Overall, we believe that these standards provide sound principles and relevant guidance supporting the judgements required to represent faithfully an entity’s interests in subsidiaries and joint arrangements. Except for the certain issues noted in the response, we believe that no significant changes are required to the relevant standards. We have indicated in our responses to the various questions in the PIR areas that may benefit from clarifications and/or additional illustrative examples.

Please click to access the full comment letter.

In March 2021, the IASB issued the ED which contains proposed guidance for itself when developing and drafting disclosure requirements in IFRSs in future as well as proposed amendments to IFRS 13 Fair Value Measurement and IAS 19 Employee Benefits that result from applying the proposed guidance to those standards. The first webcast is scheduled for 19 May 2021 and will provide an overview of the Board’s proposals. For the con­ve­nience of par­tic­i­pants from different time zones, there will be two sessions of the webinar both dis­cussing the same topics:

• Wednesday 19 May 2021, 09:00–10:00 BST and
• Wednesday 19 May 2021, 15:00–16:00 BST.

Each session will last a maximum of 60 minutes and include a moderated ques­tion-and-an­swer session.

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

Mr Servais began his speech by explaining how financial markets and their regulators are a part of the solution to ensure the financial system is resilient in the face of climate-related risks and to support the transition to a sustainable economy. For the financial markets to play their role, the disclosure of comprehensive and comparable sustainability-related disclosure would be of paramount importance and since there are currently wide gaps in the disclosure requirements, the public authorities would need to step in.

He then discussed why and how IOSCO is involved:

1. IOSCO is involved because enterprise value reporting is part of its mandate to promote investor protection and IOSCO’s members can enforce sustainability reporting and help prevent greenwashing by market participants.
2. IOSCO is also involved because of its role in the oversight of the governance of the IFRS Foundation and will monitor the governance implications of the IFRS Trustees’ proposals on sustainability.
3. And IOSCO can play a critical role in adding momentum to the IFRS initiative and in fostering endorsement of the new standards around the world.

Mr Servais stressed that IOSCO encourages a “building blocks” approach to establishing a global sustainability reporting system and limiting undue fragmentation as much as possible. By working with standard-setters from key jurisdictions, the new IFRS sustainability board’s standards would provide a globally consistent and comparable sustainability-reporting baseline. The building blocks approach would then allow jurisdictions to go further and faster if they wish, while retaining cross-border comparability. He added:

In this respect, I believe there is consistency between the IFRS/IOSCO approach and the EU’s thinking on international cooperation. The EU cannot achieve the green transition alone. It needs other countries to share its ambition and work in the same direction. Greater international alignment on ESG-related disclosures will increase global transparency. It will also reduce the due-diligence costs for global investors and the administrative costs of companies operating globally.

Mr Servais then turned to the European Commission initiative and the proposal for a Corporate Sustainability Reporting Directive (CSRD). He welcomed that the Commission has clarified that-the EU standards should aim to incorporate the essential elements of globally accepted standards currently being developed and would build on and contribute to standardisation initiatives at global level. He noted that he expected the first IFRS standard in mid-2022 and welcomed that the draft Directive clarified that EU standards "should take account of any sustainability reporting standards developed under the auspices of International Financial Reporting Standards Foundation”.

Please click to access the full text of the speech.

As reported earlier, among the topics discussed at the meeting were non-financial reporting and the IASB agenda consultation. In addition, IASB Chair Hans Hoogervorst gave a farewell speech to IFASS participants.

The full list of topics discussed at the meeting was:

• EFRAG initiative on non-financial reporting
  • Overview of the current discussions at the EU level on sustainability reporting
• Disclosure initiative – Subsidiaries that are SMEs
  • Introduction of the forthcoming proposals
• Going concern
  • Presentations by Australia and New Zealand
• Issues surrounding separate financial statements
  • Presentations by Brazil, India, Italy, and Korea
• Future of Corporate Reporting
  • FRC discussion paper on the future of corporate reporting
• Post-implementation review of IFRS 10, IFRS 11 and IFRS 12
  • Presentation by India
• International financial reporting for non-profit organisations
  • Introduction to the IFR4NPO consultation paper issued in January 2021
• Agenda consultation
  • Introduction to the main areas of the forthcoming request for information
  • EFRAG presentation of its preliminary views on the IASB’s agenda consultation
• Business combinations under common control
  • Introduction, break-out sessions, and plenary session
• Message from IASB Chair

The next meeting is to be held on 29-30 September 2021; it will also be held by remote participation.

Please click for the full report from the meeting.

The IASB is looking for preparers that would conduct fieldwork using its instructions and questionnaires to test the application of the proposed new requirements in IFRS 13, IAS 19 or both. Participants would then summarise and report the results of the fieldwork.

Please click for more information on the IASB website.

The EC proposed a transposition of the CSRD into national law by member states by 1 December 2022, so that the amendments would be applicable for the first time for fiscal years beginning on or after 1 January 2023. In her keynote speech, Mairead McGuinness, European Commissioner for Financial Services, Financial Stability and Capital Markets Union, highlighted that the timing was ambitious. The draft CSRD proposed that for reporting under the new directive, European sustainability reporting standards that are still to be developed by the European Financial Reporting Advisory Group (EFRAG) would have to be applied.

Ms McGuinness stated "we don't have a lot of time", but also added "but we will make sure that we will have those standards". She explained that to allow setting up the new structure within EFRAG, but to also have the standards available in time, the EC would task EFRAG to do these two things in parallel: set up the new Board and corresponding technical structures and also begin with the development of the new EU non-financial reporting standards based on the work done by the project task force on preparatory work for the elaboration of possible EU non-financial reporting standards of the European Corporate Reporting Lab, which works under the roof of EFRAG, but is not subject to its governance structure. Those standards would later be approved by the new technical bodies within EFRAG.

A recording of the conference is available on the EC website. Ms McGuinness' keynote address and her answers to questions from the audience begin at about 14:15hrs.

As in the predecessor publication, IFAC continues to support a new standard-setting board under the IFRS Foundation that can lead to the coordination and harmonisation of reporting and provide a baseline of requirements addressing sustainability information that is material to enterprise value. With the new publication, IFAC hopes to foster discussion on how the building blocks approach can deliver a global system for consistent, comparable, and assurable sustainability-related information that best meets the needs of investors and other stakeholders.

Please click to access Enhancing Corporate Reporting: Sustainability Building Blocks and a corresponding press release on the IFAC website.

Background

The IFRS Interpretations Committee received a submission about IAS 12 Income Taxes and the recognition of deferred tax in relation to leases (when a lessee recognises an asset and a liability at the lease commencement) and decommissioning obligations (when an entity recognises a liability and includes the decommissioning costs in the cost of the item of of property, plant and equipment). The submitted fact pattern assumed that lease payments and decommissioning costs were deductible for tax purposes when paid and identified different approaches in practice.

The Committee discussed the submission and came to the conclusion that the matter was relevant and widespread, as there are various kinds of contracts and fact patterns affected. Moreover, the question as to whether tax deductions are attributable to a contract, a (single) asset/liability, or rather to cash flows, and as to which consequences this may have for determining temporary differences, is fundamental within IAS 12. Therefore, the Committee recommended that the IASB develop clarifying amendments to IAS 12.

The IASB discussed the issue and in July 2019 published an exposure draft of proposed clarifying amendments, which have now been finalised.

Changes

The main change in Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) is an exemption from the initial recognition exemption provided in IAS 12.15(b) and IAS 12.24. Accordingly, the initial recognition exemption does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. This is also explained in the newly inserted paragraph IAS 12.22A.

Effective date and transition

The amendments are effective for annual reporting periods beginning on or after 1 January 2023. Early adoption is permitted.

An entity applies the amendments to transactions that occur on or after the beginning of the earliest comparative period presented. It also, at the beginning of the earliest comparative period presented, recognises deferred tax for all temporary differences related to leases and decommissioning obligations and recognises the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at that date.

Additional information

Please click for:

• IASB press release (link to IASB website)
• Deloitte's IFRS in Focus newsletter
• Our IAS Plus Project page on IAS 12 — Deferred tax related to assets and liabilities arising from a single transaction

The US Securities and Exchange Commission (SEC) has (all links to the SEC website):

• released a statement on the review of climate-related disclosure and its intention to enhance its focus on climate-related disclosure in public company filings;
• announced the creation of a Climate and ESG Task Force that will develop initiatives to proactively identify ESG-related misconduct;
• issued a statement requesting input from investors, registrants, and other market participants on whether current disclosures related to climate change adequately inform investors (see also Deloitte's related Heads Up newsletter); and
• launched a new page on its website that brings together the latest SEC initiatives on environmental, social and governance issues, including climate change.

The Center for Audit Quality (CAQ) of the American Institute of Certified Public Accountants (AICPA) has (all links to the CAQ website):

• examined the most recent publicly available ESG data for S&P 100 companies and published a summary of its findings;
• published a report on key actions for establishing effective governance over ESG reporting; and
• published a roadmap on ESG reporting and attestation.

The US Financial Accounting Standards Board (FASB) has released a staff educational paper on the intersection of environmental, social, and governance matters with financial accounting standards (link to FASB website).

The International Federation of Accountants (IFAC) has (all links to IFAC website):

• published a summary of its 2021 Chief Executive Forum that offers links to the presentations of key speakers (one of them by Lee White, Executive Director of the IFRS Foundation, who discussed the IFRS Trustees’ sustainability initiative); and
• issued a joint statement with the International Integrated Reporting Council (IIRC) regarding a vision for accelerating integrated reporting assurance.

The IIRC and the Sustainability Accounting Standards Board (SASB) have published a joint article on how an integrated report can be strengthened by using SASB Standards (link to IIRC website).

The Global Reporting Initiative (GRI) and the SASB have published a joint publication A Practical Guide to Sustainability Reporting Using GRI and SASB Standards (link to GRI website).

The SASB has (all links to SASB website):

• published an updated Climate Risk Technical Bulletin, which shows how climate risks and opportunities manifest in unique ways across 77 industries; and
• announced the availability of Spanish translations of its standards.

The World Economic Forum (WEF) and the Value Balancing Alliance (VBA) have published a joint statement noting their intention to work together to achieve systematic change in the direction of global sustainability / ESG accounting and reporting standards (link to WEF website).

The World Business Council for Sustainable Development (WBCSD) has announced the publication of a report Corporate natural capital accounting - from building blocks to a path for standardization (link to WBCSD website).

The project task force on the reporting of non-financial risks and opportunities and the linkage to the business model of the European Financial Reporting Advisory Group (EFRAG) will host an outreach event on 25 May that aims to get stakeholder feedback on its draft report’s key findings (link to EFRAG website).

The Association of Chartered Certified Accountants (ACCA) has published a report containing the results of a study that looked at climate change reporting by mining, oil and gas companies (link to ACCA website).

Accounting for Sustainability (A4S) has published the A4S Essential Guide to Valuations and Climate Change (link to A4S website, publication also available in the French language).

The Securities and Exchange Board of India (SEBI) has announced to introduce new ESG reporting requirements beginning with the 2022-23 financial year (link to SEBI website).

The United Nation's Sustainable Stock Exchanges (SSE) announces that (all links to SSE website):

• the Panama Stock Exchange has issued ESG reporting guidelines for issuers; and
• the Budapest Stock Exchange has published an ESG reporting guide.

The podcast discusses:

• Feedback on con­sul­ta­tion in goodwill and impairment project
• Update on the dynamic risk management project
• Disclosures in the financial instruments with characteristics of equity project
• Proposals in the primary financial statements project

The podcast (12 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.