June

WICI consults on communicating value creation from intangibles

10 Jun 2020

The World Intellectual Capital/Assets Initiative (WICI) has published an exposure draft of 'Setting a New Agenda for CFOs — Understanding the role of Intangibles in Value Creation'. The guidance is aimed at facilitating CFOs and other finance professionals to manage and report intangibles in the context of their organisation’s value creation.

The document offers the chapters 'Finding Value in Changing Landscape', 'Delivering Value — managing intangibles', 'Communicating value creation from Intangibles', 'Tools', and 'Experience & Cases', all of which are supported by examples, cases and interviews.

The chapter on communicating value creation from intangibles looks at two main aspects:

Why should companies report value creation from intangibles?

  • Supporting and evidencing strategic positioning
  • Building confidence and relationships with key stakeholders
  • Differentiating from competitors
  • Demonstrating progress on existing commitments and values

And what should companies report on?

  • Unique value creation mechanism
  • Strategic intangible assets
  • Strategy, mission, vision, values
  • Strategy for the future business, development and utilisation of intangible assets
  • Governance
  • Risks and opportunities related to intangibles
  • Business environment

The WICI website offers a press release and access to the draft guidance. Comments on the guidelines are invited by 31 August 2020.

Recent sustainability and integrated reporting developments

09 Jun 2020

A summary of recent developments at IMF, CDSB, GRI, the ESAs, SSE, BCBS, IIRC, BMJV, ISAR, and JPX.

The International Monetary Fund (IMF) has released a report arguing that investors and equity markets have been ignoring the growing risk of financial losses associated with the continued rise in global temperatures, and suggesting that climate risk should be made a part of international reporting standards. Please click to access the report on the IMF website.

The Climate Disclosure Standards Board (CDSB) has released a report Falling short? analysing the 2019 environmental and climate-related disclosures of Europe’s top 50 largest listed companies. While the findings show some improvement in company disclosure compared to 2018, current reporting practices often still fail to provide investors with a clear understanding of a company’s development, performance, position and impact. Please click to access the report on the CDSB website.

The CDSB has also released a "TCFD to-do list" with nine steps to ensure that issuers are making effective TCFD aligned disclosures. The list can be accessed on the CDSB website.

The Global Reporting Initiative (GRI) has released a new standard, GRI 306: Waste 2020, which updates previous GRI disclosures on waste, requires organisations to report on waste generated throughout the value chain, and release detailed information on its composition and how it is managed. The new standard is available free of charge on the GRI website.

The GRI has also issued new document, Linking the SDGs and the GRI Standards, that covers the 17 SDGs and maps them against the standards and disclosures that apply for each. Please click to access the document on the GRI website.

In addition, the GRI has published a new report, Using Corporate Reporting to Strengthen Sustainable Development Goals, with five key recommendations for how governments and other policy actors can use corporate reporting to strengthen SDGs progress at the national level. Please click to access the report on the GRI website.

The three European Supervisory Authorities (EBA, EIOPA and ESMA - ESAs) will organise a public hearing on proposed ESG disclosure standards for financial market participants, advisers and products. More information is available on the ESMA website.

The United Nations Sustainable Stock Exchanges (SSE) initiative has launched a database of all guidance documents provided by stock exchanges for listed companies so that other stock exchanges can learn from their peers. Please click to access the database on the SSE website.

The Basel Committee on Banking Supervision (BCBS) has published a stocktake report on its members' existing regulatory and supervisory initiatives on climate-related financial risks. The report can be accesses on the BCBS website.

The International Integrated Reporting Council (IIRC) has published its 2019 Integrated Report Building Consensus Towards a Global System. The report can be accessed on the IIRC website.

The German Federal Ministry of Justice and Consumer Protection (BMJV) has appointed the Accounting Standards Committee of Germany (ASCG) with an extensive investigation of non-financial reporting. The investigation is meant to contribute to the further development of non-financial reporting at European level. Click for more information on the ASCG website.

The United Nations Conference on Trade and Development (UNCTAD) Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) is offering a webinar "Assurance on sustainability reports: current practices and challenges" on 16 June 2020. More information is available on the UNCTAD website.

The Japan Exchange Group (JPX) has announced the publication of a new handbook to support listed companies who are choosing to work on ESG disclosure. The handbook is also available in the English language and can be accessed on the JPX website.

DPOC to hold conference call on 10 June

05 Jun 2020

The Due Process Oversight Committee (DPOC) of the IFRS Foundation has published an agenda and papers for a conference call to be held on 10 June 2020. The DPOC meeting is part of the general meeting of the IFRS Foundation Trustees that will be held (non-public) on 9-11 June 2020.

The DPOC will discuss:

  • Introduction and actions from the DPOC meeting held on 18 February 2020 and public call held on 16 April 2020
  • Technical Activities — Update report on behalf of the International Accounting Standards Board
  • Formal approval for publication of the revised Due Process Handbook.
  • Correspondence

Agenda papers for the meeting are available on the IASB's website.

June 2020 IFRS Interpretations Committee meeting agenda posted

05 Jun 2020

The IFRS Interpretations Committee has posted the agenda for its next meeting, which will be held by video conference on 16 June 2020.

The Committee will discuss the following:

  • Administrative matters
  • Supply Chain Financing — Reverse Factoring
  • IFRS 16 — Sale and leaseback with variable payments
  • IAS 12 — Deferred tax related to an investment in a subsidiary
  • IAS 38 — Player transfer payments
  • Work in progress

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.

IASB issues investor webcast on expected credit losses and related disclosures

04 Jun 2020

The IASB has issued a webcast for investors that outlines the information that entities will provide in expected credit losses (ECL) when using IFRS 9 and IFRS 7 to prepare financial statements and notes.

The webcast is hosted by IASB Vice-Chair Sue Lloyd and technical staff member Sid Kumar and covers the following areas:

  • ECL model development
  • Important characteristics of the ECL model
  • ECL related disclosures
  • Interaction with regulatory provisions

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

Membership for European Lab project task force on reporting of non-financial risks and opportunities

04 Jun 2020

The European Financial Reporting Advisory Group (EFRAG) has announced that the European Lab Steering Group has appointed the members of the project task force for its second project on reporting of non-financial risks and opportunities and linkage to the business model​.

The group’s membership includes:

  • Charles Mario Abela, not-for-profit organisation (Malta)
  • Maria Alexiou, preparer (Greece)
  • Estelle Aymard-Young, financial institution (France)
  • Emilie Beral, user (France)
  • Donato Calace, digital tools (Italy)
  • Daniela Cholakova, preparer (Bulgaria)
  • Jean-Philippe Desmartin, user (France)
  • Laura Girella, not-for-profit organisation/ academia (Italy)
  • Michael Goebbels, preparer (Germany)
  • Ulrika Hasselgren, user (Denmark)
  • Christian Hell, accountancy profession (Germany)
  • Marcus Looijenga, accountancy profession (Netherlands)
  • Gloria Mazzocco, preparer (Italy)
  • Giuseppe Milici, accountancy profession (Italy)
  • Tegwen Le Berthe, user (France)
  • Isabel Gavín Pérez, financial institution (Spain)
  • Eckhard Plinke, user (Germany)
  • Gunnar Rimmel, academia (Sweden)
  • Dawn Slevin, other stakeholder (Ireland)
  • Mirjam Wolfrum, not-for-profit organisation (Germany)

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

Update: On 27 July 2020, EFRAG announced that Charles Mario Abela and Dawn Slevin will be co-Chairs of the task force.

We comment on the IASB's proposal to defer the amendments to IAS 1

03 Jun 2020

We have responded to the IASB’s exposure draft ED/2020/3 'Classification of Liabilities as Current or Non-Current – Deferral of Effective Date'.

We support the deferral of the effective date for recent amendments to IAS 1 and believe that it is important that entities have sufficient time to analyse the potential effect of the amendments on the classification of their liabilities and, if necessary, renegotiate their debt covenants. In addition, we have observed some diversity in views on how to apply the recent amendments and suggest the Board consider additional guidance on how the recent amendments should be applied.

Please download the full comment letter here.

IASB issues 'Investor Update' newsletter

03 Jun 2020

The IASB has issued the latest edition of its newsletter 'Investor Update', which profiles recently introduced IFRS Standards and other changes to the pipeline as well as how those changes may affect companies and performance.

This issue features:

  • IFRS Foundation response to COVID-19
  • New project timelines
  • We need your views—open consultations
  • Stay up to date
  • Resources for investors

The Investor Update newslet­ter is available on the IASB’s website.

Accountancy Europe recommends actions for the public sector in the context of COVID-19

03 Jun 2020

Accountancy Europe has analysed short-term and long-term actions that could support the public sector in countering the pandemic's impact, among them many actions with regard to transparency and reporting.

Accountancy Europe notes that the COVID-19 pandemic has resulted in rapid deployment of government financial resources and development of support programmes. As governments should be very transparent about the effects of this, the recommended short-term actions include:

  • Controls over public sector expenditure have been relaxed. It is essential that governments are transparent as to the amount of funds received by beneficiaries and that such payments are retrospectively audited to ensure they have been correctly used.
  • Public sector entity reporting and auditing requirements may need to be temporarily relaxed in certain circumstances. But transparency is important, and they should report what truly matters.
  • Central governments should urgently provide guidance for public sector entities on reporting of going concern, post balance sheet events and management commentary.

Accountancy Europe also notes that it will not be business as usual once the crisis is over and that governments should seize the opportunity to drive forward programmes that support long-term fiscal resilience. The recommended long-term actions, therefore, include:

  • Public sector balance sheets will be more important than ever with public sector assets and liabilities set to balloon.
  • Post coronavirus crisis, the public sector finances will need to be restored and economies will need a kick-start. Robust accruals-based accounts provide the foundation necessary for forward looking estimates and economic models.
  • Governments will need record levels of borrowing, much of it from open markets, and investors will want to see reliable, internationally comparable and timely information. Adopting internationally recognised public sector accounting standards (IPSAS) would provide such foundations.

The actions recommended by Accountancy Europe are available in a summary overview, an in-depth analysis of the short-term actions and an in-depth analysis of the long-term actions.

EFRAG moves quickly on endorsement advice on IFRS 16 amendment

03 Jun 2020

The European Financial Reporting Advisory Group (EFRAG) has issued final endorsement advice for 'Covid-19-Related Rent Concessions (Amendment to IFRS 16)' not even a week after the amendment was issued by the IASB.

EFRAG assesses that the amendment meets the technical endorsement criteria of the IAS Regulation and is conducive to the European public good. It therefore recommends its endorsement.

The European Commission's Accounting Regulatory Committee's (ARC) vote, the next step in the endorsement process, is expected to take place later in June, however, final endorsement is currently expected not before "Q3/Q4 2020".

Please click to access the final endorsement advice letter and a corresponding press release on the EFRAG website.

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