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ESEF factsheet

19 Feb 2019

Accountancy Europe has published an ESEF factsheet designed to guide market participants through the new requirements of European Single Electronic Format (ESEF).

From 2020 on, all annual financial reports in the European Union must be prepared in xHTML, within which financial data is tagged using inline XBRL. With ESEF, the European Commission aims to facilitate access, analysis and comparability of financial statements and make reporting easier. This eventually serves to support investors in their investment decisions.

The factsheet developed by Accountancy Europe provides an overview of these digital reporting requirements, including practical advice for preparers of financial information and the implications for statutory auditors. It can be accessed through the press release on the Accountancy Europe website, which also offers access to a one-page infographic on ESEF.

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Government approves the Accounts and Reports (Amendment) (EU Exit) Regulations 2018

15 Feb 2019

The Accounts and Reports (Amendment) (EU Exit) Regulations 2018 (SI 2019/145) have been approved by the government.

The regulations set out some of the changes to be made to statutory requirements in relation to accounting and reporting, although the timing of when they become effective is dependent on other agreements made in the broader scheme of the UK’s exit from the EU.

One amendment in these regulations is to limit the scope of when subsidiary companies may be exempt from including a non-financial information statement within their strategic report. Instead of being exempt if the subsidiary undertaking is included within a consolidated management report where its parent undertaking is established under the law of an EEA State, the parent undertaking will need to be established under the law of the UK.

Please click to access the regulations here.

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Membership for European Lab Project Task Force on climate-related reporting, programme for the EFRAG conference on innovation in corporate reporting

15 Feb 2019

The European Financial Reporting Advisory Group (EFRAG) has announced that the European Lab Steering Group has appointed the members of the Project Task Force on climate-related reporting. The European Lab's activities will beginn with a conference on 'Fostering Innovation in Corporate Reporting' on 5 March 2019. The full programme for this conference is now available.

The group’s mem­ber­ship includes:

  • Cristina Bage-Friborg, company, Sweden
  • Michel Bande, civil society organization, Belgium
  • Piotr Biernacki, user, Poland
  • Jean-Francois Coppenolle, financial institution, UK
  • Eric Dugelay, accountancy profession, France
  • Aurelie Faure Schuyer, user, France
  • Elena Flor, financial institution, Italy
  • Antonio Fuertes Zurita, company, Spain
  • Andrea Gasperini, user, Italy
  • Giulia Genuardi, company, Italy
  • Andreas Horn, company, Germany
  • Andre Jakobs, financial institution, The Netherlands
  • Bertrand Janus, company, France
  • Kristina Jeromin, user, Germany
  • Michele Lacroix, user, France
  • Anna Lindberg, financial institution, Sweden
  • Alexandra Middleton, academic, Finland
  • Miroslav Petkov, user, Bulgaria
  • Alice Peyrard, company, France
  • Nicole Röttmer, accountancy profession, Germany
  • Matthias Schmidt, accountancy profession, Germany
  • Jane Thostrup Jagd, consultant, Denmark
  • Michael Zimonyi, civil society organization, Hungary

For more in­for­ma­tion, see the press release on the EFRAG website.

To mark the launch of the European Lab and its first project on climate-related reporting, a high-level conference entitled Fostering Innovation in Corporate Reporting will take place on the afternoon of 5 March 2019 in Brussels. European Commission Vice-President Valdis Dombrovskis will deliver the keynote speech and Richard Howitt, IIRC CEO and former MEP, will set the scene for the conference panel discussions. For access to the full programme of the conference and registration, see the press release on the EFRAG website.

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Report on intangibles and the R&D capitalisation debate

15 Feb 2019

Many have noted the increasing gap between the values of companies based on their share price and the tangible asset values in their financial statements. One of the major components of this gap are the ‘intangibles’ that are recognised as valuable by the market but are not recognised as assets by financial reporting.

These intangibles may include the value of the workforce, knowhow, customer relationships, brands and a pipeline of new products. IFRSs only allow for a restricted recognition of these assets, hence the gap. Many intangibles will be assets if purchased directly or as part of an acquisition. Of internal spend, the development costs of new products or processes meeting six criteria (about the likelihood that the project will achieve commercial returns) specified in IAS 38 Intangible Assets must be recognised as assets. Whether those criteria are met can be a matter of judgement giving management considerable scope to decide whether they prefer to expense these costs as incurred or to capitalise them.

A new report The capitalisation debate: R&D expenditure, disclosure content and quantity and stakeholder views provides comprehensive evidence of the current state of accounting for research and developments (R&D) by IFRS reporters and some of the factors that may lie behind it. Please click to read the full report.

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IASB posts webcast on IFRS 15

14 Feb 2019

The IASB has posted a webcast, by IASB member Nick Anderson and investor engagement member Sid Kumar, that provides an overview on IFRS 15, ‘Revenue from Contracts with Customers’.

In addition, the webcast discusses performance obligations, value transferred, when to recognise revenue, contract asset and liability, and disclosure requirements.

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

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February 2019 IASB meeting notes posted

13 Feb 2019

The IASB met on Thursday 7 and Friday 8 February 2019 to discuss five topics. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The Board decided to propose amending IFRS 9 Financial Instruments and IAS 39 Financial Instruments: Recognition and Measurement to provide relief from the effects of uncertainties caused by the reform of IBOR. The Board will consider in March whether the relief should be optional. The Exposure Draft is likely to have a short comment period, enabling any amendments to be finalised and published by December 2019, with an effective date of 1 January 2020.

The Board continued to assess concerns and implementation challenges raised by stakeholders about the requirements in IFRS 17 Insurance Contracts. The Board decided to propose amending that IFRS 17 and IFRS 9 allow an entity to apply either IFRS 17 or IFRS 9 to insurance contracts for which the only insurance in the contract is for the settlement of some, or all, of the obligations created by the contract (with consequential amendments to the disclosure requirements). The Board decided that the transition requirements in IFRS 17 be retained, except for a liability that relates to the settlement of claims incurred before an insurance contract was acquired. The Board decided to propose a change to the modified retrospective approach that would require an entity to classify such liabilities as a liability for incurred claims (to the extent that it does not have reasonable and supportable information to apply a retrospective approach) and to permit an entity applying the fair value approach to choose to classify such liabilities as a liability for incurred claims.

For the Primary Financial Statements project, the Board decided to modify some of its earlier decisions. Within the statement of cash flows, the starting point for the reconciliation of operating cash flows should be the operating profit subtotal, for all entities. Additionally, all entities should classify cash flows from dividends paid as financing cash flows and cash flows from dividends received from equity-accounted associates and joint ventures as investing cash flows. However, the Board also decided on some special requirements, for both the statement of cash flows and the statement(s) of profit or loss and other comprehensive income, for entities that have as their main business activity providing financing to customers or investing in assets that generate a return individually and largely independently of other resources held by the entity. The Board also approved additional proposals related to aggregation and disaggregation of information in the primary financial statements and in the notes, including a requirement to describe items in a way that faithfully represents the items they aggregate.

The Board considered a project plan for a comprehensive review of the IFRS for SMEs Standard that proposes the publication of a Request for Information by about July 2019, an Exposure Draft sometime between January 2020 and February 2021 and amendments between July 2021 and May 2022. The IFRS for SMEs Standard does not reflect the current requirements in IFRS 3, 10, 11, 12, 13, 14, 15, 16 or 17.

The staff also gave an oral update on the projects on Management Commentary project.

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

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Summary of the November 2018 GPF meeting

13 Feb 2019

Representatives of the IASB met with the Global Preparers Forum (GPF) in London on 6 November 2018. Notes from the meeting have now been released.

The topics discussed at the meeting included:

  • IASB technical update. An update was given on IASB activities since the last GPF meeting.
  • Primary financial state­ments. The GPF members provided feedback on the IASB’s tentative decisions related to primary financial statements. Specifically, they discussed defined subtotals in the statement of financial performance, management performance measures, and disaggregation.
  • Management commentary. The GPF members discussed developments in the project to update IFRS Practice Statement 1 Management Commentary (Practice Statement), including the objective of management commentary, applying materiality in preparing management commentary, and principles of preparing management commentary.
  • Goodwill and im­pair­ment. The GPF members provided feedback on the disclosure objectives and requirements in development to provide users more information about a business combination and performance.
  • Financial instruments with characteristics of equity. The GPF members were provided with an overview of the key proposals in the Discussion Paper DP/2018/1 Financial Instruments with Characteristics of Equity.

The next GPF meeting will be held on 22 March 2019.

The full meeting summary is available on the IASB's website.

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Recent sustainability and integrated reporting developments

12 Feb 2019

A summary of recent developments at GRI, IOSCO, WBCSD/CDSB, IIRC, the UK Government, the Carbon Trust, and XBRL International.

The Global Reporting Initiative (GRI) has launched a discussion paper A Closer Look at Water and GHG Emissions Disclosure, which contains key findings on corporate reporting on water and greenhouse gas (GHG) emissions. The publication encourages active dialogue between data producers (report issuers) and data users (investors and data service providers). Please click for more information and access to the discussion paper on the GRI website.

The Growth and Emerging Market Committee (GEMC) of the International Organization of Securities Commissions (IOSCO) has published a consultation report Sustainable finance in emerging markets and the role of securities regulators, which proposes 11 recommendations for emerging market member jurisdictions to consider when issuing regulations or guidance regarding sustainable financial instruments. Among other things, the recommendations propose requirements for disclosure of material Environmental, Social and Governance (ESG) specific risks, aimed at enhancing transparency. Please click to access the report on the IOSCO website.

The World Business Council for Sustainable Development (WBCSD) and the Climate Disclosure Standards Board (CDSB) released a report on the corporate sustainability reporting landscape in Japan. The report highlights that there’s growing market demand for more information on ESG issues and considerations. Please click for more information and access to the report on the CDSB website.

The International Integrated Reporting Council (IIRC) has published new report Integrated Reporting in Turkey. The report aims to reveal perspectives of the Turkish business world through the lens of integrated reporting, the current corporate reporting practices, and the future expectations and orientations of the companies. Please click for more information and access to the report on the IIRC website.

The UK Goverment has issued updated Environmental Reporting Guidelines: Including streamlined energy and carbon reporting guidance. The guidelines include two new chapters - 1: Steps in reporting your environmental impacts and 2: Guidance on streamlined energy and carbon reporting. It also outlines additional voluntary information that is likely to be useful to organisations and a wide range of stakeholders. Please click to access the updated guidance on the UK government website.

The Carbon Trust has published a summary of its findings on climate risk disclosure, in which it reveals that two-thirds (67%) of UK corporates plan to disclose climate-related risks and opportunities in their 2019 annual reports. Please click for more information and access to an infographic on the Carbon Trust website.

XBRL International has provided a comment letter on the EU’s draft report on climate-related disclosures, urging the EU to help work to make this kind of reporting comparable, digital, discoverable and accessible. XBRL International supports streamlining climate disclosure, believing that comparable and usable disclosures are vital to help investors navigate this complicated field. Please click for more information and access to the comment letter on the XBRL International website.

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Updated IASB work plan — Analysis

11 Feb 2019

Following the IASB's February 2019 meeting, we have analysed the IASB work plan to see what changes have resulted from the meeting and other developments since the work plan was last revised in January.

Below is an analysis of all changes that were made to the work plan since our last analysis on 25 January 2019.

Stan­dard-set­ting projects

  • No changes.

Main­te­nance projects

  • 2019 Comprehensive Review of the IFRS for SMEs Standard — This project has been added to the work plan. A request for information is expected in H2 2019.

Research projects

  • No changes.

Other projects

  • Due Process Handbook Review — This project has been added to the work plan. An exposure draft is expected in the second quarter of 2019.

The above is a faithful com­par­i­son of the IASB work plan at 25 January 2019 and at 11 February 2019. For access to the current IASB work plan at any time, please click here.

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EFRAG TEG meeting February 2019

08 Feb 2019

The European Financial Reporting Advisory Group (EFRAG) will hold a TEG meeting on 13 and 14 February 2019 in Brussels.

An agenda and details on how to register for the meeting can be found on the  EFRAG website.

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