IASB update

Date recorded:

Developing the IASB’s future work programme (Agenda Paper 5)

This agenda paper was a presentation.

In the presentation, the IASB Chair outlined:

  • A breakdown of the IASB’s activities
  • The IASB’s projects and which phases they are in
  • Key messages obtained from the IASB’s agenda consultation
  • Financial reporting issues added to the IASB’s work plan
  • A closer look at the following IASB projects:
    • Intangible Assets
    • Climate-related Risks in the Financial Statements project
    • Management Commentary

ISSB discussion

The IASB Chair led through the presentation.

One ISSB member asked about the link between sustainability-related disclosures and the IASB’s project on extractive activities. The IASB Chair replied that one IASB member suggested to provide a stronger link for entities in the extractives industry to sustainability-related disclosures. However, the risk is that this could put undue emphasis on the extractive sector which might be interpreted as these disclosures not being relevant to other industries. The IASB staff was asked to find a balance in this regard. The ISSB member asked whether the IASB would look into guidance on reserve accounting to which the IASB Chair replied that the IASB would only look at the exploration and evaluation phase. Industry has already developed in that regard and users do not seem to ask for more information than already provided.

The ISSB Chair asked how decisions made by management which would be disclosed under the governance pillar in IFRS S1 affect financial statements, for example the commitment to a net zero strategy. The IASB Chair replied that there are high hurdles as to when a statement becomes a constructive obligation that requires recognition of a liability in the financial statements. For example, restructuring plans need to meet certain criteria before they are recognised as a liability under IAS 37.

One ISSB member asked about how information about intangible assets can be provided if they are not recognised as an asset. The IASB Chair replied that this could be solved by way of disclosure. He said that, for example, entities could be made to disclose expenses that are investments but that do not meet the criteria for recognition as an asset.

The ISSB Vice-Chair noted that ISSB standards and IASB standards will not be that different as they are both capturing activity, rather than industries. However, given ISSB standards are only requiring disclosures, there is a difference in approach when developing them.

One ISSB member asked why the IASB are restricting themselves to climate-related impacts on financial statements and not include wider sustainability impacts. The IASB Chair replied that climate was the predominant concern of IASB stakeholders, which does not mean that in the future there may not be other sustainability-related projects.

The ISSB member also asked if integrated thinking played a role in preparation of financial statements. The IASB Chair confirmed that and said that integrated thinking reminds him of the balanced scorecard which is a concept used by accountants. It also means to look at items holistically and not only from an accounting perspective. He said that the management commentary could be a starting point for implementing integrated thinking into the preparation of financial statements.

The IASB Chair also noted that guidance on climate-related impacts on financial statements would not be continuously updated as the ISSB publishes guidance. It will be principles-based guidance that should be able to be applied to different circumstances. However, it should be ensured that the boards are not sending conflicting messages.

One ISSB member asked how ISSB guidance can be implemented into management commentary. The IASB Chair replied that the project is still ongoing and the feedback showed that there is demand for action. The IASB staff already integrated some of the principles of TCFD and the TRWG prototypes into management commentary so it should be easier to link with ISSB.

No decisions were made.

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