March

Recording of an investor webinar on the discussion paper on business combinations under common control

22 Mar 2021

In March 2021, the IASB offered a webinar providing an overview of the November 2020 discussion paper DP/2020/2 'Business Combinations under Common Control'. The webinar explained the Board’s preliminary views and focused especially on topics of relevance investors and analysts.

A recording of the webinar (30 minutes) is now available. It can be accessed here on the IASB website.

IFRS Foundation announces sustainability working group

22 Mar 2021

In order to accelerate convergence in global sustainability reporting standards and to undertake technical preparation for a potential international sustainability reporting standards board under the governance of the IFRS Foundation, the Trustees of the IFRS Foundation have set up a working group.

The working group is intended to provide structured engagement with initiatives focused on enterprise value reporting with a view to facilitating consolidation and reducing fragmentation in sustainability reporting standards. The working group will be chaired by the IFRS Foundation and include participation by the IASB, given the need for connectivity with financial reporting. IOSCO will participate in the group as an observer.

Members of the working group are

  • The Financial Stability Board’s Task Force on Climate related Financial Disclosures (TCFD);
  • the Value Reporting Foundation representing the intended merger of the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB);
  • the Climate Disclosure Standards Board (CDSB); and
  • the World Economic Forum (WEF).

Throughout the process, the working group will also engage closely with the Global Reporting Initiative (GRI) and CDP.

The first meeting of the working group is expected to take place in April 2021.

Please click for more information in the press release on the IASB website.

IFRS Interpretations Committee holds March 2021 meeting

19 Mar 2021

The IFRS Interpretations Committee met via video conference on 16 March 2021. We have posted Deloitte observer notes for the technical issues discussed during this meeting.

The Committee discussed one comment letter analysis on a tentative agenda decision and two new issues.

Comment letter analysis

IAS 38 Intangible Assets—Configuration or Customisation Costs in a Cloud Computing Arrangement: In December 2020, the Committee discussed the accounting for a customer's costs of configuring or customising the supplier's application in a ‘Software as a Service’ (SaaS) arrangement. The staff concluded that no intangible asset is recognised in the fact pattern described and the customer should refer to requirements in IFRS 15 for the identification of services and timing of recognition. The Committee members generally agreed with the analysis but they raised some comments on the analysis of services rendered by a third-party supplier. The Committee decided to finalise the agenda decision with some edits to address the concerns raised.  

New issues

IFRS 16 Leases—Non-refundable VAT on Lease Payments: The Committee members generally agreed that non-refundable value-added tax (VAT) is not part of lease payments and there was little diversity in practice with regard to the accounting treatment. However, they recommended that the staff should wait for feedback from comment letters before reaching the conclusion that such matter is not material or widespread. The Committee decided not to add the matter to the Committee’s standard-setting agenda and publish a tentative agenda decision.

IAS 32 Financial Instruments: Presentation—Accounting for Warrants that are Initially Classified as Liabilities: All Committee members agreed that the matter described, in isolation, is too narrow for the Committee to address in an efficient manner. The Committee decided not adding a standard-setting project for the matter submitted and instead publish a tentative agenda decision to explain this. Also, the Committee members supported that the reclassification of financial instruments is a broader issue and that there is diversity in practice which should be addressed as part of the FICE project.

More In­for­ma­tion

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

Pre-meeting summaries for the March 2021 IASB meeting

18 Mar 2021

The IASB is meeting on Tuesday 23 and Wednesday 24 March 2021, by video conference. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. We summarised 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 a regular update for the Board. The staff are recommending that the comment period be increased by 30 days for the ED Regulatory Assets and Regulatory Liabilities, because of ongoing challenges from the pandemic and the volume of consultation documents out for comment. They also recommend longer consultation periods for two documents due to be released shortly—ED Targeted Standards-level Review of Disclosures from 180 days to 270 days and the Request for Information on the Third Agenda Consultation from 120 days to 180 days.

Management Commentary: The Board will decide on the comment letter period for the forthcoming ED to revise Practice Statement 1 Management Commentary. The staff state that having a comment period longer than the normal 120 days could delay urgently needed revisions to the Practice Statement and ask the Board to set the comment period.

Equity method: The purpose of this paper is to update the Board on the equity method research project. The staff have compiled from various sources 71 application questions for consideration. Using the project scope decided by the Board in October 2020, the staff plan to consider only those issues that can be resolved without fundamentally rewriting IAS 28 or amending other Standards. Any issues not meeting these criteria will not be considered in this project. The staff will also remove issues that are not important or do not affect the consistent application of IAS 28.

Goodwill and impairment: In March 2020, the Board published Discussion Paper DP/2020/1 Business Combinations—Disclosures, Goodwill and Impairment. During the comment period, Board members and the staff attended 94 meetings with outside parties, received feedback from its consultative bodies, recorded two webinars, conducted fieldwork and received 193 comment letters. At this meeting the Board will discuss a high-level summary of the feedback received on the DP. The Board will not be asked to make any decisions.

Maintenance and consistent application: The staff will present the latest IFRIC Update. The Board will not be asked to make any decisions.

Primary Financial Statements: The Board will discuss detailed feedback on three topics: Subtotals in the statement of profit or loss—operating profit; scope of management performance measures (MPMs); and statement of cash flows. The staff recommend that the Board proceed with the proposal to require all entities to present an operating profit subtotal. The operating category would include volatile and unusual income and expenses arising from an entity’s operations. The staff recommend that the Board proceed with the proposal to include information about measures meeting the definition of MPMs in the financial statements and explore possible approaches to expand the scope of MPMs to include measures other than subtotals of income and expenses. The staff also recommend that the Board proceed with the limited proposals in the ED in relation to cash flows and make no additions to the scope of the work. 

IFRS for SMEs: The staff recommend that the Board move the project from its research programme to its standard-setting work plan, treating alignment with IFRS Standards as the starting point, applying the principles of relevance to SMEs, simplicity and faithful representation in determining whether and how that alignment should take place. The next step should be an ED.

Our pre-meet­ing summaries is available on our March meeting notes page and will be sup­ple­mented with our popular meeting notes after the meeting.

Report of the February 2021 SME Implementation Group meeting

18 Mar 2021

The IASB has issued a report on the SME Implementation Group (SMEIG) meeting held on 4–5 February 2021 via video conference.

The SMEIG discussed feedback on the Request for Information Second Comprehensive Review of the IFRS for SMEs Standard related to the following topics:

  • Alignment approach and principles.
  • When to consider alignment.
  • Alignment with the 2018 Conceptual Framework for Financial Reporting.
  • Alignment with IFRS 13 Fair Value Measurement.
  • Alignment with IFRS 3 Business Combinations.
  • Alignment with IFRS 10 Consolidated Financial Statements.
  • Alignment with IFRS 11 Joint Arrangements.
  • Alignment with IFRS 9 Financial Instruments.
  • Alignment with IFRS 16 Leases.
  • Alignment with IFRS 15 Revenue from Contracts with Customers.

View the report is available on the IASB website.

Adoption of principles-based accounting in Korea

17 Mar 2021

In 2011, Korea moved from rules-based accounting to IFRSs and their principles-based approach and faced unexpected challenges. The Korea Accounting Standards Board (KASB) has now published an English language summary of the 2020 publication 'Principles-based Accounting: We must strike flint to start fire'.

The summary offers an overview of the gist addressed in the book, including how principles-based accounting is understood in Korea, Korea’s experience toward IFRS implementation and the issues raised, as well as the efforts taken to overcome various challenges with a few more alternatives suggested by the research team set up to identify what caused the problems and to suggest solutions.

Please click to access the summary on the KASB website (114 pages).

IFRS Foundation Trustees reappoint two IFRS Interpretations Committee members

16 Mar 2021

The Trustees of the IFRS Foundation have announced the reappointments of Guy Jones and Goro Kumagai as IFRS Interpretations Committee members. The reappointments take effect from 1 July 2021 and are for a three-year period.

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

Report on the February 2021 IFRS Advisory Council meeting

16 Mar 2021

A summary report has been released of the meeting of the IFRS Advisory Council held by remote participation on 23 February 2021.

The participants discussed:

  • Updates on Trustees and Board’s Activities — The Advisory Council received an update on recent Trustee activities that focused on the consultation paper on sustainability reporting , reorganisation of the work of the Trustees, and work on developing post-covid-19 working practices. There was also an update on recent Board activities that focused on consultations that had been published since the Council’s last (November 2020) meeting, the post-implementation reviews of IFRS 9 and IFRS 10-12, and recently published educational material.
  • Response to the Trustees’ consultation on sustainability reporting — Council members discussed:
    • delineation between the work of the Board, in particular on management commentary, and the work of the potential SSB,
    • the ongoing engagement and collaboration by the IFRS Foundation with other bodies to ensure existing initiatives are built upon and work by the Foundation does not slow progress or duplicate steps already taken,
    • the strong credibility that the IFRS brand can give to sustainability reporting,
    • the importance of continuing engagement with market participants,
    • the desire for knowing the timing of the release of sustainability standards, and
    • steps that need to be taken to ensure appropriate funding and technical expertise are in place to support the establishment of a SSB, and
    • the need to revise the IFRS Foundation Constitution.
  • Post-COVID-19 working practices — Feedback amongst Advisory Council members included:
    • the need for a sound structure that overarches diverse personal employee preferences,
    • global competition for talent,
    • a gradual approach towards remote working options,
    • the importance of equity for employees,
    • challenges of a hybrid working model,
    • the idea of having core days when most employees are at the office and flexible days when people can work at home,
    • awareness that an office working environment can help maintain an international culture, and
    • challenges with future employee turnover.

The full meeting summary is available on the IASB's website. There are also recordings of the individual sessions.

IOSCO sees coherence between IFRS Foundation and EU approach on non-financial reporting

16 Mar 2021

In a keynote address given at the 7th EU-Asia Financial Services Dialogue, Jean-Paul Servais, Vice-Chair of the International Organization of Securities Commissions (IOSCO), discussed important recent developments in sustainable finance seen through an international lens.

Mr Servais discussed IOSCO’s coordination role at international level before turning to the initiatives taken by the IFRS Foundation. He focused on corporate level disclosures, staing that there was a growing momentum building, as attested to by various press statements and reports in recent weeks issued by IOSCO, the IFRS Foundation, the FSB and the European body EFRAG.

Mr Servais noted that although in recent years, environment-related disclosure has improved, investor demand for sustainability-related information is still not being properly met. Therefore, IOSCO supports mandatory disclosure beyond the voluntary frameworks that are still the norm in many jurisdictions. Most recently, the IOSCO Board issued a press release referring to the urgent need to improve the consistency, comparability and reliability of sustainability reporting. The IOSCO Board identified as priorities encouraging globally consistent standards and promoting comparable metrics and narratives.

The press release also noted that IOSCO has a key role to play in working with the IFRS Foundation Trustees toward the establishment of a Sustainability Standards Board (SSB), to sit alongside the International Accounting Standards Board (IASB) under the existing IFRS Foundation governance structure, as IOSCO will have an essential role to play in evaluating the standards issued by the SSB for cross-border purposes governing issuers ́ sustainability-related reporting requirements, and in encouraging members and relevant authorities to consider these standards when setting sustainability-related disclosure requirements at national and regional levels.

Last week, the IFRS Foundation published a press release confirming that it remains on track to make a final determination about a new board in advance of the November 2021 United Nations COP26 conference. Building on a successful public consultation and following the direction set by IOSCO in its press release in February, the Trustees outlined key features of the new SSB and its work, including the intention to build on existing standards and frameworks. Mr Servais noted that IOSCO is on the same page and encourages the SSB to leverage the content of existing sustainability-related reporting frameworks, because this can give the IFRS Foundation a running start in developing a common set of international standards. IOSCO also supports the envisioned building blocks approach with the SSB's standards providing a globally consistent and comparable sustainability-reporting baseline, while also providing flexibility for coordination on reporting requirements that capture wider sustainability impacts. IOSCO is also exploring with the IFRS Foundation and other multilateral bodies the possibility of establishing a consultative committee under the IFRS Foundation that can advise the SSB on those sustainability topics that are material from an enterprise value creation perspective and advise on consistency in requirements on the broader sustainability topics.

Mr Servais concluded his discussion of the IFRS Foundation roadmap by referring to the final reports on possible EU non-financial reporting standards released last week. He noted:

I believe there is coherence between the IFRS/IOSCO approach and the EU’s thinking on international cooperation. In its recent report of 8 March to the Commission, the European Reporting Lab at EFRAG proposed that the EU promote and participate in global convergence efforts on a ‘co-construction’ basis. The ultimate goal, as expressed, is to foster coherence and consistency between EU and global sustainability reporting. It can be noted that the EU intends to pay particular attention to the decisions to be made by recognised global standard-setters in order to promote convergence. 

Mr Servais also added the comment that it would be good if in principle all regional initiatives were available to participate in global convergence efforts, so as to make convergence happen as quickly as possible.

Please click to access the full transcript of Mr Servais' keynote address on the IOSCO website.

March 2021 IASB meeting agenda posted

12 Mar 2021

The IASB has posted the agenda for its next meeting, which will be held via video conference on 23–24 March 2021. There are seven topics on the agenda.

The Board will discuss the following:

  • Board work plan update
  • Management commentary
  • Main­te­nance and con­sis­tent ap­pli­ca­tion
  • Equity method
  • Goodwill and impairment
  • Second comprehensive review of the IFRS of SMEs Standard
  • Primary financial statements

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.

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