The Climate Disclosure Standards Board (CDSB) has responded to the consultation document of the Task Force on Climate-related Financial Disclosures (TCFD) with recommendations on climate-related disclosures. The CDSB calls on the TCFD to explore how the concept of materiality should be applied to climate-related financial disclosure, to work with relevant standard-setters (including IASB & FASB) to explore how the existing mainstream model could allow for the integration of climate-related financial disclosures, to review the suggested illustrative metrics so that they incorporate more financial metrics, and to rationalise and coordinate the recommendations. More information is available through the press release on the CDSB's website as well as the response itself.

The London Stock Exchange Group (LSEG) has issued guidance setting out recommendations for good practice in environmental, social and governance reporting (ESG). The guidance, has been developed in response to investor demand for a more consistent approach to ESG reporting and builds upon the TCFD recommendations. Please click for a press release and the guidance on LSEG website.

The Sustainability Accounting Standards Board (SASB) has published a Conceptual Framework and Rules of Procedure that move the organisation to a two-tier governance structure that separates fiduciary duty from standards-setting activities. The documents as well as further information on additional consultation are available through the press release on the SASB website.

The Global Reporting Initiative (GRI) and the Bombay Stock Exchange (BSE), one of India’s leading exchange groups, have released a linkage document between the GRI Standards and the SEBI Business Responsibility Report (BRR) Framework. The document is aimed at companies that wish to use the GRI Standards to comply with SEBI’s reporting requirements mandatory for the top 500 Indian companies listed in the country’s stock exchanges. The linkage document is available through the GRI website.

Deloitte has released a new publication in it Thinking allowed series that looks at climate-related disclosures and some of the issues involved and how companies and audit committees might respond to the challenges. The publication builds on the TCFD recommendations.

On Wednesday 22 February, the staff is bringing the Insurance Contracts project back to the Board to discuss the findings from the external editorial review of a draft of IFRS 17 Insurance Contracts. The staff is proposing some drafting changes to address matters identified in the review. The most significant changes proposed relate to changes to the carrying amount of the contractual service margin and introducing a narrow exemption to the requirements to group insurance contracts when a regulation or law constrains an entity from fully pricing the insurance risks transferred based on the characteristics of each policy holder.

For the project on financial instruments with the characteristics of equity, the papers explore whether rights and obligations arising from non-contractual terms (e.g. those arising from law) should be taken into account when classifying a financial instrument as equity. The Board will be looking at mandatory tender offers and bonds that are contingently convertible to ordinary shares as a result of regulatory requirements.

In January 2017 the Board decided to develop an exposure draft to amend IFRS 9 Financial Instruments in relation to symmetric prepayment options, to allow instruments with a prepayment options to qualify for amortised cost measurement. Having discussed the urgency of the amendment with the Due Process Oversight Committee the staff is proposing a 30 day comment period with the goal of finalising the amendment so that it can have an effective date of 1 January 2018.  

The staff will update the Board on the project to amend the definition of a business in IFRS 3 Business Combinations. The staff will also formalise the steps for publishing a request for views as part of the post-implementation review of IFRS 13 Fair Value. And there will be a brief update on the Research Programme.

On Thursday 23 February, the staff will present an analysis of the proposed new accounting model for rate-regulated activities that was discussed in the December 2016 Board meeting. The papers look at the general approach of the model, the scope and the recognition of regulatory assets and regulatory liabilities.

The discussions on the Conceptual Framework project are entering the final stages. The papers for this meeting relate mostly to housekeeping matters: whether the appendix on ‘cash-flow-based measurement techniques’ should be retained; a review of existing Standards for potential inconsistencies with the revised CF, the effects of the revised CF; and minor comments on concepts supporting asset and liability definitions and due process.

The Board will discuss two issues relating to IFRS 9 Financial Instruments that have come from the Interpretations Committee and the Transitional Resource Group for Impairment of Financial Instruments.

Our pre-meet­ing summaries are available on our February meeting note page and will be sup­ple­mented with our popular meeting notes after the meeting.

Topics reviewed were:

• Recent developments around IFRSs (such as the state of use of IFRSs in Japan and Japan's experience with first-time adoption)
• Initiatives to promote further voluntary use of IFRSs in Japan
• How Japan's voice in international standard-setting can be strengthened
• Quality enhancements of Japanese GAAP
• Development of human resources in the area of international accounting

No decisions were made, but the informative presentations were made publicly available and can be downloaded from the FSA website (in the Japanese language only).

In the preliminary consultation document, EFRAG had expressed the view that that IFRS 16 meets the relevant qualitative characteristics, raises no issues regarding prudent accounting, is not contrary to the true and fair view principle, would improve financial reporting, compared to the standard and the interpretations it replaces, and would not put European entities at a competitive disadvantage taking into account the lack of convergence with the equivalent US GAAP standard. However, EFRAG had not formed an opinion on whether the standard would reach an acceptable cost-benefit trade-off. Also, as EFRAG intended to conduct additional work that was expected to result in significant additional input into its assessment, EFRAG had not expressed a view on whether IFRS 16 is conducive to the European public good.

EFRAG has now done additional research and evaluated the feedback on the preliminary consultation documents and concludes that IFRS 16:

• Meets the qualitative characteristics of relevance, reliability, comparability and understandability, leads to prudent accounting, and it is not contrary to the true and fair view principle.
• Would improve financial reporting and would reach a cost-benefit trade-off that is acceptable. EFRAG has not identified that IFRS 16 would have major deleterious effects on the European economy, including financial stability and economic growth.

Accordingly, EFRAG has assessed that adopting IFRS 16 is conducive to the European public good and has issued its draft endorsement advice. Comments on the draft endorsement advice are requested by 13 March 2017. It is available through the press release on the EFRAG website.

EFRAG has also updated its endorsement status report accordingly.

In addition, the EFRAG has published a study by an independent economic consultancy which was used during the development of the draft endorsement letter. The study addressed potential changes in the behaviour of preparers, investors and lenders, the potential economic impact, and a cost-benefit analysis of IFRS 16. The overall conclusion was (quoted from chapter 1.5 of the study):

The meeting offers core sessions and, in addition, evening/late morning optional sessions dedicated to the presentation of activities that have already been presented at other forums.

The agenda is summarised below:

Ms Bos fills the European vacancy, and Mr Kwak and Mr Zhu fill the Asia-Oceania vacancies. The terms of all three members became effective on 1 February 2017 and will last for three years.

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

In comparison with the 2014 results, the 2016 data shows a 2% increase in the number of IFIs asserted compliance with IFRS, however, 52% of IFIs still don't use IFRS but apply local GAAP (33%), the accounting standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) (17%), or do not specify the accounting standards or law complied with in their financial statements (2%). The study concludes:

The IFIs in the study continued to apply a variety of financial reporting frameworks. As a result, the differing recognition and measurement bases impede users’ ability to meaningfully compare the financial statements. Further efforts must be made to engage with relevant standard-setters and regulators to persuade them of the merits of IFRS compliance. This is all the more important when there may be indications that affected entities in those jurisdictions would prefer IFRS over other frameworks.

Please click for access to the study on the AOSSG website. It offers a general survey of the standards applied and the treatment of the three areas of focus (lessor accounting for ijarah with an arrangement to transfer ownership, classification of customer investment accounts, and recognition and measurement of finance income) for the whole sample as well as findings listed by jurisdiction.

The Board will discuss the following:

• Insurance contracts.
• Financial instruments with characteristics of equity.
• Symmetric prepayment options related to IFRS 9.
• Due process step followed in the post-implementation review of IFRS 13.
• Definition of a business.
• Update on the research programme.
• Rate-regulated activities.
• Cash-flow-based measurement techniques, concepts supporting asset and liability definition, and due process related to the Conceptual Framework.
• IFRS implementation issues related to IFRS 9.

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 position had become vacant with the death of Wayne Upton in September 2016.

Please click for the press release announcing Ms Lloyd's appointment on the IASB website.