European enforcers examined the financial statements of about 729 issuers representing an average examination rate of 17% of all IFRS issuers with securities listed on regulated markets. These examinations resulted in 265 actions taken to address material departures from IFRS.

Enforcers also assessed the non-financial information related to ESG for 737 issuers, covering approximately 37% of the total estimated number of issuers required to publish a non-financial statement, resulting in 39 enforcement measures.

In addition, 611 management reports were reviewed for evaluating compliance with ESMA’s guidelines on alternative performance measures, covering around 14% of all IFRS listed issuers in Europe against which were taken 93 corrective actions.

Please click to access the full report on the ESMA website.

A summary of the agenda is set out below:

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

The DP discusses three categories of crypto-assets (payment tokens/cryptocurrencies, utility tokens, and investment tokens) and proposes three approaches for addressing IFRS related requirements.

In addition, the EFRAG has issued three podcasts which discuss the issues in the DP.

Please click for more in­for­ma­tion and access to the survey on the EFRAG website.

The topics discussed at the CMAC meeting included:

• Post-implementation Review of IFRS 9—Classification and Measurement
• Post-implementation Review of IFRS 10, IFRS 11 and IFRS 12
• Rate-regulated Activities
• Business Combinations Under Common Control

See the meeting summary on the IASB website.

The topics discussed at the GPF meeting included:

• Sustainability Reporting
• Post-implementation Review of IFRS 9—Classification and Measurement
• Post-implementation Review of IFRS 10, IFRS 11 and IFRS 12
• Rate-regulated Activities
• IFRS Interpretations Committee update

See the meeting summary on the IASB website.

The report for 2020 provides an overview of the IFRS Foundation’s activities during the past year and sets out the Foundation’s and IASB’s priorities for 2021.

For more information, see the press release and annual report (available in PDF format, inline XBRL version and XBRL files) on the IASB website.

EFRAG assesses that “on a consensus basis that, apart from the requirement to apply annual cohorts to intergenerationally-mutualised and cash-flow matched contracts, all the other requirements of IFRS 17, on balance (i) meet the qualitative characteristics of relevance, reliability, comparability and understandability required to support economic decisions and the assessment of stewardship, raise no issues regarding prudent accounting, and that they are not contrary to the true and fair view principle; and (ii) are conducive to the European public good.” EFRAG did not reach a consensus related to the requirement to apply annual cohorts to intergenerationally-mutualised and cash-flow matched contracts. Seven EFRAG Board members believe that the annual cohorts requirement meets the endorsement criteria, whereas seven EFRAG Board members believe it does not and two EFRAG Board members abstained.

For more information, see the press release which includes links to the final endorsement advice package on the EFRAG website. In addition, the EFRAG endorsement status report has been updated.

Background

In May 2020, the IASB issued Covid-19-Related Rent Concessions (Amendment to IFRS 16). The pronouncement amended IFRS 16 Leases to provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. On issuance, the practical expedient was limited to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2021.

Since lessors continue to grant COVID-19-related rent concessions to lessees and since the effects of the COVID-19 pandemic are ongoing and significant, the IASB decided to extend the time period over which the practical expedient is available for use.

Changes

The Changes in Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16) amend IFRS 16 to

1. permit a lessee to apply the practical expedient regarding COVID-19-related rent concessions to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2022 (rather than only payments originally due on or before 30 June 2021);
2. require a lessee applying the amendment to do so for annual reporting periods beginning on or after 1 April 2021;
3. require a lessee applying the amendment to do so retrospectively, recognising the cumulative effect of initially applying the amendment as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the beginning of the annual reporting period in which the lessee first applies the amendment; and
4. specify that, in the reporting period in which a lessee first applies the amendment, a lessee is not required to disclose the information required by paragraph 28(f) of IAS 8.

Effective date

The amendment is effective for annual reporting periods beginning on or after 1 April 2021 (earlier application permitted, including in financial statements not yet authorised for issue at the date the amendment is issued).

Dissenting opinion

The final amendment includes a joint dissenting opinion by Board members Nick Anderson and Zachary Gast. They voted against publication of the final amendments noting that when the practical expedient was initially offered, its application was limited to a very specific timeframe. Extending the period during which the practical expedient is available does further impede comparability between lessees that apply the practical expedient and those that do not. They also note that support from users of financial statements for the original amendment was based on limiting the practical expedient to a specific time frame. In addition, they highlight that lessees are no longer applying IFRS 16 for the first time.

Additional information

Please click for:

• IASB press release (link to IASB website)
• IFRS in Focus newsletter
• Our IAS Plus project page on IFRS 16 and COVID-19 — Extension of practical expedient
• Updated EFRAG endorsement status report

The new TEG will be tasked with reviewing and assessing technical recommendations focused on enterprise value creation that will be developed the working group recently set up by the IFRS Foundation to prepare for a potential international Sustainability Standards Board (SSB). The working group's tasks also include planned work to further refine the prototype climate-related disclosure standard, its content, and industry-specific metrics. IOSCO has been invited to join the IFRS Foundation working group as an observer.

Please click to access the announcement of the new TEG on the IOSCO website.

The analysis builds on a review of the 2017, 2018 and 2019 annual reports of a sample of European issuers and on the evidence from supervision and enforcement activities undertaken by European enforcers on financial statements relating to financial years between 2014 and 2020.

The report was submitted to the IASB as part of the ESMA response to the post-implementation review of the three standards that the IASB is currently conducting.

Overall, the results show that the requirements of the standards have generally been well applied in the financial statements of the issuers in the sample. However, ESMA believes there is room for improvement in the level of compliance, comparability and transparency in the application of the requirements. In addition, ESMA notes that some aspect of the IFRSs can be improved to bring more clarity in areas where uncertainty in practice still exists.

Please click to access the full report on the ESMA website.

The two boards informed each other about their respective activities, including the response to the COVID-19 pandemic’s effects, and exchanged views on technical topics in which they both have an interest, including accounting for goodwill, accounting for leases, and rate-regulated activities.

The next meeting between the FASB and ASBJ is expected to be held in the second half of 2021. For more information about the latest meeting, see the press release on the ASBJ website.