Agenda for the September 2021 IFRS Advisory Council meeting

10 Sep 2021

An agenda has been released for the meeting of the IFRS Advisory Council that will be held by remote participation on 13 September 2021.

A summary of the agenda is set out below:

Monday 13 September 2021 (12:00-15:00)

  • Welcome and Chair's preview
  • Updates on Trustees and Board’s Activities
  • Sustainability reporting (approximately two hours of presentation and discussion)
  • Closing remarks

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

Interview with new Board member

08 Sep 2021

Bertrand Perrin from France joined the International Accounting Standards Board (IASB) at the beginning of July. The IASB has released an interview with him where he talks about his first few weeks on the Board, the role financial reporting plays in the global economy, and what he’s looking forward to in his new job.

Pre-meeting summaries for the September 2021 IFRS Interpretations Committee meeting

08 Sep 2021

The Committee meets on Tuesday 14 & Wednesday 15 September 2021, via video conference. The Committee will discuss the comment letter analyses for two tentative agenda decisions, input on a Board project and two initial considerations.

Comments on tentative agenda decisions

IFRS 16 Leases—Non-refundable VAT on Lease Payments: In March 2021, the Committee discussed a submission about whether a lessee includes non-refundable VAT as part of the lease payments. In the meeting, the Committee members generally agreed with the accounting conclusion but a number of them were not convinced that the matter is not material or widespread based on the limited outreach performed by the staff. The responses from the comment letters reflect similar views and some respondents requested explaining the accounting treatment of the non-refundable VAT in the agenda decision.

IAS 32 Financial Instruments: Presentation—Accounting for Warrants that are initially classified as Liabilities: In March 2021, the Committee discussed a submission asking whether the issuer reclassifies the warrant (which is classified as a financial liability at initial recognition) as equity when the exercise price is subsequently fixed. The staff concluded that the matter, in isolation, is too narrow to be answered and recommended publishing a tentative agenda decision to explain this. On the other hand, they believe that the broader issues of reclassifying financial instruments are better addressed as part of the Board’s Financial Instruments with Characteristics of Equity (FICE) project. In the meeting, the Committee members generally agreed with the staff's recommendations as did most respondents to the tentative agenda decision.

The staff recommend that the tentative agenda decisions be finalised with minor editorial changes or no change at all.

Input on Board project

Proposed amendments to IFRS 16 LeasesLease Liability in a Sale and Leaseback: In November 2020, the Board published ED/2020/4 Lease liability in a Sale and Leaseback, which proposed an amendment to IFRS 16. The comment period ended in March 2021 and the Board discussed the feedback on the ED at its meeting. The staff analysed the feedback and provided recommendations on the project direction in the agenda paper.

The staff are seeking Committee members' views on the possible project direction.

Initial consideration

IAS 7 Statement of Cash Flows—Demand Deposits with Restrictions on Use: The Committee received a submission asking whether an entity includes demand deposits with restrictions on use as a component of cash and cash equivalents ("C&CE"). The terms and conditions of the demand deposit do not prevent the entity from accessing amounts held in the demand deposit but the entity cannot use the cash other than the purpose specified in the agreement. The staff analysed that such demand deposits should be included in C&CE in the statement of cash flows and could be presented as C&CE in the statement of financial position, unless presenting it separately in an additional line item is relevant to an understanding of the entity's financial position. The information about the restrictions is required to be disclosed under various IFRS Standards.

The staff recommended not to add a standard-setting project and instead publish a tentative agenda decision on this issue.

IFRS 9 Financial Instruments—Cash Received via Electronic Transfer as Settlement for a Financial Asset: The Committee received a submission asking the timing of recognition of cash received via Bacs, a formal automated settlement process, as settlement for a financial asset. The submitter asked whether it is acceptable for the entity to derecognise the trade receivable and recognise the cash on transfer initiation date, rather than the transfer settlement date. The staff concluded that the trade receivable is generally derecognised on the settlement date, the date when the contractual right to the cash flows from the trade receivable expires. Also, cash should be recognised on the transfer settlement date because the entity has a right to obtain cash from the bank only when cash is deposited in its bank account.

The staff recommended not to add a standard-setting project and instead publish a tentative agenda decision on this issue.

Work in progress: The staff are in the process of analysing three matters:

  • Principal versus agent-IT resellers (IFRS 15)
  • Deficits in low/new energy vehicle credits (IAS 37)
  • Rent Concessions-lessors and lessees (IFRS 16 and IFRS 9)

The full agenda for the meeting and our com­pre­hen­sive pre-meet­ing summaries can be found here.

Recent sustainability and integrated reporting developments

08 Sep 2021

A summary of recent developments at G7, SSE, EFRAG/Shift, EFRAG, SASB, IRC, IFAC, CDSB, VBA, CAQ, CIPFA, EFAA, CapitalsCoalition, FRC, Swiss Federal Council, SGX, and Deloitte.

As part of the UK’s G7 2021 presidency, the UK government has set up an independent Impact Taskforce (ITF) to come up with solutions for a sustainable and inclusive recovery from the COVID-19 crisis. An announcement of the ITF and a list of members are available on the Global Steering Group for Impact Investment website.

The United Nations Sustainable Stock Exchanges (SSE) initiative has launched a new Action Plan to Make Markets Climate Resilient and a Model Guidance on Climate Disclosure. Both publications can be accessed on the SSE website.

The European Financial Reporting Advisory Group (EFRAG) announces that the EFRAG task force on European sustainability reporting standards and Shift have concluded a statement of cooperation benefiting from Shift’s experience in the human rights domain in the development of draft European sustainability reporting standards. Please see the EFRAG press release here.

EFRAG's task force on sustainability reporting has also released a working paper of the prototype for the climate standard they are working on. The paper is for information only and not open for public comments. Please click to access the paper here.

The Sustainability Accounting Standards Board (SASB) has published an eight-step guide to the SASB standards disclosure process. The guide was created to explain how one does practically accomplish releasing an initial SASB standards disclosure. Please click to access the guide on the SASB website.

The Integrated Reporting Committee (IRC) of South Africa has updated its Governance Information Paper for the changes in the revised IIRC Framework. It includes a new section, with examples, of the processes involved in the preparation an integrated report. Please click to access the paper here.

The International Federation of Accountants (IFAC) has releases a statement on climate change information and the 2021 reporting cycle noting that professional accountants have an active role to play in determining the way climate change information is reported in the upcoming 2021 reporting cycle and is enhanced in future years. Please click to access the statement here.

The Climate Disclosure Standards Board (CDSB) has released guidance and an online course to help companies disclose water-related financial information to investors. Please click for more information here.

The Value Balancing Alliance (VBA) has published a position paper on the standardisation of disclosure requirements. The paper can be accessed on the VBA website.

The Center for Audit Quality (CAQ) of the American Institute of Certified Public Accountants (AICPA) has looked at the most recent publicly available ESG data for S&P 500 companies. They found that 95% of S&P 500 companies had detailed ESG information publicly available. Please click to see their findings here.

The Chartered Institute of Public Finance and Accountancy (CIPFA) has undertaken research that shows that more than half (56%) of public sector organisations do not currently report on their climate impact, i.e. the public sector lags behind the private sector on climate reporting. More information is available on the CIPFA website.

The European Federation of Accountants and Auditors for SMEs (EFAA) has published What SMPs and SMEs Need to Know About Sustainability Reporting. Please click to access the publication on the EFAA website.

The CapitalsCoalition is consulting on a methodology promoting standardised natural capital accounting for business. Comments are requested by 30 September. Please click for more information here.

The Financial Reporting Lab of the UK Financial Reporting Council (FRC) has published its latest project report on reporting on risks, uncertainties, opportunities and scenarios. It outlines what investors want to understand from corporate reporting on risks, uncertainties, opportunities and the use of scenarios. The report can be accessed here.

The Swiss Federal Council has decided on parameters for the future mandatory climate reporting by large Swiss companies. The Federal Department of Finance is to prepare a consultation draft by summer 2022. Please see the press release here.

The Singapore Exchange (SGX) is proposing a roadmap for climate-related disclosures to be made mandatory in issuers’ sustainability reports amid urgent demand for such information from lenders, investors and other key stakeholders. More information is available on the SGX website.

Deloitte has commented on the Task Force on Climate-related Financial Disclosure (TCFD)’s June 2021 document Proposed Guidance on Climate-related Metrics, Targets, and Transition Plans. Please click to access our comment letter.

Agenda for the October 2021 ASAF meeting

06 Sep 2021

The International Accounting Standards Board (IASB) has released an agenda and meeting papers for the meeting of the Accounting Standards Advisory Forum (ASAF), which is to be held by remote participation on 1 October 2021

The agenda for the meeting is summarised below:

Friday, 1 October (11:00-15:00)

  • Equity method
    • IASB update on the project and ASAF members’ views on how to develop solutions to application questions on the equity method
    • Presentation of research on the equity method by the ASBJ
  • Management commentary
    • Preliminary feedback from the ASAF members’ jurisdictions on the exposure draft published in May
  • Primary financial statements
    • Update on the redeliberations of the Board on the proposals in the exposure draft and ASAF members' views on any implications of the Board’s redeliberations so far on topics yet to be discussed
  • Rate regulated activities
    • Verbal update about the feedback on the exposure draft
  • Agenda planning

For more information, please see the agenda and meeting papers on the IASB's website.

Agenda for the September 2021 IFASS meeting

06 Sep 2021

The International Forum of Accounting Standard Setters (IFASS) will meet on 29-30 September 2021. The meeting will be held virtually.

The full agenda for the meeting is summarised below.

Wednesday, 29 September 2021 (9:30–14:45)

  • Welcome and opening remarks
  • Message from IASB Chair and responses to questions from IFASS members
  • Climate reporting
    • Presentation by New Zealand
  • Regulatory assets and regulatory liabilities – Thoughts on the IASB exposure draft
    • Presentations by Canada, EFRAG, Hong Kong, India, and Norway
  • IPSASB – Project update
  • International financial reporting for non-profit organisations – IFR4NPO project update

Thursday, 30 September 2021 (9:45-15:15)

  • Presentations of research
    • Equity method of accounting (Japan)
    • Accounting estimation and estimates (Korea)
  • Issues surrounding separate financial statements
    • Presentations by Brazil, India, Italy, and Korea
  • Intangibles
    • Presentation of EFRAG discussion paper and research undertaken by Australia
    • Break-out sessions
    • Plenary session with presentation of group discussions
  • Closing remarks

ASBJ paper on the equity method of accounting

03 Sep 2021

The Accounting Standards Board of Japan (ASBJ) has published a paper 'Perspectives on the Equity Method of Accounting'.

The paper proposes principles that would clarify when to focus on the aspect of one-line consolidation and when to focus on the aspect of a measurement basis to address the current practical issues arising from applying the equity method of accounting, with the understanding that the existing requirements in IAS 28 Investments in Associates and Joint Ventures have both aspects of one-line consolidation and a measurement basis.

The ASBJ has published the paper with a view to contribute to the global debate surrounding the equity method of accounting. The ASBJ will present the paper for discussion at the IFASS meeting in September and at the ASAF meeting in October.

Please click to access the paper on the ASBJ website.

September 2021 IFRS Interpretations Committee meeting agenda posted

03 Sep 2021

The IFRS Interpretations Committee has posted the agenda for its next meeting, which will be held by video conference on 14-15 September 2021.

The Committee will discuss the following:

  • IFRS 16 — Non-refundable value added tax on lease payments
  • IAS 32 — Accounting for warrants that are classified as financial liabilities on initial recognition
  • IFRS 16 — Lease liability in sale and leaseback
  • IAS 7 — Demand deposits with restrictions on use
  • IFRS 9 — Cash received via electronic transfer as settlement for a financial asset

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.

Germany and Japan offer to host the ISSB headquarters

02 Sep 2021

Since the start of 2021 the IFRS Foundation Trustees have worked towards the potential creation of a new standard-setting board within the existing governance structure of the IFRS Foundation. Two offers to host the headquarters of that new body have now become publicly available.

The German offer, which is supported by 185 companies and organisations, notes that Frankfurt is well positioned to host the headquarters of the ISSB as it is embedded in an ecosystem driving sustainable finance and business, is home to international institutions and organisations and headquarters many international companies.

Please click for the following additional information (all links to the Frankfurt Main Finance website):

The Japanese application especially notes the the good cooperation already in place with the IFRS Foundation through the Tokyo Liaison Office, which could be leveraged to support the ISSB in expanding its engagement with stakeholders in the Asia-Oceania region. The letter also stresses the willingness to provide financial and technical support.

Please click for the full application letter on the ASBJ website.

As already reported, Canada has also offered to host the future ISSB. In addition, Switzerland notes that, owing to its unique proximity to important international organisations and NGOs, Geneva has a global outreach, is recognised throughout the world as an independent and neutral negotiation venue and would be a credible host location for the ISSB. The Swiss application is not publicly available, but a press release can be found here.

Call for papers – 3rd IPSASB research forum

02 Sep 2021

In preparation of its 3rd Research Forum, which will be co-hosted by Comparative International Governmental Accounting Research Network (CIGAR) at its June 2022 conference, the International Public Sector Accounting Standards Board (IPSASB) is calling for scholarly contributions from the academic community.

The research areas of interest are:

  • Research on practical IPSAS implementation challenges 
    • Differential reporting 
    • Discount rates
  • Research on adoption and implementation of specific IPSAS
    • IPSAS 31 Intangible Assets
    • IPSAS 33 First-Time Adoption of Accrual Basis IPSAS
  • Broad future focused research
    • Climate change and public sector financial reporting related to sustainability 
    • Financial reporting impacts of digitization in the public sector

Please click for more information and the call for papers on the IPSASB website.

New resource page on the IFRS Foundation Trustees' sustainability reporting initiative

01 Sep 2021

We have set up a new resource page on IAS Plus that pulls together information regarding the background, an overview of developments, and news regarding the IFRS Foundation Trustees' project on sustainability-related reporting.

In the context of their periodic strategy review, the IFRS Foundation Trustees published a consultation paper in September 2020 to determine:

  • whether there is a need for global sustainability standards;
  • whether the IFRS Foundation should play a role in developing such standards; and
  • what the scope of that role could be.

Feedback to the consultation confirmed an urgent need for global sustainability reporting standards and support for the Foundation to play a role in their development. Since the start of 2021, the Trustees have, therefore, worked towards the potential creation of a new standard-setting board within the existing governance structure of the IFRS Foundation.

Please click for more information on our new dedicated resource page.

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