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EFRAG draft comment letter on the IASB's discussion paper on goodwill and impairment

30 May 2020

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB discussion paper DP/2020/1 'Business Combinations — Disclosures, Goodwill and Impairment'.

The IASB's project on goodwill and impairment aims at improving the information companies provide to investors, at a reasonable cost, about the businesses those companies buy and would help to hold management to account for its decisions to acquire those businesses.

In its draft comment letter on the discussion paper published in March 2020, EFRAG

  • supports the objective to explore whether companies can, at a reasonable cost, provide investors with more useful information about the acquisitions companies make;
  • notes some practical issues to consider in relation to disclosures about the strategic rationale, management’s objectives for an acquisition, and synergies; asks whether this information should be provided in the management commentary rather than the financial statements; and questions whether the benefits of some of the disclosures would outweigh the costs;
  • suggests that the guidance on goodwill allocation to cash generating units is possibly amended to improve how the impairment test for cash-generating units containing goodwill is applied in practice;
  • does not offer a view yet on whether amortisation of goodwill should not be reintroduced;
  • appreciates the attempts to simplify the impairment test, but has reservations about introducing an indicator-only approach;
  • supports the proposal to remove the restriction that prohibits companies from including cash flows arising from a future uncommitted restructuring or from enhancing the asset’s performance as well as to remove the requirement to use pre-tax inputs and pre-tax discount rates to calculate value in use;
  • does not assess that there would be any benefits of presenting the amount of total equity excluding goodwill in the statement of the financial position; and
  • would recommend that the issue on whether some intangible assets could be included in goodwill should be considered in a second phase of the project.

Comments on EFRAG's draft comment letter are requested by 30 November 2020. For more information, see the press release and the draft comment letter on the EFRAG's website.

IASB issues podcast on latest Board developments (May 2020)

29 May 2020

The IASB has released a podcast featuring IASB Chair, Hans Hoogervorst and Vice-Chair, Sue Lloyd discussing deliberations at (1) the May IASB meeting and (2) the Board's supplementary meeting on IFRS 16 covid-19-related rent concessions.

The podcast features discussions related to amendment to IFRS 16 Leases to help companies with covid-19-related rent concessions. The podcast also discusses:

  • Amendments to IFRS 17 Insurance Contracts;
  • IBOR reform and the effects on financial reporting — Phase 2;
  • Management commentary;
  • Disclosure initiative — Accounting policies; and
  • Maintenance and consistent application.

The podcast can be accessed through the press release on the IASB website. More information on the topics discussed is available through our comprehensive notes taken by Deloitte observers at the May IASB meeting as well as the Board's supplementary COVID-19 meeting.

IASB finalises amendment to IFRS 16 regarding COVID-19-related rent concessions

28 May 2020

The International Accounting Standards Board (IASB) has published 'Covid-19-Related Rent Concessions (Amendment to IFRS 16)' amending the standard to provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. Concurrently, the IASB also published a proposed Taxonomy Update to reflect this amendment.



The COVID-19 pandemic has led to some lessors providing relief to lessees by deferring or relieving them of amounts that would otherwise be payable.  In some cases, this is through negotiation between the parties, but can be as a consequence of a government encouraging or requiring that the relief be provided. Such relief is taking place in many jurisdictions in which entities that apply IFRSs operate.

When there is a change in lease payments, the accounting consequences will depend on whether that change meets the definition of a lease modification, which IFRS 16 Leases defines as “a change in the scope of a lease, or the consideration for a lease, that was not part of the original terms and conditions of the lease (for example, adding or terminating the right to use one or more underlying assets, or extending or shortening the contractual lease term)”.

On 24 April 2020, the Board published an exposure draft with a proposed amendment intended to provide practical relief to lessees in accounting for rent concessions arising as a result of the COVID-19 pandemic. Given the urgency of the matter, the exposure draft was published with a 14-day comment period. On 15 May 2020, the Board considered the feedback received and decided to finalise the amendment with some changes.



The changes in Covid-19-Related Rent Concessions (Amendment to IFRS 16) amend IFRS 16 to

  1. provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification;
  2. require lessees that apply the exemption to account for COVID-19-related rent concessions as if they were not lease modifications;
  3. require lessees that apply the exemption to disclose that fact; and
  4. require lessees to apply the exemption retrospectively in accordance with IAS 8, but not require them to restate prior period figures.

The main change from the proposal in the exposure draft is that the IASB had proposed that the practical expedient should only be available for lease payments originally due in 2020. However, after having considered the feedback to the exposure draft, the IASB decided to extend this period to June 2021 to also capture rent concessions granted now and lasting for 12 months.

The IASB considered but decided not to provide any additional relief for lessors as the current situation is not as equally challenging for them and the required accounting is not as complicated.


Effective date

The amendment is effective for annual reporting periods beginning on or after 1 June 2020. Earlier application is permitted, including in financial statements not yet authorised for issue at 28 May 2020. The amendment is also available for interim reports.


Proposed Taxonomy Update

The IASB has also published a proposed Taxonomy Update to reflect the amendment to IFRS 16. Comments on the proposed Taxonomy update are requested by 29 June 2020.


Additional information

Please click for:


EC review of the NFRD postponed by three months

27 May 2020

In February 2020, the European Commission (EC) launched an initiative to review the European Non-Financial Reporting Directive (NFRD). The COVID-19 pandemic has now led to changes in the timetable.

The review was originally scheduled to be completed in the fourth quarter of 2020. An updated work programme released today shows that this date has been moved to the first quarter of 2021.

Please see this communication on the EC website (entry number four under item 2).

IASB releases podcast on IFRS 17 (May 2020)

26 May 2020

The IASB has released a podcast featuring IASB member Darrel Scott and technical staff member Vitalina Kobernik as they discuss the developments at the May 2020 Board meeting related to the amendments to IFRS 17 'Insurance Contracts'.

The amendments to IFRS 17 are being finalised by the staff. During this process the staff identified five (sweep) issues for which the Board decided to make additional changes to the standard, along with two other matters that were identified after the staff paper had been distributed.

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

Our comprehensive meeting notes from the session are available here.

Updated IPSAS-IFRS alignment dashboard

26 May 2020

The International Public Sector Accounting Standards Board (IPSASB), which develops the International Public Sector Accounting Standards (IPSAS) for financial reporting by governments and other public sector entities, has released an updated IPSAS-IFRS alignment dashboard showing how far individual IPSAS are aligned with corresponding IFRSs.

Please click to access the updated alignment dashboard prepared for the June 2020 IPSASB meeting on the IPSASB website.

In this context, please also so our 2020 edition of IPSAS in your pocket published in January.

We comment on the IASB's proposed amendments as a result of the second phase of its project on the IBOR reform

25 May 2020

We have commented on IASB exposure draft ED/2020/1 'Interest Rate Benchmark Reform — Phase 2 (Proposed amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)', which was published by the IASB on 9 April 2020.

The ED contains proposed amendments that would address issues that might affect financial reporting after the reform of an interest rate benchmark, including its replacement with alternative benchmark rates.

We are largely supportive of the amendments. In particular, we support the key changes that ensure that entities that apply hedge accounting will continue to do so as they transition to new benchmark interest rates and that the accounting for the modification of hedged items, when those modifications arise directly from the reforms, are reflected on a prospective basis via the application of IFRS 9:B5.4.5. We consider these as being the two most important elements of the proposals.

Please click to download our full comment letter.

Updated IASB work plan — Analysis (May 2020 meetings)

25 May 2020

Following the IASB's May 2020 supplementary and regular meetings, we have analysed the IASB work plan to see what changes have resulted from the meetings and other developments since the work plan was last revised in April 2020. Almost all changes result from the numerous exposure drafts and final amendments the IASB has published recently.

Below is an analysis of all changes made to the work plan since our last analysis on 24 April 2020.

Standard-setting projects

  • no changes

Maintenance projects

  • Annual improvements — 2018-2020 cycle — removed from the work plan as the IASB completed this cycle of annual improvements by issuing Annual Improvements to IFRS Standards 2018–2020 on 14 May 2020; projects that were part of this cycle included:
    • Fees in the ‘10 per cent’ Test for Derecognition of Financial Liabilities (Amendments to IFRS 9)
    • Lease Incentives (Amendment to Illustrative Example 13 accompanying IFRS 16)
    • Subsidiary as a First-time Adopter (Amendment to IFRS 1)
    • Taxation in Fair Value Measurements (Amendment to IAS 41)
  • Classification of liabilities — Effective date — an exposure draft ED/2020/3 Classification of Liabilities as Current or Non-current — Deferral of Effective Date (Proposed amendment to IAS 1) was published on 4 May 2020 with comments requested by 3 June 2020; the feedback on the exposure draft will be discussed in June 2020
  • IFRS 16 and COVID-19 — the IASB discussed the feedback on the exposure draft published on 24 April 2020 at its supplementary meeting on 15 May 2020 and expects to issue final amendments "on or around 28 May 2020"
  • IAS 37 — Onerous contracts — removed from the work plan as the IASB issued Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37) on 14 May 2020
  • IAS 16 — Proceeds before intended use — removed from the work plan as the IASB issued Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16) on 14 May 2020
  • IFRS 3 — Updating a reference to the Conceptual Framework — removed from the work plan as the IASB issued Reference to the Conceptual Framework (Amendments to IFRS 3) on 14 May 2020

Research projects

  • Dynamic risk management — core model outreach has been clarified to take place in fourth quarter of 2020 (previously second half of 2020)

Other projects

  • IFRS Taxonomy update — Amendments to IFRS 17 and IAS 16 — a project newly added to the work plan; a proposed taxonomy update is expected in July 2020
  • IFRS Taxonomy update — Covid-19-related rent concessions (Amendment to IFRS 16) — a project newly added to the work plan; a proposed taxonomy update is expected in May 2020

The above is a faithful comparison of the IASB work plan at 24 April 2020 and at 25 May 2020. For access to the current IASB work plan at any time, please click here.

May 2020 IASB meeting notes posted

24 May 2020

The IASB met via video conference on 20–21 May 2020 to discuss six topics. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

Amendments to IFRS 17 Insurance ContractsThe amendments to IFRS 17 are being finalised by the staff. During this process the staff identified five (sweep) issues for which the Board decided to make additional changes to the Standard, along with two other matters that were identified after the staff paper had been distributed.

Maintenance and consistent application — Sale and leaseback with variable payments: At its April 2020 meeting, the Board decided to amend IFRS 16 for sale and leaseback transactions when the lease has variable payments. At this meeting the Board decided that the proposed amendment be applied retrospectively in accordance with IAS 8, except when hindsight is required, and that early application be permitted.  

Disclosure initiative — Accounting policies: The Board supported the staff recommendations towards finalising the proposal to require entities to disclose ‘material’ accounting policies instead of ‘significant’ accounting policies. However, given the importance of the wording, the staff have been asked to bring revised drafting back for the Board to consider. The finalisation should not be delayed to align with any changes arising from the ED General Presentation and Disclosures. However, the staff will consider whether to align the effective date of this amendment with the amendments to IAS 8 under the Accounting policies and accounting estimates project.

Management commentary: The Board supported the staff recommendations for the disclosure objectives and the type of information that would support those objectives in relation to risk and the external evironment.

Research programme update: The staff updated the Board on the research programme, including recent changes to the timetable and priorities.

There was also an oral update of IBOR Reform and the Effects on Financial Reporting: Based on informal discussions, the overall feedback of the ED is supportive and positive. The comment letter analysis and potential changes will be discussed in the June 2020 meeting.

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

AAOIFI statement on COVID-19 accounting implications for Islamic financial institutions

22 May 2020

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has published a statement 'Accounting implications of the impact of COVID-19 pandemic'.

The objective of the statement is to provide clarifications to Islamic financial institutions for the application of AAOIFI financial accounting standards (FASs) and the AAOIFI's Conceptual Framework considering certain pertinent issues arising due to economic factors and regulatory interventions in the wake of the COVID-­19 pandemic. AAOIFI is of the view that the FASs are robust and flexible enough to address the challenges posed by the prevalent uncertainty in the environment, but emphasises that institutions are encouraged to provide additional disclosures on voluntary basis to enable the users of the financial statements to better understand the financial position and performance of the institutions.

Please click to access the statement on the AAOIFI website.

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