Overall, our most popular pages remain our accounting standards summaries, and we continued to witness strong demand for our news, publications, resource pages, and project summaries. Our COVID-19 resource page witnessed of course great demand this year.

We wish you a happy, safe and healthy New Year. We look forward to bringing you the latest financial reporting news in 2021.

The Ministry of Finance of the People's Republic of China has issued CAS 25 (revised) to be part of the IFRS-converged accounting standards for Chinese entities (Chinese Accounting Standards or CAS). The text of the new regulation is converged with IFRS 17 as issued by the IASB except for the mandatory effective date that is staggered over two stages: 1 January 2023 for all Chinese listed insurers and 2026 for all other Chinese insurers. The Chinese text of CAS 25 (revised) is available here.

The Saudi Organization for Certified Public Accountants (SOCPA) has adopted Amendments to IFRS 17 that the IASB issued in June 2020 to address concerns and implementation challenges that were identified after IFRS 17 Insurance Contracts was published in 2017. The SOCPA adoption also includes Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4). Announcements in Arabic regarding the adoption of the IFRS 17 amendments and the IFRS 4 amendments are available on the SOCPA website.

On 24 December 2020, the Institute of Chartered Accountants of India (ICAI) issued for comment an exposure draft of amendments to Ind AS 117 Insurance Contracts that is intended to keep the IFRS-converged accounting standards for Indian entities (Indian Accounting Standards or Ind AS) aligned with IFRSs as issued by the IASB. Comments can be submitted by 24 January 2021. Following receipt of any comments, the ICAI will issue the amended Ind AS 117 for the Ministry of Corporate Affairs to consider its inclusion in the legally mandated Ind AS. The press release on the ICAI website offers access to the exposure draft.

We look forward to seeing you again after the holidays and to continue to be your preferred accounting website in 2021.

IOSCO sees an urgent need to improve the completeness, consistency and comparability of sustainability reporting and notes:

Together, the IFRS Foundation’s consultation and a parallel collaborative initiative of an alliance of sustainability reporting organizations can further efforts to facilitate comparable high-quality international standards that provide the content that capital markets need, within a transparent standard-setting architecture with a robust and inclusive governance structure.

IOSCO also believes that robust sustainability reporting standards, interconnected with financial reporting standards, would also support audit and assurance – enhancing the market’s trust in sustainability disclosures, and laying the foundations for mandatory corporate reporting on sustainability internationally.

Please click to access the full comment letter on the IOSCO website.

The FSB supports the recommended approach by the Trustees of the IFRS Foundation to initially focus on standards for climate-related financial disclosures, as an important initiative to promote globally consistent disclosures and avoiding fragmentation. The FSB strongly encourages the IFRS Foundation to build on the work of the TCFD, by using the TCFD’s recommendations as the basis for standards for climate-related financial disclosures.

The FSB notes that the TCFD recommendations set out a comprehensive framework that has been developed by, and is directly responsive to the needs of, users and preparers of financial filings across a range of financial and non-financial sectors around the world. They have attracted widespread support from users and preparers.

In its comment letter, the FSB also strongly encourages other national or regional authorities that are developing requirements or guidance for climate-related disclosures to consider using the TCFD recommendations as the basis. Such consistency in approach would help to avoid the risk of market fragmentation, both across jurisdictions, and between requirements and guidance being developed today and international standards that may be introduced in the future.

Please click to access the full comment letter on the FSB website.

The proposed amendment aims at clarifying how a seller-lessee should apply the subsequent measurement requirements in IFRS 16 Leases to the lease liability that arises in a sale and leaseback transaction.

EFRAG supports the proposals in the exposure draft as they provide practical guidance on an area not currently addressed by IFRS 16 while relying on existing measurement principles. However, EFRAG encourages the IASB to reconsider the matter more broadly as part of the future post-implementation review of IFRS 16.

Comments on EFRAG's draft comment letter were originally requested by 21 February 2021; however, to allow more time for stakeholders to provide their view, the comment deadline has been extended to 23 March 2021. For more information, see the press release and the draft comment letter on the EFRAG's website.

We support the Board’s initiative to review these two documents to ensure that they describe clearly the concepts on which SASB Standards are based and the procedures that the organisation follows when developing, issuing and maintaining a SASB Standard. We believe it is important that SASB take this opportunity to ensure maximum alignment of both the SASB Conceptual Framework and the Rules of Procedure with global best practice (in particular the corresponding documents of the IFRS Foundation), in order to facilitate moves towards global sustainability standard setting. We therefore recommend that SASB now moves to adopt the approach set out in the recent joint paper.

Download the full comment letter here.

The podcast discusses:

• Primary financial statements;
• Comprehensive review of the IFRS for SMEs;
• Maintenance and consistent application;
• Subsidiaries that are SMEs;
• Financial instruments with characteristics of equity; and
• Post-implementation review of IFRS 9

The podcast (15 minutes) can be accessed through the press release on the IASB website.

The detailed notes taken by Deloitte observers at the meeting are available here.

The group has published a paper that illustrates how their current frameworks, standards and platforms, along with the elements set out by the Task Force on Climate-related Financial Disclosures (TCFD), can be used together to provide a running start for development of global standards that enable disclosure of how sustainability matters create or erode enterprise value.

In their joint statement of intent published in September 2020, the group stressed their willingness and readiness to work with the Trustees of the IFRS Foundation in this area. The paper demonstrates that standard-setting for sustainability-related financial disclosure is a natural extension of the IFRS Foundation’s current role, and provides insight into how such an ambition can be achieved by building on content that already exists.

In the paper, the group of five explain that enterprise value reporting “is not therefore a replacement for sustainability reporting, which serves a broad range of stakeholders, can offer input to public policy design and reveals issues that may emerge as material for economic decision-making over time.” They believe, however, that consistent communication of how sustainability matters affect drivers of enterprise value can be a “complementary enabler of change, since it creates a financial incentive for companies and their investors to improve performance on some sustainability matters as much and as quickly as they can”.

Following the paper’s launch, the group is co-hosting a webinar on 12 January 2020, where the CEOs of each organisation will come together to further outline the concepts and motivations behind the paper. 

A joint press release announcing the paper is available on the CDP website.

Maintenance and Consistent Application — IFRIC Update: At its December meeting the IFRS Interpretations Committee finalised an agenda decision in relation to supplier financing. At this meeting, the Board cleared that decision. If four or more Board members had objected, the decision would not have been published. This is the first agenda decision to be subjected to the revised due process. The final agenda decision was published immediately after the meeting, on 14 December, and can be accessed at https://www.ifrs.org/news-and-events/updates/ifric-updates/december-2020/#5.

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 Board decided to seek views on whether the consultation document should include proposed reduced disclosure requirements for IFRS 17; and that IFRS 1 not be amended and that transition provisions are not required. The Board also decided that if an entity stops applying the reduced disclosure Standard that the comparatives should apply full IFRS; that the reduced disclosures can be applied for the ‘first time’ more than once; and that the Standard is optional and an entity can reverse its decision to apply it.

SME Standard review and update: The IASB published Request for Information (RFI) ‘Comprehensive Review of the IFRS for SMEs Standard' in January. The IASB received 66 comment letters, mainly from accountancy bodies and standard-setting bodies. Overall, respondents expressed support for the IFRS for SMEs Standard to be based on full IFRS Standards. The paper also contains feedback on the specific questions asked in the RFI. The Board decided that the SME Implementation Group (SMEIG) be asked to develop a set of recommendations for the Board in its review of the IFRS for SMEs Standard. The next meeting of the SMEIG is planned for February 2021.

Disclosure Initiative — Accounting Policies: The Board is amending IAS 1 and its Practice Statement on applying materiality. The Board decided not to add any transition requirements and that the Practice Statement not include anything that would allow a reader to identify which version of the Practice Statement they were reading. They also decided to change the wording in IAS 1:117B.

Primary Financial Statements: In December 2019, the IASB published Exposure Draft ED/2019/7 General Presentation and Disclosures. The staff have summarised feedback from the 215 comment letters it received, outreach activities, fieldwork and a review of academic literature. There are 11 papers, each summarising an aspect of the feedback. To give a flavour of the feedback, there was support for many aspects of the proposals, such as defined subtotals and categories in the statement of profit or loss and introducing a definition for unusual items. But many respondents thought additional guidance was required and most did not agree with the proposed definition of unusual items. There was broad support for the proposed roles for the primary financial statements and the notes. However, there was almost no support for separating integral and non-integral associates and joint ventures and the proposals related to management performance measures received mixed, and strongly expressed, views. The staff did not ask the Board to make any decisions but asked for feedback and for the Board to identify areas they thought would require further research. The Board discussion lasted over four hours, although they did not get to all of the papers. The Board was particularly interested in making sure adequate consideration was given to how the various parts of the project link together. The staff will bring the papers not discussed back to the next meeting and start to set out their plans for the project.

Post-implementation review of IFRS 9 — Classification and Measurement: In October 2020, the Board decided to begin the post-implementation review (PIR) of the IFRS 9 classification and measurement requirements. The staff plan to identify and assess the matters to be examined, which will then form the basis for a public Request for Information (RFI). The staff expect the PIR will take around 18-24 months to complete, with the RFI being issued in the third quarter of 2021. The Board provided feedback to the staff.

Financial Instruments with Characteristics of Equity: The Board decided to move the FICE project from the research programme to the standard-setting programme.

Pensions Benefits that depend on Asset Returns: In January the Board decided to develop examples to illustrate how a proposed capped approach would compare to the outcome of the existing requirements in IAS 19 for defined benefit plans with benefits that vary with asset returns. The Board provided feedback on an illustrative example.

Please click to access the detailed notes taken by Deloitte observers for the entire meeting. For an analysis of how the IASB work plan has changed after this meeting, please see here.