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UK GAAP application for reporting periods ending 30 September 2022

04 Oct, 2022

The table below reflects new and revised UK GAAP financial reporting requirements that need to be considered for financial reporting periods ending on 30 September 2022.

Amendments have been made to FRS 102 in relation to phase 2 of the interest rate benchmark reform and also in relation to accounting for temporary rent concessions for operating leases occurring as a direct consequence of the COVID-19 pandemic extending beyond 30 June 2021 (for which an amendment was also made to FRS 105). Amendments to FRS 101, FRS 102, FRS 104 and FRS 105 have also been made to reflect changes in company law following the UK's exit from the European Union and to FRS 101 as a result of the 2020/21 annual review of the standard.  The FRC is currently undertaking its next periodic review of FRS 102 and other UK and Ireland accounting Standards.  Any changes that are proposed as a result of the periodic review will be included in a Financial Reporting Exposure Draft (FRED), which is expected to be published during 2022.  This will be subject to public consultation of not less than three months.

The table below reflects new and revised UK GAAP financial reporting requirements that need to be considered for financial reporting periods ending on 30 September 2022. For those reporters who want to understand new UK GAAP application for earlier periods please select one of the following:

Pronouncement Effective date Application for quarters ending 30 September 2022?
1st qtrs.* 2nd qtrs.** 3rd qtrs.*** Full yrs****
FRS 100
Amendments to FRS 101 - 2018/19 cycle issued The amendments take effect for accounting periods beginning on or after 1 January 2021. If an entity applies the July 2019 amendments to FRS 101 early, these amendments to FRS 100 shall be applied at the same time.

Already applied in the prior year (July 2021) #

Already applied in the prior year (April 2021) # Already applied in the prior year (January 2021) # Mandatory (see #)
Consequential amendments as a result of Amendment to FRS 101 – Effective date of IFRS 17 The amendments take effect for accounting periods beginning on or after 1 January 2023. If an entity applies the July 2019 amendments to FRS 101 early, these amendments to FRS 100 shall be applied at the same time ~ ~ ~ ~
Amendments to reflect changes in UK company law following the UK’s exit from the European Union that come into effect at the end of the Transition Period

The effective date for these amendments is accounting periods beginning on or after 1 January 2021. Early application is permitted in some circumstances to provide UK entities with the option to use IAS that are adopted for use within the UK after 31 December 2020, in addition to IFRS that have been adopted in the EU as at this date. This is consistent with the transitional arrangements provided in UK company law for entities preparing ‘IAS accounts’.

Already applied in the prior year (July 2021) Already applied in the prior year (April 2021) Already applied in the prior year (January 2021) Mandatory
FRS 101
Amendments to the Basis for Conclusions FRS 101 Reduced Disclosure Framework

No effective date. No amendments to FRS 101 have been made

N/A (see effective date column) N/A (see effective date column) N/A (see effective date column) N/A (see effective date column)
Amendments to FRS 101 - 2018/19 cycle issued

The amendments take effect for accounting periods beginning on or after 1 January 2021. If an entity applies the recognition, measurement and disclosure requirements of IFRS 17 early, the amendments to FRS 101 are applied at the same time.

Already applied in the prior year (July 2021) # Already applied in the prior year (April 2021) # Already applied in the prior year (January 2021) # Mandatory (see #)
Amendments to FRS 101 - 2019/20 cycle issued

Paragraph 8 of FRS 101 notes that the exemptions are available from when the relevant standard is applied. Therefore there is no need to amend the effective date for these amendments, which will be available for financial statements approved after the amendments have been finalised.

Optional Optional Optional Optional
Changes the effective date of an amendment to the definition of a qualifying entity made in July 2019, effectively allowing relevant insurers to continue to apply FRS 101 for a further two years. The revised effective date for the new definition of a qualifying entity is accounting periods beginning on or after 1 January 2023 ~ ~ ~ ~

The effective date for these amendments is accounting periods beginning on or after 1 January 2021. Early application is permitted in some circumstances to provide UK entities with the option to use IAS that are adopted for use within the UK after 31 December 2020, in addition to IFRS that have been adopted in the EU as at this date. This is consistent with the transitional arrangements provided in UK company law for entities preparing ‘IAS accounts’.

Already applied in the prior year (July 2021) Already applied in the prior year (April 2021) Already applied in the prior year (January 2021) Mandatory

Paragraph 8 of FRS 101 notes that the exemptions are available from when the relevant standard is applied. Therefore there is no need to amend the effective date for these amendments, which will be available for financial statements approved after the amendments have been finalised

% % % %
'

No amendments were made as a result of the annual review

NA NA NA NA
FRS 102
Amendments to FRS 101 - 2018/19 cycle issued

The amendments take effect for accounting periods beginning on or after 1 January 2021. If an entity applies the July 2019 amendments to FRS 101 early, these amendments to FRS 102 shall be applied at the same time

Already applied in the prior year (July 2021) #

Already applied in the prior year (April 2021) #

Already applied in the prior year (January 2021) #

Mandatory (see #)

Amendments to FRS 101 - 2019/20 cycle issued

Paragraph 8 of FRS 101 notes that the exemptions are available from when the relevant standard is applied. Therefore there is no need to amend the effective date for these amendments, which will be available for financial statements approved after the amendments have been finalised.

Optional

Optional

Optional

Optional

Consequential amendments as a result of Amendment to FRS 101 – Effective date of IFRS 17 The amendments take effect for accounting periods beginning on or after 1 January 2023. If an entity applies the July 2019 amendments to FRS 101 early, these amendments to FRS 102 shall be applied at the same time ~ ~ ~ ~
Amendments to reflect changes in UK company law following the UK’s exit from the European Union that come into effect at the end of the Transition Period

The effective date for these amendments is accounting periods beginning on or after 1 January 2021. Early application is permitted in some circumstances to provide UK entities with the option to use IAS that are adopted for use within the UK after 31 December 2020, in addition to IFRS that have been adopted in the EU as at this date. This is consistent with the transitional arrangements provided in UK company law for entities preparing ‘IAS accounts’.

Already applied in the prior year (July 2021) Already applied in the prior year (April 2021) Already applied in the prior year (January 2021) Mandatory
‘Amendments to FRS 102 – Interest rate benchmark reform (Phase 2)’.

The amendments are effective for accounting periods beginning on or after 1 January 2021, with early application permitted.

Already applied in the prior year (July 2021)

Already applied in the prior year (April 2021)

Already applied in the prior year (January 2021) Mandatory
Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime - COVID-19-related rent concessions beyond 30 June 2021

The amendments are effective for accounting periods beginning on or after 1 January 2021, with early application permitted.

Already applied in the prior year (July 2021) Already applied in the prior year (April 2021) Already applied in the prior year (January 2021) Mandatory
FRS 103
Amendments to reflect changes in UK company law following the UK’s exit from the European Union that come into effect at the end of the Transition Period The effective date for these amendments is accounting periods beginning on or after 1 January 2021. Early application is permitted in some circumstances to provide UK entities with the option to use IAS that are adopted for use within the UK after 31 December 2020, in addition to IFRS that have been adopted in the EU as at this date. This is consistent with the transitional arrangements provided in UK company law for entities preparing ‘IAS accounts’. Already applied in the prior year (July 2021) Already applied in the prior year (April 2021) Already applied in the prior year (January 2021) Mandatory
FRS 104
Amendments to FRS 104 Interim Financial Reporting - Going concern The amendments are effective for interim periods beginning on or after 1 January 2021, with earlier application permitted Already applied in the prior year (July 2021) Already applied in the prior year (April 2021) Already applied in the prior year (January 2021) Mandatory
Amendments to reflect changes in UK company law following the UK’s exit from the European Union that come into effect at the end of the Transition Period

The effective date for these amendments is accounting periods beginning on or after 1 January 2021. Early application is permitted in some circumstances to provide UK entities with the option to use IAS that are adopted for use within the UK after 31 December 2020, in addition to IFRS that have been adopted in the EU as at this date. This is consistent with the transitional arrangements provided in UK company law for entities preparing ‘IAS accounts’.

Already applied in the prior year (July 2021)

Already applied in the prior year (April 2021)

Already applied in the prior year (January 2021) Mandatory
FRS 105
Amendments to reflect changes in UK company law following the UK’s exit from the European Union that come into effect at the end of the Transition Period

The effective date for these amendments is accounting periods beginning on or after 1 January 2021. Early application is permitted in some circumstances to provide UK entities with the option to use IAS that are adopted for use within the UK after 31 December 2020, in addition to IFRS that have been adopted in the EU as at this date. This is consistent with the transitional arrangements provided in UK company law for entities preparing ‘IAS accounts’.

Already applied in the prior year (July 2021)

Already applied in the prior year (April 2021)

Already applied in the prior year (January 2021)

Mandatory

Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime - COVID-19-related rent concessions beyond 30 June 2021

The amendments are effective for accounting periods beginning on or after 1 January 2021, with early application permitted.

Already applied in the prior year (July 2021)

Already applied in the prior year (April 2021)

Already applied in the prior year (January 2021)

Mandatory

* 1st quarter ending on 30 September 2022 (accounting period began on 1 July 2022).

** 2nd quarter ending 30 September 2022 (accounting period began 1 April 2022).

*** 3rd quarter ending 30 September 2022 (accounting period began 1 January 2022).

**** 4th quarter ending 30 September 2022 (accounting period began 1 October 2021).

# - The amendments to FRS 101 and the consequential amendments to FRS 100 and FRS 102 take effect for accounting periods beginning on or after 1 January 2021. If an entity applies the recognition, measurement and disclosure requirements of IFRS 17 early, the amendments to FRS 101 are applied at the same time.  IFRS 17 has been endorsed for use in the EU, albeit with an optional exemption from applying the annual cohort requirement.  It has also been endorsed for use in the UK.  If an entity applies the July 2019 amendments to FRS 101 early, the amendments to FRS 100 and FRS 102 are applied at the same time.

~ The amendments to FRS 101 and the consequential amendments to FRS 100 and FRS 102 take effect for accounting periods beginning on or after 1 January 2023. If an entity applies the recognition, measurement and disclosure requirements of IFRS 17 early, the amendments to FRS 101 are applied at the same time. IFRS 17 has been endorsed for use in the EU, albeit with an optional exemption from applying the annual cohort requirement.  It has also been endorsed for use in the UK.  If an entity applies the July 2019 amendments to FRS 101 early, the amendments to FRS 100 and FRS 102 are applied at the same time.

% - a qualifying entity may take advantage of the exemption introduced by paragraph 8(iA) from when Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) is applied. Similarly, the amendments to paragraph AG1(h) of FRS 101 apply from when Classification of Liabilities as Current or Non-current (Amendments to IAS 1) is applied.  Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) has been endorsed for use in the UK and EU.  Classification of Liabilities as Current or Non-current (Amendments to IAS 1) has not been endorsed for use in either the UK or EU.

 

 

 

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New and revised pronouncements as at 30 September

04 Oct, 2022

Our popular summary of new and revised financial reporting requirements, updated for financial reporting periods ending on 30 September 2022. This listing can be used to perform a quick check that new financial reporting requirements such as new and revised accounting standards and interpretations, and amendments to standards and interpretations, have been fully considered in the reporting close process.

The information below reflects developments to 4 October 2022 and will be updated through to 31 December 2022 to reflect new and revised financial reporting requirements that need to be considered for financial reporting periods ending on 30 September 2022. For accounts approved after December 2022, please also refer to subsequent versions of this document for any new and revised IFRS Accounting Standards that have additionally been issued that might require disclosure in the accounts under IAS 8:30.

The information below is organised as follows:

Summary

Financial reporting considerations related to the Russia-Ukraine War
Below is our usual analysis of new and amended standards, however, we are also aware that many entities will have been impacted by Russia's invasion into Ukraine. Please see our Need to know — Financial reporting considerations related to the Russia-Ukraine War highlighting some of the key issues to be considered by the entities in preparing their financial statements.

The table below provides a summary of the pronouncements which will be mandatorily applied by UK entities for the first time at 30 September 2022, for various quarterly reporting periods. Where a UK entity chooses to prepare financial statements in accordance with IFRS Accounting Standards as issued by the IASB, as well as in compliance with International Accounting Standards as adopted in conformity with the requirements of the Companies Act 2006, that entity should comply with the earlier IASB effective date for those items.

Endorsement of IFRS Accounting Standards by the EU has not applied in the UK since the end of the transition period following the UK’s withdrawal from the EU (31 December 2020). The UK Endorsement Board (UKEB) is now responsible for endorsing IFRS Accounting Standards for use in the UK which all UK companies that are required or choose to apply IFRS Accounting Standards must apply. However, because UK endorsed IFRS Accounting Standards have not been granted equivalence to EU endorsed IFRS Accounting Standards by the EU, UK companies that are listed in the EEA may need to state compliance with both EU-endorsed and UK-endorsed IFRS Accounting Standards. Alternatively, they may state compliance with both UK-endorsed IFRS Accounting Standards and IFRS Accounting Standards as issued by the IASB, if this is permitted by the relevant listing authority.

Further information on IFRS Accounting Standards in the UK is available here.

The table below provides a summary of these pronouncements, and which reporting periods they apply to:

Pronouncement IASB Effective date* EU/UK effective date* UK Mandatory at 30 September 2022?
1st qtrs.** 2nd qtrs.*** 3rd qtrs.**** Full yrs*****
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4)
1 January 2018 1 January 2018 Optional ~ Optional ~ Optional ~ Optional ~
Interest Rate Benchmark Reform — Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) 1 January 2021 1 January 2021

Already applied in prior year (July 21

Already applied in prior year (April 21 Already applied in prior year (January 21 Yes
Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16) 1 April 2021 1 April 2021 Already applied in prior year (July 21 Already applied in prior year (April 21 Yes Yes
Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16) 1 January 2022 1 January 2022 Yes Yes Yes No
Annual Improvements 2018-2020 Cycle 1 January 2022 1 January 2022 Yes Yes  Yes No
Reference to the Conceptual Framework (Amendments to IFRS 3) 1 January 2022 1 January 2022 Yes Yes Yes No
Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37) 1 January 2022 1 January 2022 Yes Yes Yes No

* Generally annual reporting periods beginning on or after the date indicated, may only apply to first-time adopters in some limited cases (see below for full details).

** 1st quarter ending on 30 September 2022 (accounting period began on 1 July 2022).

*** 2nd quarter ending 30 September 2022 (accounting period began 1 April 2022).

**** 3rd quarter ending 30 September 2022 (accounting period began 1 January 2022).

***** 4th quarter ending 30 September 2022 (accounting period began 1 October 2021).

~ The application of both approaches (overlay approach/ deferral approach) is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.

More information about these pronouncements, and all new and revised pronouncements, is set out below.

Financial statement considerations in adopting new and revised pronouncements

Where new and revised pronouncements are applied for the first time, there can be consequential impacts on annual financial statements, including:

  • Updates to accounting policies. The terminology and substance of disclosed accounting policies may need to be updated to reflect new recognition, measurement and other requirements, e.g IAS 19 Employee Benefits may impact the measurement of certain employee benefits.
  • Impact of transitional provisions. IAS 8 Accounting Policies, Changes in Estimates and Errors contains a general requirement that changes in accounting policies are retrospectively applied, but this does not apply to the extent an individual pronouncement has specific transitional provisions.
  • Disclosures about changes in accounting policies. Where an entity changes its accounting policy as a result of the initial application of an IFRS and it has an effect on the current period or any prior period, IAS 8 requires the disclosure of a number of matters, e.g. the title of the IFRS, the nature of the change in accounting policy, a description of the transitional provisions, and the amount of the adjustment for each financial statement line item affected
  • Third statement of financial position. IAS 1 Presentation of Financial Statements requires the presentation of a third statement of financial position as at the beginning of the preceding period in addition to the minimum comparative financial statements in a number of situations, including if an entity applies an accounting policy retrospectively and the retrospective application has a material effect on the information in the statement of financial position at the beginning of the preceding period
  • Earnings per share (EPS). Where applicable to the entity, IAS 33 Earnings Per Share requires basic and diluted EPS to be adjusted for the impacts of adjustments result from changes in accounting policies accounted for retrospectively and IAS 8 requires the disclosure of the amount of any such adjustments.

Whilst disclosures associated with changes in accounting policies resulting from the initial application of new and revised pronouncements are less in interim financial reports under IAS 34 Interim Financial Reporting, some disclosures are required, e.g. description of the nature and effect of any change in accounting policies and methods of computation.

 

New or revised standards

The information below can be used to assist with the disclosure requirements under paragraph 30 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, which requires entities to disclose any new IFRS Standards that are in issue but not yet effective and which are likely to impact the entity

New or revised pronouncement Effective date

UK Application at 30 September 2022 to:

1st qtrs 2nd qtrs 3rd qtrs Full yrs

IFRS 17 Insurance Contracts

IFRS 17 requires insurance liabilities to be measured at a current fulfillment value and provides a more uniform measurement and presentation approach for all insurance contracts. These requirements are designed to achieve the goal of a consistent, principle-based accounting for insurance contracts. IFRS 17 supersedes IFRS 4 Insurance Contracts as of 1 January 2021.

Issued: 18 May 2017 (Summary of IFRS 17, Article, Newsletter).

Applicable to annual reporting periods beginning on or after 1 January 2023. The original effective date of IFRS 17 of 1 January 2021 was amended by Amendments to IFRS 17 issued by the IASB in June 2020.

Endorsed for use in the EU, albeit with an optional exemption from applying the annual cohort requirement.  Also endorsed for use in the UK.

Optional

Optional

Optional

Optional

Amendments

New or revised pronouncement When effective UK Application at 30 September 2022 to:
1st qtrs 2nd qtrs 3rd qtrs Full yrs

Editorial Corrections (various)

The IASB periodically issues Editorial Corrections and changes to IFRSs and other pronouncements. Since the beginning of calendar 2012, such corrections have been made in February 2012, July 2012, March 2013, September 2013, November 2013 and March 2014, September 2014, December 2014, March 2015, April 2015, September 2015, December 2015, March 2016, May 2016, September 2016, December 2016, September 2017, November 2017, December 2018, March 2019, May 2019, December 2019, July 2020, September 2020, October 2020, November 2020, June 2021, October 2021, December 2021, February 2022 and July 2022.

Note: For details of these editorial corrections, see our IASB editorial corrections page.

As minor editorial corrections, these changes are effectively immediately applicable under IFRS See comment in previous column
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4)
Amends IFRS 4 Insurance Contracts provide two options for entities that issue insurance contracts within the scope of IFRS 4:
  • an option that permits entities to reclassify, from profit or loss to other comprehensive income, some of the income or expenses arising from designated financial assets; this is the so-called overlay approach;
  • an optional temporary exemption from applying IFRS 9 for entities whose predominant activity is issuing contracts within the scope of IFRS 4; this is the so-called deferral approach.
The application of both approaches is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.
Issued: 12 September 2016 (article, newsletter)

Overlay approach to be applied when IFRS 9 is first applied. Deferral approach effective for annual periods beginning on or after 1 January 2018 and only available for five years after that.

In June 2020 the IASB issued Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) which changes the fixed expiry date for the temporary exemption (the deferral approach) in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2023.

 

Optional

Optional

Optional

Optional

Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)

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

The Changes in Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16) amend IFRS 16 to

  • permit a lessee to apply the practical expedient regarding COVID-19-related rent concessions to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2022 (rather than only payments originally due on or before 30 June 2021);
  • require a lessee applying the amendment to do so for annual reporting periods beginning on or after 1 April 2021;
  • require a lessee applying the amendment to do so retrospectively, recognising the cumulative effect of initially applying the amendment as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the beginning of the annual reporting period in which the lessee first applies the amendment; and
  • specify that, in the reporting period in which a lessee first applies the amendment, a lessee is not required to disclose the information required by paragraph 28(f) of IAS 8.

Issued: 31 March 2021 (article)

The amendment is effective for annual reporting periods beginning on or after 1 April 2021 (earlier application permitted, including in financial statements not yet authorised for issue at the date the amendment is issued).

 

Already applied in prior year (July 2021)

Already applied in prior year (April 2021).

Mandatory - Endorsed by both the UK and EU.

Mandatory - Endorsed by both the UK and EU.

Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)

The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current

Issued: 23 January 2020 (article)

Annual reporting periods beginning on or after 1 January 2023 (see 'Classification of Liabilities as Current or Non-current — Deferral of Effective Date (Amendment to IAS 1)' below). Original effective date 1 January 2022.

Not yet endorsed for use in the EU or the UK.

 

 

 

 

Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16)

The amendments amend IAS 16 to prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss.

Issued: 14 May 2020 (article, newsletter)

Annual reporting periods beginning on or after 1 January 2022

Mandatory

Mandatory

Mandatory

Optional

Annual Improvements 2018-2020 Cycle

Makes amendments to the following standards:

  • IFRS 1 First-time Adoption of International Financial Reporting Standards - Subsidiary as a first-time adopter. The amendment permits a subsidiary that applies paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by its parent, based on the parent’s date of transition to IFRSs.
  • IFRS 9 Financial Instruments - Fees in the ‘10 per cent’ test for derecognition of financial liabilities. The amendment clarifies which fees an entity includes when it applies the ‘10 per cent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognise a financial liability. An entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other’s behalf.
  • IFRS 16 Leases - Lease incentives. The amendment to Illustrative Example 13 accompanying IFRS 16 removes from the example the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives are illustrated in that example.
  • IAS 41 Agriculture - Taxation in fair value measurements. The amendment removes the requirement in paragraph 22 of IAS 41 for entities to exclude taxation cash flows when measuring the fair value of a biological asset using a present value technique. This will ensure consistency with the requirements in IFRS 13.

Issued: 14 May 2020 (article, newsletter)

The amendments to IFRS 1, IFRS 9, and IAS 41 are all effective for annual periods beginning on or after 1 January 2022. Early application is permitted. The amendment to IFRS 16 only regards an illustrative example, so no effective date is stated.

 

 

Mandatory

Mandatory

Mandatory

Optional

Reference to the Conceptual Framework (Amendments to IFRS 3)

The changes:

  • update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Framework;
  • add to IFRS 3 a requirement that, for transactions and other events within the scope of IAS 37 or IFRIC 21, an acquirer applies IAS 37 or IFRIC 21 (instead of the Conceptual Framework) to identify the liabilities it has assumed in a business combination; and
  • add to IFRS 3 an explicit statement that an acquirer does not recognise contingent assets acquired in a business combination.

Issued: 14 May 2020 (article, newsletter)

The amendments are effective for annual periods beginning on or after 1 January 2022. Early application is permitted if an entity also applies all other updated references (published together with the updated Conceptual Framework) at the same time or earlier

 

 

Mandatory

Mandatory

Mandatory

Optional

Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37)

The changes specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).

Issued: 14 MAy 2020 (article, newsletter)

Annual reporting periods beginning on or after 1 January 2022. 

 

Mandatory

Mandatory

Mandatory

Optional

Amendments to IFRS 17

Amends IFRS 17 to address concerns and implementation challenges that were identified after IFRS 17 Insurance Contracts was published in 2017.

The main changes are:

  • Deferral of the date of initial application of IFRS 17 by two years to annual periods beginning on or after 1 January 2023
  • Additional scope exclusion for credit card contracts and similar contracts that provide insurance coverage as well as optional scope exclusion for loan contracts that transfer significant insurance risk.
  • Recognition of insurance acquisition cash flows relating to expected contract renewals, including transition provisions and guidance for insurance acquisition cash flows recognised in a business acquired in a business combination.
  • Clarification of the application of IFRS 17 in interim financial statements allowing an accounting policy choice at a reporting entity level.
  • Clarification of the application of contractual service margin (CSM) attributable to investment-return service and investment-related service and changes to the corresponding disclosure requirements.
  • Extension of the risk mitigation option to include reinsurance contracts held and non-financial derivatives.
  • Amendments to require an entity that at initial recognition recognises losses on onerous insurance contracts issued to also recognise a gain on reinsurance contracts held.
  • Simplified presentation of insurance contracts in the statement of financial position so that entities would present insurance contract assets and liabilities in the statement of financial position determined using portfolios of insurance contracts rather than groups of insurance contracts.
  • Additional transition relief for business combinations and additional transition relief for the date of application of the risk mitigation option and the use of the fair value transition approach.
  • Several small amendments regarding minor application issues.

Issued: 25 June 2020 (article)

 

The amendment is effective for annual reporting periods beginning on or after 1 January 2023. Earlier application is permitted.

 

Optional

Optional

Optional

Optional

Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)

The amendment changes the fixed expiry date for the temporary exemption in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2023.

Issued: 25 June 2020 (article)

In June 2020 the IASB issued Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) which changes the fixed expiry date for the temporary exemption (the deferral approach) in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2023.

Optional

Optional

Optional

Optional

'Classification of Liabilities as Current or Non-current — Deferral of Effective Date (Amendment to IAS 1)'

The amendment defers the effective date of the January 2020 amendments (see above) by one year.

Issued: 15 July 2020 (article)

 

The changes in Classification of Liabilities as Current or Non-current — Deferral of Effective Date defer the effective date of Classification of Liabilities as Current or Non-current (Amendments to IAS 1) to annual reporting periods beginning on or after 1 January 2023. Earlier application of the January 2020 amendments continue to be permitted.

Not yet endorsed for use in the EU or the UK.

Interest Rate Benchmark Reform — Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

The amendments in Interest Rate Benchmark Reform — Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) introduce a practical expedient for modifications required by the reform, clarify that hedge accounting is not discontinued solely because of the IBOR reform, and introduce disclosures that allow users to understand the nature and extent of risks arising from the IBOR reform to which the entity is exposed to and how the entity manages those risks as well as the entity’s progress in transitioning from IBORs to alternative benchmark rates, and how the entity is managing this transition.

Issued: 27 August 2020 (article)

 

Annual reporting periods beginning on or after 1 January 2021.

Already applied in prior year (July 2021)

Already applied in prior year (April 2021.

Already applied in prior year (January 2021.

Mandatory - endorsed by both the EU and UK.

Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)

The amendments require that an entity discloses its material accounting policies, instead of its significant accounting policies. Further amendments explain how an entity can identify a material accounting policy. Examples of when an accounting policy is likely to be material are added. To support the amendment, the Board has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2.

Issued: 12 February 2021 (article)

Annual reporting periods beginning on or after 1 January 2023.  Endorsed for use in the EU but not in the UK.

 

 

 

 

Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)

The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations.

The amendments provide an exemption from the initial recognition exemption provided in IAS 12.15(b) and IAS 12.24. Accordingly, the initial recognition exemption does not apply to transactions in which both deductible and taxable temporary differences arise on initial recognition that result in the recognition of equal deferred tax assets and liabilities.

Issued: 7 May 2021 (article)

Annual reporting periods beginning on or after 1 January 2023. Endorsed for use in the EU but not yet endorsed for use in the UK.

Initial Application of IFRS 17 and IFRS 9 — Comparative Information (Amendment to IFRS 17)


The amendment permits entities that first apply IFRS 17 and IFRS 9 at the same time to present comparative information about a financial asset as if the classification and measurement requirements of IFRS 9 had been applied to that financial asset before.

Issued: 9 December 2021 (article)

An entity that elects to apply the amendment applies it when it first applies IFRS 17

 

 

 

 

Optional 

Optional 

Optional 

Optional 

Definition of Accounting Estimates (Amendments to IAS 8)

The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”. Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The amendments clarify that a change in accounting estimate that results from new information or new developments is not the correction of an error.

Issued: 12 February 2021 (article)

 

 

Annual reporting periods beginning on or after 1 January 2023.  Endorsed for use in the EU but not in the UK.

 

 

Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)

The amendments clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale.

Issued: 22 September 2022 (article)

Annual reporting periods beginning on or after 1 January 2024.  Not yet endorsed for use in the EU or the UK.

 

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New members appointed to GPF

03 Oct, 2022

The IASB and the Global Preparers Forum (GPF) have appointed three new members. The new members are Lily Hu, Patrick Matos, and Feifei Wang and will serve an initial term of five years starting on 1 November 2022.

For more information, see the press release on the IFRS Foundation website.

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IASB issues podcast on latest Board developments (September 2022)

03 Oct, 2022

The IASB has released a podcast featuring IASB Chair Andreas Barckow and Executive Technical Director Nili Shah discussing deliberations at the September 2022 IASB meeting.

High­lights of the podcast include dis­cus­sions on:

  • Disclosures on business combinations (goodwill and impairment project);
  • IASB meeting in June 2022 on equity method;
  • Disclosure objectives and requirements of IFRS 6 Exploration for and Evaluation of Mineral Resources (Extractive Activities project);
  • Tentative decisions on primary financial statements;
  • Updates on rate-regulated activities, financial instruments with characteristics of equity, and contractual cash flow characteristics of financial assets projects;
  • Progress made on the post-implementation reviews for IFRS 9 — Classification and Measurement, IFRS 15 Revenue from Contracts with Customers, and other related news; and
  • Key takeaways from the maintenance and consistent application session.

The podcast can be accessed through the press release on the IASB website.

Please click to view the detailed notes taken by Deloitte observers for the IASB meeting.

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FRC publishes thematic review of IFRS 3

30 Sep, 2022

The Financial Reporting Council (FRC) has published its thematic review of business combinations, an area of infrequent reporting for many companies, but which is often significant and has a widespread impact on the company financial statements.

The FRC's review looked at a sample of 20 companies across various industries.  While the FRC was broadly satisfied with the quality of reporting of business combinations, it observed several areas where improvements can be made.  Specifically the FRC expects companies to:   

  • Clearly explain the impact of the business combination on the group’s strategy, resources, operations, and performance. Explanations should be clear and concise, highlighting the reasons for any significant changes (for example, on liquidity and funding). Where alternative performance measures (APM’s) are used to explain the impact of the combination, the FRC expects companies to apply the recommendations from its recent APM thematic review.  
  • Provide a comprehensive understanding of the effects of the business combination supported by consistent information throughout the annual report, allowing the reader to follow ‘the full story’.
  • Avoid boilerplate disclosures, making sure explanations reflect the specific circumstances, for example when describing the factors giving rise to goodwill and explanations of contingent consideration arrangements. Better disclosures explain the valuation techniques used to value acquired assets and liabilities and the key assumptions used.
  • Provide meaningful sensitivities and/or ranges of reasonably possible outcomes for significant estimates made in accounting for the business combination.
  • Disclose clearly the potential variability in future amounts payable for contingent consideration. Better disclosures provide specific details of the target measures on which the contingency is based and the time period over which they are to be assessed.     
  • Make sure business combination related cash flows are correctly classified, with cash flows for acquisition-related costs presented within operating cash flows and not investing in the consolidated accounts. Similarly cash flows relating to payments linked to continuing employment should be reported within operating cash flows.
  • Carefully consider what deferred tax balances should be recognised as a result of the combination.
  • Explain how transactions not accounted for as part of the business combination have been treated and the line item(s) in the financial statements in which they have been recognised. When contingent payments are linked to continuing employment of personnel they should be excluded from consideration for the business combination and accounted for as post acquisition employment expense.

The FRC report includes examples of better practice disclosures and a case study (in the appendix) to encourage improvement in the general quality of company disclosures.

A press release and the full thematic review are available on the FRC website.

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Financial Reporting Lab publishes September 2022 newsletter

30 Sep, 2022

The Financial Reporting Lab ("Lab") has published the September 2022 edition of its quarterly newsletter.

The newsletter provides an update on the Lab's recent publications (such as Digital security risk disclosure, Improving ESG data production and structured digital reporting) and provides an update on its upcoming report on net zero.

The newsletter also includes an invitation to participate in the stewardship reporting project and includes a reminder about the draft 2023 Taxonomy Suite being open for comment.

The full newsletter is available on the FRC website here

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September 2022 ISSB meeting notes posted

30 Sep, 2022

The ISSB met in Frankfurt on 20-23 September 2022. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

General Sustainability-related Disclosures—Summary of comments

The ISSB received over 700 comment letters and/or surveys. Almost all respondents supported the ISSB’s overall aim to develop a comprehensive global baseline of sustainability-related financial disclosures for the capital markets. However, many respondents asked for greater clarity, support, guidance and examples to enable effective application of the ED IFRS S1. Many respondents also suggested that the ISSB should give more consideration to the range of capabilities and preparedness of entities around the world, especially for smaller entities and entities in emerging markets, to apply IFRS S1. Many respondents emphasised the importance of close collaboration with the IASB and the importance of improving understandability, connectivity and consistency by using shared definitions and concepts across IFRS Sustainability Disclosures Standards and IFRS Accounting Standards. In addition, many respondents observed that key differences in concepts, terminologies, and definitions remain between the ISSB’s proposals and jurisdictional initiatives. They emphasised the importance for the ISSB to work together with jurisdictions, including Europe and the United States, in developing a global baseline of sustainability-related financial disclosures.

Climate-related Disclosures—Summary of comments

The ISSB received comment letters and survey responses from nearly 700 respondents. The proposals in the ED were generally well-received, in particular by users of general purpose financial reporting, who expressed strong agreement with the proposed objective and the specific proposals.  While there was broad support for IFRS S2, many respondents also asked for greater support, guidance and examples to enable effective application of the proposals.

General Sustainability-related Disclosures and Climate-related Disclosures—Plan for redeliberations

Noting that there has been widespread support for the proposed requirements in the EDs, the staff suggested focusing on a limited number of topics for redeliberations, which are for joint topics relevant to both EDs: scalability, and current and anticipated effects of sustainability-related and climate-related risks and opportunities. For IFRS S1: enterprise value; breadth of reporting required; 'significant’ sustainability-related risk or opportunity; identifying significant sustainability-related risks and opportunities and disclosures; application of the materiality assessment; connected information; and frequency of reporting. For IFRS S2: strategy and decision-making, including transition planning; climate resilience; greenhouse gas emissions; and industry-based requirements, including financed and facilitated emissions.

General Sustainability-related Disclosures and Climate-related Disclosures—Scalability

Most respondents to the consultation suggested that the ISSB should give more consideration to the range of capabilities and preparedness of entities around the world to apply the proposals in the EDs. At this meeting, the ISSB members were asked (i) whether they want to explore mechanisms to enable the requirements to be scalable, (ii) for feedback on the proposed mechanisms for addressing scalability and (iii) for feedback on the factors that should be used when evaluating which mechanism could be used for addressing particular scalability challenges.

Climate-related Disclosures—Financed and Facilitated Emissions

The ED IFRS S2 proposed the addition of “transition risks exposure” as a disclosure topic in the industry-based disclosure requirements for four industries–commercial banks, investment banking and brokerage, asset management and custody activities and insurance. The staff thinks the ISSB will need to consider in its future redeliberations the scope of the proposals, data considerations, industry breakdown, complexity and requests for increased flexibility.

IASB Update—Developing the IASB’s future work programme

In the presentation, the staff outlined a breakdown of the IASB’s activities, its projects, key messages from the IASB’s agenda consultation and financial reporting issues added to the IASB’s work plan. The staff also provided a closer look at the IASB projects on Intangible Assets, Climate-related Risks in the Financial Statements and Management Commentary.

ISSB discussions

As this was a meeting to discuss feedback the ISSB was not asked to make any decisions. The summary meeting notes capture the main reflections of the ISSB members. Importantly, the ISSB supported the proposed redeliberation plan. The ISSB will start to discuss specific issues in October.

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

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September 2022 IASB meeting notes posted

30 Sep, 2022

The IASB met in London on 20-22 September 2022. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The following topics were discussed:

Equity Method

The staff recommended that when measuring the carrying amount to be derecognised in a partial disposal would identify the cost of the specific portion of the investment being disposed of or, if it cannot be identified, apply the last-in, first-out method. They also recommended relief to allow the weighted average method to be used as a practical expedient for equity method investments held prior to the transition date. Several IASB members expressed concerns about the approach and more work will need to be undertaken. The IASB decided that when an equity accounted investee issues equity instruments, and the investor continues to apply the equity method, an ownership interest increase would be treated as a purchase of an additional interest whereas a decrease would be a partial disposal. The IASB also discussed application questions related to transactions between an investor and its associate or joint venture and acknowledged conflicts between the requirements in IFRS 10 and those in IAS 28.

Goodwill and Impairment

The IASB made several changes to its preliminary views in relation to disclosures about the objectives and rationale for the business combinations an entity has made, including an exemption from some of the disclosure requirements when disclosure would be seriously prejudicial to the entity’s objectives for the business combination. The IASB decided that, if some disclosure requirements are required only for a sub-set of business combinations, the focus should be on strategically important business combinations—i.e. those for which failing to meet the objectives would seriously put at risk the entity achieving its overall business strategy.

Post-implementation Review (PIR) of IFRS 9—Classification and Measurement

At this meeting, the IASB discussed questions relating to matters raised by respondents to the RFI that are not covered by other staff papers. The staff recommended that the IASB not consider further issues related to: derecognition and whether ‘substantially all of the risks and rewards’ of a financial asset have been transferred; assessing whether the entity has a practice of settling similar contracts net in cash when considering using the ‘own use exemption’; the disposal of equity instruments classified as FVTOCI; whether interest rates contractually linked to an index that adjusts the time value of money based on a market interest rate and/or inflation rate introduce ‘leverage’ in the context of recent significant rises in inflation rates; and whether rates including a leverage factor imposed by the government should follow IFRS 9 for regulated rates guidance and, if so, how to consider whether the rate provides exposure to risks or variability in the contractual cash flows that are inconsistent with a basic lending arrangement. The staff therefore recommend that questions about purchased or originated credit-impaired financial assets be considered as part of the upcoming PIR of the impairment requirements in IFRS 9. IASB members were generally supportive of the staff suggestions, but no decisions were made.  

Financial Instruments with Characteristics of Equity (FICE)

The IASB decided to clarify that: IAS 32:23 would apply to an obligation to redeem own equity instruments settled in a variable number of another type of own equity instruments. It decided that on expiry of a written put option on own equity instruments: the financial liability would be reclassified to the same component of equity as that from which it was reclassified on initial recognition of the put option; and the cumulative amount in retained earnings related to the put option would be permitted to be reclassified to another component of equity but amounts previously recognised in profit or loss on remeasuring the financial liability would not be reversed. Furthermore, written put options or forward purchase contracts on own equity instruments are presented gross rather than net.

Primary Financial Statements

The IASB decided not to proceed with any specific requirements for unusual income and expenses. It also decided that all entities would classify income and expenses from associates and joint ventures accounted for using the equity method in the investing category. It withdrew the proposal that an entity classify incremental expenses in the investing category but confirmed the proposal that the specified subtotals listed (in paragraph 104 of the ED) are not management performance measures and adding ‘operating profit or loss and income and expenses from investments accounted for using the equity method’ to the list of specified subtotals. Lastly, it withdrew the proposed prohibition on a mixed presentation of operating expenses.

Work Plan

The staff provided an update on the IASB’s work plan since its last update in May 2022. The IASB decided to consider in the second half of 2023 when to begin the PIRs of the hedge accounting requirements of IFRS 9 and the requirements of IFRS 16. The IASB also discussed clarifying the purpose of a PIR and managing stakeholder expectations about their objectives.

PIR of IFRS 15 Revenue from Contracts with Customers

The staff anticipate that they will undertake outreach from October 2022 to Q1 2023. The RFI is expected to be published in H1 2023, with a 120-day comment period.

Contractual Cash Flow Characteristics

In 2022, the IASB added a project to clarify particular aspects of the IFRS 9 requirements for assessing a financial asset’s contractual cash flow characteristics (i.e. the ‘solely payments of principal and interest’ (SPPI) requirements). The IASB decided to clarify that for contractual cash flows to be SPPI, a basic lending arrangement does not give rise to variability in cash flows due to risks or factors that are unrelated to the borrower, even if such terms and conditions are common in the specific market in which the entity operates. The IASB also decided to set out the factors when a financial asset that includes contractual terms that change the timing and amount of the contractual cash flows can be consistent with a basic lending arrangement and therefore have SPPI cash flows. The IASB further decided to clarify that the reference to ‘instruments' in paragraph B4.1.23 of IFRS 9 include lease receivables.

Extractive Activities

The staff presented papers summarising their reviews of disclosure-related stakeholder feedback from research carried out between 2018 and 2021, relevant academic literature and relevant jurisdictional requirements and a sample of annual filings. Overall, IASB members expressed support for the proposed direction of the project and for the three suggested areas for further research. It was noted that it was very important to communicate clearly to stakeholders that these are the only topics that will be taken forward in this project, and that other potential areas identified have now been scoped out. The IASB was not asked to make any decisions.

Maintenance and consistent application

At its June 2022 meeting, the IFRS Interpretations Committee voted to finalise the agenda decision Cash Received via Electronic Transfer as Settlement for a Financial Asset (IFRS 9). The staff recommended that, rather than finalising the agenda decision, the IASB explore amending IFRS 9. In relation to the forthcoming amendments to IAS 1 for non-current liabilities with covenants, the staff recommended that the IASB clarify requirements around the early application of the 2020 amendments and the 2022 amendments. IASB members agreed with the staff recommendations. Several IASB members noted that the IASB should move quickly as it affects almost all entities in all industries. The Chair acknowledged this but said that it is important to note that the staff recommendation uses the term ‘explore standard-setting’ which means that it is not certain yet that standard-setting will be undertaken. Only if the issue can be resolved in a timely fashion without significant disruption would the IASB move to standard-setting.

Rate-regulated Activities

The staff recommended that the IASB clarify that an entity would apply IFRIC 12 first and then, apply the requirements of the proposed new Standard to any remaining rights and obligations to determine if the entity has regulatory assets or regulatory liabilities. IASB members generally agreed that IFRIC 12 should be applied before the new Standard, however there were mixed views about how to achieve this.

An analysis of how the IASB’s work plan has changed as a result of the meeting is available here.

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

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IFRS Foundation announces new IASB Board members

30 Sep, 2022

The Trustees of the IFRS Foundation have announced the appointment of Patrina Buchanan and Hagit Keren as IASB Board members. Both appointments are for a five-year term.

Ms Buchanan played leading roles in IASB projects to reform the accounting for leases and revenue recognition and consolidation for almost two decades. She has also led the Foundation’s projects that support consistent application of IFRS Accounting Standards, including managing the work of the IFRS Interpretations Committee. Her first term as IASB member will commence in December 2022.

Ms Keren joins the Foundation from KPMG Israel where she served as its Insurance Sector Lead. She brings knowledge and experience in implementing IFRS 17 Insurance Contracts. She was previously on secondment to the IFRS Foundation to establish and manage the IASB’s Transition Resource Group set up to support the implementation of IFRS 17. Ms Keren will join the Board in 2023.

Please click for additional information in the press release on the IFRS Foundation website.

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ISSB issues podcast on latest Board developments (September 2022)

29 Sep, 2022

The IFRS Foundation has released a podcast discussing highlights from the September 2022 ISSB meeting. The podcast is hosted by ISSB Chair Emmanuel Faber and Vice-Chair Sue Lloyd.

Highlights of the podcast include discussions on:

  • key developments since the last board meeting;
  • highlights from the discussion on feedback to draft standards;
  • the importance of proportionality and scalability;
  • prioritisation and agenda setting; and
  • expectations for the October meeting in Montreal.

The podcast can be accessed through the press release on the IFRS Foundation’s website.

Please click to view the detailed notes taken by Deloitte observers for the ISSB meeting.

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