFRS 12

07 Apr 2021

On 26 March 2021, the IASB, in conjunction with the European Accounting Association (EAA), held an EAA Financial Reporting Standards workshop that provided an overview of the request for information regarding the post-implementation review of IFRS 10 'Consolidated Financial Statements', IFRS 11 'Joint Arrangements', and IFRS 12 'Disclosure of Interests in Other Entities'.

The purpose of the workshop was to obtain feedback on the matters included in the request for information and to discuss relevant academic evidence.

A recording of the workshop as well as the slides used are now available on the EAA website.

ESMA (European Securities and Markets Authority) (dark gray) Image

ESMA publishes report on the activities of accounting enforcers and their findings within the EU in 2020

06 Apr 2021

The report provides an overview of the activities of the European Securities and Markets Authority (ESMA) and the accounting enforcers in the European Union (EU) when examining compliance of financial information provided by issuers listed on regulated markets with the applicable financial reporting framework in 2020.

European enforcers examined the financial statements of about 729 issuers representing an average examination rate of 17% of all IFRS issuers with securities listed on regulated markets. These examinations resulted in 265 actions taken to address material departures from IFRS.

Enforcers also assessed the non-financial information related to ESG for 737 issuers, covering approximately 37% of the total estimated number of issuers required to publish a non-financial statement, resulting in 39 enforcement measures.

In addition, 611 management reports were reviewed for evaluating compliance with ESMA’s guidelines on alternative performance measures, covering around 14% of all IFRS listed issuers in Europe against which were taken 93 corrective actions.

Please click to access the full report on the ESMA website.

IFRS AC meeting (mid blue) Image

Agenda for the April 2021 IFRS Advisory Council meeting

06 Apr 2021

An agenda has been released for the upcoming meeting of the IFRS Advisory Council which will be held by remote participation on 13 April 2021.

A summary of the agenda is set out below:

Tuesday 13 April 2021 (12:00-16:25)

  • Welcome and Chair's preview
  • Sustainability
    • Introduction
    • Breakout sessions (closed session)
  • Updates on Trustees and Board’s Activities
  • Feedback from previous Advisory Council meetings
  • Sustainability
    • Report back from breakout sessions
    • Summary by Advisory Council Chair
  • Closing remarks

Agenda papers for the meeting are available on the IASB website.

EFRAG (European Financial Reporting Advisory Group) (dk green) Image

EFRAG publishes March 2021 issue of 'EFRAG Update'

05 Apr 2021

The European Financial Reporting Advisory Group (EFRAG) has published an 'EFRAG Update' summarising public technical discussions held and decisions made during March 2021.

The update reports on the EFRAG Board webcast meetings on 15 March and 29 March,the EFRAG TEG webcast meetings on 3-4 March, 23 March, 26 March and 30 March and the EFRAG CFSS and TEG webcast on 3 March. The publication also covers the activities of the European Reporting Lab.

The update also lists EFRAG publications issued in March including:

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

EFRAG (European Financial Reporting Advisory Group) (dk green) Image

EFRAG issues its final endorsement advice on the IASB's proposed amendment to IFRS 16 and COVID 19

05 Apr 2021

The European Financial Reporting Advisory Group (EFRAG) has issued its final endorsement advice letter relating to the use in the European Union (EU) of 'Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)' ("the Amendment).

The Amendment extends, by one year, the May 2020 amendment that provides lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification.

EFRAG recommends the endorsement of the Amendment. EFRAG’s assessment is that the Amendment meets all the technical endorsement criteria of the IAS Regulation and is conducive to the European public good.

A press release and the endorsement advice letter to the European Commission are available on the EFRAG website. EFRAG has also updated its endorsement status report.

EFRAG (European Financial Reporting Advisory Group) (dk green) Image

EFRAG launches survey on crypto-assets (liabilities)

02 Apr 2021

The European Financial Reporting Advisory Group (EFRAG) is inviting stakeholders to participate in a survey on Discussion Paper (DP) 'Accounting for Crypto-Assets (Liabilities): Holder and Issuer Perspective'.

The DP discusses three categories of crypto-assets (payment tokens/cryptocurrencies, utility tokens, and investment tokens) and proposes three approaches for addressing IFRS related requirements.

Please click for more in­for­ma­tion and access to the survey on the EFRAG website.

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