The Forum will be held in conjunction with the journals Accounting in Europe and European Accounting Review. The call for papers notes that researchers are encouraged to contribute evidence on intangible assets from a variety of perspectives. Submissions on the following topics are mentioned in the call for papers as being particularly of interest:

• Recognition and measurement
  • Internally generated assets
  • Internally generated vs intangible assets acquired in business combinations
  • New types of intangible assets (such as cryptocurrencies, emission rights, cloud computing)
• Disclosure in financial statements
  • Internally generated and unrecognised assets
  • Research and development expenditure
• Other information sources
  • Management Commentary
  • Sustainability reporting
• Related projects
  • Pollutant pricing mechanisms
  • Cryptocurrencies

Please click for more information on the IASB website.

The amendments replace the 2020 IFRS Taxonomy with the most recent one published by the IFRS Foundation in March 2021 as core taxonomy. The ESEF is amended on a yearly basis to reflect updates to the IFRS Taxonomy published by the IFRS Foundation.

Please click for more information and access to the updated taxonomy on the ESMA website.

The following topics are on the agenda:

Financial Instruments with Characteristics of Equity

The staff are proposing amendments to IAS 32. They recommend that the Board (a) clarify that some financial instruments with contingent settlement provisions can be compound instruments and clarify the measurement requirements for the liability component of such instruments; (b) specify that the term ‘liquidation’ in paragraph 25(b) of IAS 32, refers to when an entity has started the process to permanently cease to trade; (c) specify that the assessment of whether a contractual term is ‘not genuine’ in paragraph 25(a) of IAS 32, is not purely a probability-based assessment; and (d) amend IAS 32 to specify how an entity must consider the effects of applicable laws when classifying financial instruments as financial liabilities or equity.

The staff plan to bring recommendations on the classification of financial instruments that are subject to shareholders’ discretion and whether additional disclosures would be beneficial at a future meeting.

Maintenance and Consistent Application

Lease Liability In A Sale and Leaseback: At this meeting the staff recommend how to proceed with ED/2020/4 Lease Liability in a Sale and Leaseback (Proposed amendments to IFRS 16). The staff recommend retaining the following proposals: clarify that the leaseback liability is a liability to which IFRS 16 applies; not change the initial measurement requirements in paragraph 100(a) of IFRS 16 for the right-of-use asset and the gain or loss arising from the sale and leaseback; clarify that a seller-lessee subsequently measures the right-of-use asset arising from the leaseback applying paragraphs 29-35 of IFRS 16; and include an illustrative example of a sale and leaseback transaction with variable payments. The staff recommend changing the following aspects of the proposals: no longer prescribe how a seller-lessee determines the proportion of the previous carrying amount of the asset that relates to the right of use the seller-lessee retains; require the seller-lessee to subsequently measure the leaseback liability applying paragraphs 36-46 of IFRS 16; and specify that the term ‘lease payments’ may not be as defined in Appendix A to IFRS 16. Instead, the seller-lessee would apply the term ‘lease payments’ or ‘revised lease payments’ in such a manner that it does not recognise any amount of the gain or loss that relates to the right of use retained to the extent that the right of use is retained.

Economic Benefits from Use of a Windfarm (IFRS 16)—Finalisation of Agenda Decision: The Board will be asked if any Board members object to the finalisation of the agenda decision.

Business Combinations under Common Control

The Board published its Discussion Paper (DP) Business Combinations under Common Control (BCUCC) in November 2020, with a comment letter deadline of 1 September 2021. The purpose of this meeting is to provide the Board with an overview of feedback on the DP and detailed summaries of feedback on selected topics from the DP. The Board will not be asked to make decisions in this session.

Almost all respondents agree that the project should cover the receiving entity’s reporting for all transfers of businesses under common control. Most respondents agree with the preliminary view that neither the acquisition method nor a book-value method should be applied to all BCUCCs. Some respondents (including most respondents from China) disagree and say a book-value method should be applied to all BCUCCs. A few respondents report mixed views within their organisation/jurisdiction or do not express a clear view.

Third Agenda Consultation

The staff recommend proceeding with the criteria as proposed in the Request for Information (RFI) for evaluating potential projects: its importance to investors; whether there is any deficiency how the matter is reported; the type of entities it is likely to affect or whether it is more prevalent in some jurisdictions than others; how pervasive or acute the matter is likely to be; interaction with other projects; the complexity and feasibility of the potential project and its solutions; and whether the Board and its stakeholders have capacity and could make timely progress.

Primary Financial Statements

The staff recommend the Board proceed with a definition for unusual items, removing the reference to ‘limited predictive value’, developing application guidance which clarifies that the definition captures income or expenses that are dissimilar in type or amount from income or expenses expected in the future and explain that in considering whether income or expenses are similar, an entity would consider characteristics of the income and expenses, including the underlying event or transaction.

The staff recommend retaining the proposal to classify in the investing category: income and expenses from assets that generate returns individually and largely independently of other resources; adding further application guidance; and income and expenses from associates and joint ventures. The staff also recommend retaining the label ‘investing category’ and not continuing with the proposal to define ‘income and expense from investments’.

Second Comprehensive Review of the IFRS for SMEs Standard

The staff are recommending that IFRS for SMEs be amended to make it more closely aligned with IFRS 3, IFRS 10 (but not investment entities) and IFRS 11 (but retain the IFRS for SME classifications of joint arrangements and the accounting requirements for jointly controlled entities). The Board will discuss whether and how to align the IFRS for SMEs Standard with the impairment requirements in IFRS 9. The staff recommend adding the definition of a financial guarantee contract from IFRS 9. The summaries (and staff papers) list the amendments they recommend that the Board should and should not incorporate into IFRS for SMEs, as well as other narrower amendments the Board should make.

Rate-regulated Activities

The staff is developing a plan for redeliberating ED/2021/1 Regulatory Assets and Regulatory Liabilities. The staff recommend prioritising total allowed compensation (returns on assets not yet available for use and regulatory assets and regulatory liabilities arising from differences between assets’ regulatory recovery pace and their useful lives) and scope (including interaction of the proposals with IFRIC 12). These are topics about which respondents raised significant concerns.

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

Background

Many insurance companies have not yet applied IFRS 9 Financial Instruments and will first apply it at the same time they apply IFRS 17 Insurance Contracts. However, the two standards have different requirements for the comparative information that will be presented on initial application. IFRS 17 requires companies to present one restated comparative period. IFRS 9 permits but does not require restatement of comparative periods, and prohibits companies from applying IFRS 9 to financial assets derecognised in the comparative period.

Some insurers have since raised concerns about the usefulness of the information that would be presented for financial assets in the comparative period on initial application of IFRS 17. They are of the view that such information would be misleading because it would include accounting mismatches that would essentially arise from the continued application of IAS 39 (i.e. would not represent economic mismatches), which would be very difficult to explain. These insurers asked the Board to allow them to present significantly improved information about financial instruments that would result from applying the classification requirements of IFRS 9 at the transition date of IFRS 17.

In July 2021, the IASB published proposed amendments to IFRS 17 to address these concerns and the amendments have now been finalised.

Key amendment

The main amendment in Initial Application of IFRS 17 and IFRS 9 — Comparative Information (Amendment to IFRS 17) is a narrow-scope amendment to the transition requirements of IFRS 17 for entities that first apply IFRS 17 and IFRS 9 at the same time. The amendment regards financial assets for which comparative information is presented on initial application of IFRS 17 and IFRS 9, but where this information has not been restated for IFRS 9. Under the amendment, an entity is permitted to present comparative information about a financial asset as if the classification and measurement requirements of IFRS 9 had been applied to that financial asset before. The option is available on an instrument-by-instrument basis. In applying the classification overlay to a financial asset, an entity is not required to apply the impairment requirements of IFRS 9.

There are no changes to the transition requirements in IFRS 9.

Effective date

An entity that elects to apply the amendment applies it when it first applies IFRS 17.

Additional information

The following additional information is available on the IASB website and on IAS Plus:

• IASB press release
• Our IAS Plus Project page on Initial application of IFRS 17 and IFRS 9 ― Comparative information
• Deloitte's IFRS in Focus newsletter
• Updated EFRAG endorsement status report

For the briefing paper, the EFRAG Secretariat has considered how the IASB's proposals might be applied in the EU. More specifically, the EFRAG Secretariat provides an EU Perspective on the IASB's proposed scope for subsidiaries without public accountability.

Please click to access the briefing paper through the press release on the EFRAG website.

Specifically, Mr Barckow discussed:

• Sustainability-related financial disclosures — He noted that sustainability has become a mainstream topic amongst board of directors and within financial reporting. He cited the creation of the International Sustainability Standards Board (ISSB) which was developed to create a global baseline of investor-focused, sustainability-related disclosure standards. In addition, he stated that the ISSB and the IASB will work independently of each other, but the 'connectivity between accounting requirements and sustainability disclosure requirements is essential'.
• Current work programme and future direction — He highlighted three key projects the IASB is working on: (1) primary financial statements, (2) post-implementation reviews for the IASB’s consolidation Standards (IFRS 10, 11, and 12) and financial instruments Standard (IFRS 9), and (3) goodwill and impairment.
• Agenda consultation and future work programme — He mentioned that the staff is in review of the feedback received from the IASB’s latest agenda consultation. Some themes that have emerged from the feedback so far are ‘be mindful how much change you impose on stakeholders; reserve time for working with the new ISSB as well as on emerging issues; and do something on intangibles’. New projects suggested by stakeholders include climate related risk, cryptocurrencies and related transactions, going concern, intangible assets and the statement of cash flows. Some of these projects may be handled by the ISSB, while others may be worked on jointly.
• Convergence — He noted that having converged Standards and keeping Standards converged with the FASB are two different challenges; however, it is important to continue to keep the two Boards (IASB and FASB) informed on important issues and work together to the benefit of stakeholders.

See the full transcript on the IASB’s website.

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) are currently reexamining goodwill accounting, and, specifically, the measurement of goodwill post-acquisition. The IASB is pursuing improved disclosures while the FASB is considering reverting to amortisation.

The CFA Institute surveyed its members on their desired path forward. A majority of respondents (58%) supported retaining impairment as impairment is regarded as decision-useful and provides information content. Nevertheless, they also see room for improvement. Only 31% of the respondents supported the introduction of amortisation, which is viewed as the inferior model because it does not allow the discernment between good and bad acquisitions, distorts financial metrics and does not provide decision-useful information for investment analysis. Nevertheless, these respondents note that goodwill erodes over time, that impairment is subjective, and that amortisation is more predictable.

On convergence, the survey report notes:

Respondents were in raging agreement that the IASB and FASB should follow the same approach in the accounting for goodwill (90%) and in the subsequent measurement of goodwill (94%).

Investors also highlighted that the current accounting model needs to be updated to reflect the increasing importance of intangibles, that the move from a manufacturing to a service economy makes this more important and evident, and that a resolution is needed between the accounting for acquired versus internally generated intangibles.

Please click for the full report with detailed findings on the website of the CFA Institute.

The corrections relate to IFRS Practice Statement 2 'Making Materiality Judgements' published in September 2017, Reference to the Conceptual Framework (Amendments to IFRS 3) issued in May 2020, and Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) published in February 2021.

Editorial corrections do not change the meaning or application of pronouncements, but instead correct inadvertent errors. The editorial corrections can be viewed on the editorial corrections page of the IASB's website.

The Board will discuss the following:

• Second com­pre­hen­sive review of the IFRS for SMEs Standard
• Rate-reg­u­lated ac­tiv­i­ties
• Primary financial state­ments
• Financial instruments with characteristics of equity
• Third agenda con­sul­ta­tion
• Maintenance and consistent application
• Business combinations under common control

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.

The Committee discussed the comment letter analysis for one tentative agenda decision and two new submissions. One topic was deferred to the next meeting.

Comment letter analysis

IFRS 16 Leases—Economic Benefits from Use of a Windfarm: In June 2021, the Committee published a tentative agenda decision in response to a submission about the definition of a lease. The submitter asked whether, applying IFRS 16:B9(a), an electricity retailer (customer) has the right to obtain substantially all the economic benefits from use of a windfarm throughout the term of an agreement with a windfarm generator (supplier). The Committee concluded that the principles and requirements in IFRS Standards provide an adequate basis to account for this matter. Many of the respondents to the tentative agenda decision agreed with the conclusion. Nonetheless, some of them raised some further matters for the Committee to consider. The staff presented an analysis of these matters and the Committee decided to finalise the agenda decision with the addition of two references to previous agenda decisions to address issues raised by respondents.

IFRS 9 Financial Instruments and IAS 20 Accounting for Government Grants and Disclosure of Government Assistance—TLTRO III Transactions: In its June 2021 meeting, the Committee discussed 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. The staff have analysed the comment letters and recommended finalising the agenda decision with minor editorial changes.

This agenda item was not discussed due to lack of time and was deferred to the next meeting.

New submissions

IFRS 15 Revenue from Contracts with Customers—Principal versus Agent: Software Reseller: The Committee received a submission asking whether a reseller of software licences is a principal or agent in respect of the standard software licences provided to the customer. The staff found that the fact pattern is highly specific and even small or subtle differences in the specific facts and circumstances could change the conclusion when applying the requirements about principal versus agent considerations in IFRS 15. The staff were therefore of the view that it would be inappropriate for the Committee to conclude whether the reseller is a principal or agent in the fact pattern submitted. The Committee decided to publish a tentative agenda decision that only sets out the applicable requirements in IFRS 15 and explains how a reseller might apply those requirements.

IAS 37 Provisions, Contingent Liabilities and Contingent Assets—Negative low or new energy vehicle credits: The Committee received a submission asking whether an entity with negative low emission vehicle credits has a present obligation that meets the definition of a liability in IAS 37. If the answer to this question is "no", the submitter asked whether the Committee’s views would be different if the entity had entered into a binding contract to purchase positive new energy credits before the end of the reporting period the entity, but that contract is settled after the end of the reporting period. The Committee decided to publish a tentative agenda decision outlining whether an entity with negative low emission vehicle credits has a present obligation that meets the definition of a liability in IAS 37.

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

• Rent Concessions: Lessors and Lessees (IFRS 16 and IFRS 9)
• Special Purpose Acquisition Companies (SPAC): Classification of Public Shares as Liabilities or Equity (IAS 32)

More In­for­ma­tion

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