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We comment on the comprehensive review of the IFRS for SMEs

23 Oct 2020

We have published our comment letter on the IASB’s Request for Information ‘Comprehensive Review of the IFRS for SMEs Standard’, which was published by the IASB on 28 January 2020.

We support the proposed alignment of the IFRS for SMEs Standard with full IFRS Standards, which includes the alignment of principles and important definitions; however, we suggest the Board should assess which principles and definitions are relevant to the users of the IFRS for SMEs Standard. In addition, we agree with the Board’s proposal to use the principles of relevance, simplification and faithful representation to provide a framework that assists in determining whether and how the IFRS for SMEs and the suggestions by the Board in Part B of the RFI on the specific sections of the IFRS for SMEs Standard that should be aligned with full IFRS Standards except for the proposed alignment with IFRS 16 Leases. Lastly, we note that the IFRS for SMEs Standard does not provide guidance on how SMEs should account for assets held for sale and discontinued operations. We believe that the Board should consider alignment with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations with simplifications, where appropriate.

Click to view the comment letter.

Pre-meeting summaries for the October IASB meeting

23 Oct 2020

The IASB will meet via video conference on 27–29 October 2020 for its regular meeting. We have posted our pre-meeting summaries for the meetings that allow you to follow the IASB’s decision making more closely. For each topic to be discussed, we summarise the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

Board work plan update: This is the first periodical update of the work plan, replacing the research update. The staff have been reviewing the timing of consultation documents and recommend some changes to the timing of consultations (such as delaying the management commentary ED until May 2021) and extending some comment periods (such as for the DP on BCUCC). The work plan on the IFRS Foundation website will be updated after the meeting.

2020 Agenda Consultation: The IASB is preparing to issue a Request for Information (RFI) in the first quarter of 2021, as part of the public consultation on its work plan that it is required to undertake every five years. The staff has completed its work and recommend that the RFI describe 27 potential projects identified from outreach undertaken.

Maintenance and Consistent Application—Deferred Tax related to Assets and Liabilities arising from a Single Transaction: In July 2019, the Board published an ED proposing amendments to IAS 12. The staff recommend that the Board confirm the proposal to narrow the scope of the recognition exemption so that it would not apply to transactions that give rise to equal amounts of taxable and deductible temporary differences. The papers include recommendations about the capping proposal, the extent of application guidance and illustrative examples and transition.

Management Commentary: This is the last decision-making meeting for the ED. The staff are asking for permission to begin the formal drafting and balloting processes. The staff papers include the working draft of their guidance on the provision of information about matters that could affect an entity’s long-term prospects, intangible resources and relationships, and ESG matters, but this is to elicit feedback rather than seeking any formal decisions. The ED is expected to be published in May 2021, if the IASB approves the revised work plan.

Extractive activities: The staff will present findings on the diversity of accounting policies applied to exploration and evaluation expenditure within the scope of IFRS 6. The staff’s research indicates that diversity is primarily due to the extent to which an entity recognises exploration and evaluation expenditure incurred during the reporting period as an asset and the unit of account that an entity decides to apply to its exploration and evaluation expenditure asset. Most of the entities in the sample use ‘area of interest’ accounting.  The ‘full cost’ and ‘successful efforts’ methods are the most common accounting policies for oil and gas companies not applying ‘area of interest’ accounting. The Board is not being asked to make any decisions.

Equity Method: Work on reviewing aspects of IAS 28 began in May. The staff recommend that the objective of this review be to assess whether application problems with the equity method for associates and joint ventures can be addressed by identifying and explaining the principles of IAS 28. They recommend that the Board not consider whether the equity method is a one-line consolidation method or a measurement method, whether it should be replaced by one of the measurement bases in the Conceptual Framework or whether significant influence should be the basis for when to apply the equity method.

Disclosure Initiative, Subsidiaries that are SMEs: The IASB is developing a Standard setting out reduced disclosure requirements for subsidiaries that apply IFRS Standards but meet the definition of an SME. At this meeting the IASB will discuss whether the compliance statement required by IAS 1 should differentiate the entities that have applied the reduced disclosure requirements and whether the disclosure requirements of IAS 8 should be applied by these entities.

Oral Updates: The staff will give oral updates on Dynamic Risk Management and the IFRS Taxonomy.

More information

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


23 Oct 2020

The thirty-seventh session of the United Nations Conference on Trade and Development (UNCTAD) Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) will be held in a hybrid format (allowing participation in Geneva in person as well as remotely) on 2 - 6 November 2020.

The two main topics for the meeting will be:

  • Practical implementation, including measurement, of core indicators for entity reporting on the contribution towards the attainment of the Sustainable Development Goals: Review of case studies
  • Climate-related financial disclosures in mainstream entity reporting: good practices and key challenges

The background papers for these two topics are available in Arabic, Chinese, English, French, Spanish, and Russian and can be accessed here. The programme for the event can be accessed here. The keynote address on the second topic will be given by Erkki Liikanen, Chair of the IFRS Foundation Trustees.

The workshop before the ISAR meeting this year (30 October 2020) will focus on "Assurance on sustainability reports: current practices and challenges“. Please click for more information here.

IASB issues podcast on being an IASB Board member

22 Oct 2020

The IASB has issued a podcast which features a discussion between former Board member Darrel Scott and newly appointed member Bruce Mackenzie as they share their experiences as members of the IASB Board.

Mr Scott provides his perspective from ten years in the position, while Mr Mackenzie discusses his expectations in his first term.

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

Agenda for the November 2020 IFRS Advisory Council meeting

22 Oct 2020

An agenda has been released for the upcoming meeting of the IFRS Advisory Council which will be held by remote participation on 3–4 November 2020.

A summary of the agenda is set out below:

Tuesday 3 November 2020 (12:00-15:45)

  • Updates on Trustees and Board’s Ac­tiv­i­ties
  • Feedback from previous Adisory Council meetings
  • Sustainability

Wednesday 4 November 2020 (12:00-14:45)

  • Sustainability
  • Chair’s summary

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

IPSASB exposure draft on borrowing costs

22 Oct 2020

The International Public Sector Accounting Standards Board (IPSASB) has released an exposure draft of non-authoritative guidance on borrowing costs.

Exposure Draft 74 IPSAS 5 'Borrowing Costs' – Non-Authoritative Guidance proposes the addition of non-authoritative guidance to IPSAS 5 Borrowing Costs that consists of implementation guidance and illustrative examples to clarify how the existing principles for when borrowing costs can be capitalised should be applied in various regularly encountered public sector contexts. The exposure draft does not propose amendments to the authoritative guidance in IPSAS 5.

Comments are requested by 1 March 2021.

Please click to access the following additional information on the IPSASB website:

Seventh IASB research forum — papers available

22 Oct 2020

The International Accounting Standards Board (IASB) will host its seventh Research Forum on 2–3 November 2020 as a virtual conference. The papers to be presented and discussed are now available on the IASB website.

The forum will see the presentation of four academic papers, followed by a responses of an academic and of an IASB/NNS representative, and two panel discussions around research opportunities related to IFRS 9 and to IFRS 15. The audience will be invited to participate in the discussions. The papers are the following (all links to the IASB website):

IASB and EAA virtual academic research seminar on goodwill

20 Oct 2020

On 30 October 2020, the International Accounting Standards Board (IASB) and European Accounting Association (EAA) will hold a virtual research seminar for academics related to the IASB’s Discussion Paper 'Business Combinations — Disclosures, Goodwill and Impairment' and relevant academic literature.

The purpose of the session is to obtain feedback from academics on the proposals in the March 2020 DP and to discuss relevant academic evidence.

Please click for more information on the IASB website.

October 2020 IASB meeting agenda posted

16 Oct 2020

The IASB has posted the agenda for its next meeting, which will be held via video conference on 27–29 October 2020. There are nine topics on the agenda.

The Board will discuss the following:

  • Board work plan update
  • Agenda consultation
  • Equity method of accounting
  • Taxonomy
  • Main­te­nance and con­sis­tent ap­pli­ca­tion
  • Dynamic risk management
  • Ex­trac­tive ac­tiv­i­ties
  • Disclosure initiative — subsidiaries that are SMEs
  • Management commentary

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.

EFRAG updates Board composition

15 Oct 2020

The EFRAG General Assembly has announced that Ricardo Sanchez and Sven Morich have been appointed to the Board. They have filled the vacancies that occurred when Karin Dohm and Andreas Barckow have stepped down. In addition, Hans Buysse has been appointed as EFRAG Board Vice-President.

Further, the EFRAG General Assembly extended the mandate of all EFRAG Board members that was to expire on 31 October 2020 (date incorrect in press release) by six months to 30 April 2021, to allow the EFRAG Board in its current composition to finalise the endorsement advice on IFRS 17 Insurance Contracts.

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

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