June

IFRS Interpretations Committee holds June 2021 meeting

15 Jun 2021

The IFRS Interpretations Committee (Committee) met on Tuesday 8 & Wednesday 9 June 2021. We have posted Deloitte observer notes for the technical issues discussed during this meeting.

The Committee discussed two initial considerations and the comment letter analyses for two tentative agenda decisions:

IAS 2 Inventories—Costs Necessary to Sell Inventories: In February 2021, the Committee discussed a submission about whether an entity includes all costs necessary to make the sale or only those that are incremental to the sale as the “estimated costs necessary to make a sale” when determining the net realisable value of inventories. In the meeting, most of the Committee members agreed with the analysis and conclusion that IAS 2 does not allow an entity to limit such costs to only those that are incremental. However, Committee members raised concerns that such a conclusion may contradict with predominate practice. The responses from the comment letters are similar and some respondents requested additional clarifications. The Committee decided to finalise the agenda decision.

IAS 10 Events after the Reporting Period—Preparation of Financial Statements when an Entity is No Longer a Going Concern: In February 2021, the Committee discussed a submission asking firstly whether an entity can prepare financial statements for prior periods on a going concern basis if it was a going concern in those periods and had not previously prepared financial statements for those periods; and secondly if it had previously prepared financial statements for the preceding period on a going concern basis, whether it is required to restate comparative information in respect of the preceding period to reflect the basis of accounting used in preparing the current period's financial statements. In the meeting, the Committee members agreed that the answer is “yes” to the first question and “no” to the second question. Most of the respondents to the tentative agenda decision agreed with the staff analysis. There were some respondents who disagreed with some aspects of the analysis and/or requested clarifications. The Committee decided to finalise the agenda decisions with some changes to drafting.

IFRS 9 Financial Instruments—European Central Bank’s Third Targeted Longer-Term Refinancing Operations Programme: The Committee received a submission asking how banks account for the European Central Bank (ECB)’s Targeted Longer-Term Refinancing Operations (TLTRO). Specifically, the submission asked whether the TLTRO III tranches are loans at a below-market interest rate which should be accounted for as a government grant. Moreover, it asked how banks calculate the applicable effective interest rate, account for changes in estimated cash flows due to the revised assessment of meeting the conditions attached to the liability and account for changes in cash flows related to the prior period that result from the bank’s lending behaviour or from changes in the TLTRO III conditions determined by the ECB.

The staff analysed the general criteria of a government grant in IAS 20 and explained that the Committee is not in a position to provide a view as to whether the TLTRO III contains a government grant because the assessment involves non-accounting questions. For the matters related to calculating the effective interest rate and estimation of future cash flows, the staff considered that they are too narrow for the Committee to consider in isolation and should be addressed as part of the Board's post-implementation review of the classification and measurement requirements of IFRS 9 ("PIR").

The Committee decided not to add the matter to the standard-setting agenda and make edits to the tentative agenda decision that were suggested during the meeting.

IFRS 16 Leases—Power Purchase Agreements in a Gross Pool Electricity Market: The Committee received a request about an electricity retailer’s (customer) accounting for a power purchase agreement (“PPA”) in a gross pool electricity market. The request asked whether, applying IFRS 16:B9(a), the customer has the right to obtain substantially all the economic benefits from the use of the windfarm throughout the 20-year term of the PPA. The staff analysed that the PPA provides the customer with neither the right to obtain electricity from the windfarm nor the obligation to purchase any particular amount of electricity either from the windfarm of the grid, and accordingly, the customer has no right to obtain substantially all the economic benefits from the use of the windfarm.

The Committee decided not to add the matter to the standard-setting agenda and make #edits to the tentative agenda decision that were suggested during the meeting.

Work in progress: There was no new matter under analysis at the time of the meeting.

More In­for­ma­tion

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

EFRAG, EFFAS, ABAF/BVFA, and IASB to host joint webinar on rate-regulated entities

14 Jun 2021

The European Financial Reporting Advisory Group (EFRAG), the European Federation of Financial Analysts Societies (EFFAS), the Association Belge des Analystes Financiers (ABAF/BVFA), and the International Accounting Standards Board (IASB) will host a joint webinar on 12 July 2021 on the proposals in the IASB’s Exposure Draft (ED) ‘Regulatory Assets and Regulatory Liabilities’.

On 28 January 2021, the IASB published the ED which would replace IFRS 14 Regulatory Deferral Accounts and would apply when the entity is party to a regulatory agreement that determines the regulated rate the entity can charge for the goods or services it supplies to customers.

The webinar will provide information on the proposals and an opportunity for users to provide feedback.

For more in­for­ma­tion, see the press release on the EFRAG’s website. A detailed programme is available here.

June 2021 IASB meeting agenda posted

11 Jun 2021

The IASB has posted the agenda for its next meeting, which will be held via video conference on 22–23 June 2021.

During the meeting, the IASB will discuss the following:

  • Work plan update
  • Insurance contracts
  • Equity method
  • Maintenance and consistent application
  • Primary financial statements
  • Goodwill and impairment
  • Farewell

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 conducting surveys on regulatory assets and regulatory liabilities exposure draft

11 Jun 2021

The European Financial Reporting Advisory Group (EFRAG) is conducting two surveys aimed at (1) preparers and (2) users that analyse the financial statements of rate-regulated entities to participate in an effect analysis of the IASB exposure draft, ‘Regulatory Assets and Regulatory Liabilities’.

On 28 January 2021, the IASB published the ED which would replace IFRS 14 Regulatory Deferral Accounts and would apply when the entity is party to a regulatory agreement that determines the regulated rate the entity can charge for the goods or services it supplies to customers.

The feedback from the surveys will be used to assist the EFRAG in the cost-benefit assessment of the IASB proposals in its final comment letter. The survey is open until 30 July 2021. For more in­for­ma­tion, view the preparers survey and users survey press releases on the EFRAG’s website.

EFRAG-IASB webinar on proposed amendments to the disclosure requirements in IFRS Standards

11 Jun 2021

On 30 June 2021, EFRAG, along with the IASB, will host a webinar on the IASB exposure draft (ED) ‘Disclosure Requirements in IFRS Standards — A Pilot Approach’.

On 25 March 2021, the IASB issued the ED that 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 webinar will feature discussions and views of European stakeholders on the ED and other related practical issues. For more information, see the press release on the EFRAG’s website. A detailed programme of the event is available here.

Update: A recording of the event can be accessed here and a summary report is available here.

Agenda for the June 2021 DPOC meeting

10 Jun 2021

The Due Process Oversight Committee (DPOC) will hold its 16 June 2021 by conference call.

The agenda for the DPOC meeting is sum­marised below.

Wednesday, 16 June 2021 (12:30–13:15)

  • In­tro­duc­tion and actions from the DPOC meeting held on 2 March 2021
  • Mon­i­tor­ing com­pli­ance with due process:
    • Technical ac­tiv­i­ties
    • Initial application of IFRS 17 and IFRS 9
    • Consultative Groups — Update
  • DPOC matters
    • Cor­re­spon­dence: update since the agenda was cir­cu­lated
  • Summary

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

IIRC and SASB officially merge

10 Jun 2021

The International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) have officially announced their merger to form the Value Reporting Foundation (VRF).

The VRF supports business and investor decision-making with three key resources:

  • Integrated Thinking Principles,
  • Integrated Reporting Framework, and
  • SASB Standards.

These tools are intended to enable organisations to move from buy-in to action. By more closely aligning the Integrated Reporting Framework and the SASB Standards, the VRF will make it easier for businesses to communicate their long-term strategy and provide a more comprehensive view of business performance to investors and other providers of capital.

The VRF is also committed to the delivery of a more coherent corporate reporting system by working closely with the IFRS Foundation and other leading framework providers and standard-setters around the world.

Please visit the new VRF website for more information and a list of statements from business leaders. 

Second webinar in series on disclosure requirements in IFRS Standards

09 Jun 2021

In May 2021, the IFRS Foundation initiated a series of webinars on the IASB exposure draft ‘Disclosure Requirements in IFRS Standards — A Pilot Approach’. The second webinar in the series will be held on 17 June 2021.

The second webinar will explore in more detail the proposed new approach to developing disclosure requirements in IFRS Standards and will include a discussion of the Board’s views on comparability, enforceability and electronic reporting.

For the convenience of participants from different time zones, there will be two sessions of the webinar both discussing the same topics:

  • Thursday 17 June 2021, 09:00–10:00 BST and
  • Thursday 17 June 2021, 15:00–16:00 BST.

Each session will include a moderated question-and-answer session.

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

Japan updates list of 'designated' IFRSs

08 Jun 2021

The Financial Services Agency (FSA) of Japan has announced that additional IFRSs issued up until 31 March 2021 were designated for use by companies voluntarily applying IFRSs in Japan.

TCFD consults on updates to its 2017 recommendations

08 Jun 2021

The Task Force on Climate-related Financial Disclosures (TCFD) set up by the Financial Stability Board (FSB) to develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to lenders, insurers, investors and other stakeholders is consulting on updates to its final recommendations on climate-related financial disclosures as disclosure practices and the use of disclosures by financial and non-financial organisations have continued to progress since 2017.

The introduction to the consultation notes that when the Task Force issued its final recommendations, "it was aware of the limitations of reporting certain metrics as well as the nascency of climate-related reporting at the time, and anticipated that metric disclosure would evolve as climate-related financial reporting matured". The developments especially noted are around global standard convergence:

In response to these developments, progress around certain metrics and newly identified areas warranting additional guidance, the TCFD has developed its Proposed Guidance on Climate-related Metrics, Targets, and Transition Plans to serve two purposes:

  • to provide general guidance for organisations seeking to establish relevant metrics, targets, and transition plans around their climate-related risks and opportunities, and
  • to propose specific changes to the guidance for all sectors and supplemental guidance in the 2017 final report and in the guidance on implementing the recommendations.

Comments on the proposed guidance, which comes with an associated Measuring Portfolio Alignment: Technical Supplement, are requested by 7 July 2021. The Task Force will take the consultation responses into consideration when releasing final guidance in the fall of 2021. Please click to access both documents on the TCFD website.

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