Day 1 of the conference will feature:

• speeches by Chair of the IFRS Foundation Trustees and the ISSB Chair;
• an introduction to the structure and remit of the ISSB;
• a discussion on digital reporting and the effect of technology on the investment process; and
• breakout sessions on the ISSB’s forthcoming consultations.

Day 2 will feature:

• a speech by the IASB Chair;
• an update on the work of the IASB and the IFRS Interpretations Committee;
• breakout sessions on aspects of the IASB’s work; and
• an interactive Q&A session with leaders from the IASB.

Please click for more information on the conference page on the IFRS Foundation website.

Items for initial consideration

IFRS 17 Insurance Contracts—Quantity of the Benefits Provided under a Group of Annuity Contracts: The Committee received a submission about how to identify, applying IFRS 17:B119(a), the quantity of benefits provided under a group of immediate annuity contracts. The staff concluded that in determining the quantity of benefits provided in each period an entity applies the constant annual benefit approach. Under that approach, the benefits are determined using the claim amount payable for the period. Most of the Committee members agreed with the staff's analysis. The Committee will publish a tentative agenda decision based on the analysis.

IFRS 9 Financial Instruments and IFRS 16 Leases—Rent Concessions: Lessors and Lessees: The Committee received a submission about the application of IFRS 9 and IFRS 16 by both a lessor and a lessee in accounting for a particular rent concession. The staff concluded that the lessor estimates the expected credit losses (ECL) on the operating lease receivable by taking into account its expectations of forgiving lease payments. The lessor also applies both the derecognition requirements in IFRS 9 and lease modification requirements in IFRS 16 for the rent concession granted. The Committee decided to publish a tentative agenda decision to that effect. In addition, for the lessee accounting on the forgiven lease payments, the Committee decided a standard-setting project (annual improvement) given the possible alternative interpretations of the principles and requirements in IFRS 16 is necessary.

IAS 32 Financial Instruments: Presentation—Special Purpose Acquisition Companies (SPAC): Classification of Public Shares as Financial Liabilities or Equity: The Committee received a submission asking whether a SPAC classifies public shares it issues as financial liabilities or equity instruments applying IAS 32. The staff concluded that the matter is too narrow for the Committee to consider in isolation and is better suited to be addressed as part of the IASB’s Financial Instruments with Characteristics of Equity (FICE) project. All Committee members agreed with this.

Special Purpose Acquisition Companies (SPAC): Accounting for Warrants at Acquisition: The Committee received a submission about how an entity accounts for warrants on acquiring a SPAC. The staff analysed the accounting treatment step by step and concluded that IFRS 2 is applied in accounting for instruments issued to acquire the stock exchange listing service and IAS 32 is applied in accounting for instruments issued to acquire cash and assume any liabilities related to the SPAC warrants. The Committee decided to publish a tentative agenda decision to that effect, but preferred not adding the analysis of a variation (the reverse acquisition) to the tentative agenda decision.

Comment letters on tentative agenda decision

IAS 7 Statement of Cash Flows—Demand Deposits with Restrictions on Use: In September 2021, the Committee published a tentative agenda decision on whether an entity includes demand deposits with restrictions on use as a component of cash and cash equivalents. Most respondents to the tentative agenda decision agreed (or did not disagree) with the technical analysis and conclusions but raised some concerns. The Committee decided to finalise the agenda decision.

Administrative matters

Work in progress: The following new matter has not yet been presented to the Committee: Lease payments linked to cadastral value (IFRS 16).

More In­for­ma­tion

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

The proposal would require “registrants to include certain climate-related disclosures in their registration statements and periodic reports, including information about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition, and certain climate-related financial statement metrics in a note to their audited financial statements.”

In the proposing release, the SEC noted that the disclosures registrants would be required to provide are similar to those that many companies provide under existing disclosure frameworks and standards, such as the Financial Stability Board's Task Force on Climate-Related Financial Disclosures (TCFD) and the Greenhouse Gas Protocol.

For more information, see the following:

• Deloitte's Heads Up — SEC proposes rule on climate disclosure requirements
• Press release and fact sheet, as well as statements by SEC Chair Gary Gensler and Commissioners Allison H. Lee, Hester M. Peirce, and Caroline A. Crenshaw, on the SEC’s website.
• Statements by TCFD Chair Michael Bloomberg and Vice Chair for Public Policy Mary Schapiro on the TCFD website.
• IFAC statement welcoming the proposal und stressing the importance of international alignment on the IFAC website.

The following topics are on the agenda:

Business Combinations under Common Control

The IASB published a Discussion Paper in November 2020. In this session, the IASB will discuss feedback received on the overall project objective and respondents’ suggestions to expand the scope of the project to address reporting by entities involved in a BCUCC other than the receiving entity, reporting of an investment in a subsidiary received under common control in separate financial statements and reporting of common control transactions other than BCUCCs. The staff recommend that the project objective is updated to reflect the stage of the project and to emphasise that the project considers users of the receiving entity’s financial statements and that the project scope not be extended to address these other topics.

Management Commentary

In May 2021, the IASB published proposals for a revised Practice Statement (PS) on Management Commentary. The IASB will consider a summary of the feedback received. The staff conclude that many respondents, including almost all investors, support the project. Many respondents highlighted the importance of management commentary in corporate reporting and the need for guidance in this area to remain current. Some respondents highlighted that the proposals reflect investors information needs, provide well-structured preparation guidance, could help improve connectivity between ‘financial’ and ‘non-financial’ information, and build on the recent developments in narrative reporting, such as the Integrated Reporting (IR) Framework, and the Recommendations of the Task Force on Climate Related Financial Disclosures (TCFD recommendations). A few respondents disagreed with the focus on investor needs, and instead argued that providing a PS in this area would be outside the remit of the IASB, preferring to use the IR Framework as the basis for such reporting. No decisions will be asked from the IASB on the agenda papers.

Extractive Activities

The staff will set out a plan for improving the disclosure objectives and requirements about exploration and evaluation expenditure and removing the temporary status of IFRS 6.

Financial Instruments with Characteristics of Equity

IAS 32 has no general requirements on reclassification between financial liabilities and equity instruments. It is unclear whether IAS 32 requires an entity to reassess the classification of a financial instrument after initial recognition when a contract is modified. The IASB could consider either requiring or prohibiting reassessment (unless IAS 32 specifically requires it). If the IASB decides to prohibit reclassification for changes in the substance of the contractual terms without a modification to the contract, it could consider requiring entities to still disclose information about the effects of such changes on the nature of the obligation. If the IASB decides to require reclassification for changes in the substance of the contractual terms with a modification to the contract, further consideration would be needed in relation to the timing, measurement and disclosure of the reclassification.

Primary Financial Statements

The IASB will consider classification for entities that invest in the course of main business activities in assets that generate a return individually and largely independently of other resources held by the entity. The staff recommend that the IASB provide additional guidance. That guidance is set out in the paper. The staff also recommend the IASB confirm the requirement for an entity to disclose information about MPMs in a single note to the financial statements and not add specific requirements relating to including the MPMs disclosures in the financial statements by reference to another document.

Third Agenda Consultation

The staff estimate that in the period from 2022 to 2026, the IASB will be able to add to its work plan 2 large projects, 3–4 medium-sized projects or 4–5 small projects. They recommend that the IASB short-list seven projects for further discussion: climate-related risks; cryptocurrencies and related transactions; going concern disclosures; intangible assets; operating segments; pollutant pricing mechanisms; and statement of cash flows and related matters.

Maintenance and consistent application

At its February 2022 meeting, the IFRS Interpretations Committee decided to finalise an agenda decision in response to a submission about accounting for the European Central Bank’s Targeted Longer-Term Refinancing Operations (TLTRO). IASB members will be asked if they object to the agenda decision.

Post-implementation Review (PIR) of IFRS 9

The staff conclude that, overall, the PIR feedback is positive. The staff set out a plan for the second phase of the review. The topics to be discussed are: contractual cash flow characteristics (including financial assets with sustainability-linked features and contractually linked instruments) in April–May; business model assessment in Q2/Q3; equity instruments and OCI in Q2/Q3; modifications to contractual cash flows and amortised cost and the effective interest method in Q2/Q3; and other matters in Q3. The IASB plans to start the PIR of the impairment requirements in the second half of 2022.

Second Comprehensive Review of the IFRS for SMEs Standard

At this meeting the IASB will deliberate the approach to develop proposals to update the disclosure requirements in the IFRS for SMEs Standard to align with IFRS Accounting Standards and the alignment of the IFRS for SMEs Standard with the requirements for financial guarantee contracts in IFRS 9. 

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

The IFRS Foundation Constitution provides the ISSB Chair and Vice-Chair with the option to publish exposure drafts before the ISSB is quorate. This is due to the fact that standard-setting in this areas is perceived as urgent and while the process for appointing ISSB members has started, it might yet take a while until the ISSB is quorate. The granting of the option was based on the premise that the exposure drafts build on the mature and high-quality preparatory work of the TRWG and generally build on established frameworks. Still, the publication of the exposure drafts requires oversight and permission of the DPOC.

During the meeting, the ISSB leadership explained that they think there are two key benefits of publishing the exposure drafts prior to the ISSB becoming quorate. Namely to:

• advance standard-setting with urgency; and
• clarify scope and demonstrate interoperability with jurisdictional requirements.

They explained delaying publication of the exposure drafts to allow for their deliberation by the ISSB would mean a delay of at least a quarter, given that the ISSB is expected to be quorate early in the third quarter of 2022. The delay may even be longer if the board were to actively debate the proposals prior to publishing an exposure draft. Given the current quality of the exposure drafts, the Chair and Vice-Chair of the ISSB do not believe that the benefits that might arise from deliberation by the ISSB would be substantial enough to justify missing the window of opportunity of a quarter two/three consultation. In order to minimise the risk of re-exposure, which would lengthen the overall timetable to finalisation, the questions included in the exposure drafts will be designed to elicit responses on a broad range of issues to maximise the opportunity to obtain stakeholder feedback to inform the quorate ISSB’s redeliberations.

Regarding clarifying the scope and demonstrating interoperability, the Chair and Vice-Chair think this clarification will be beneficial to demonstrate the significant overlap that exists between information that is to be provided to the capital markets and information to be required for multiple stakeholders. Current discussions with stakeholders and a select number of jurisdictions have highlighted that timing is critical to provide a draft of the ISSB’s intended global baseline, as several jurisdictions intend to expose their own draft jurisdictional specific requirements in the coming months (for example the European Union and the United States). The ISSB leadership believes that giving stakeholders the opportunity to review the ISSB’s exposure drafts alongside jurisdictional consultations will allow stakeholders to bring fully informed and coordinated comments to each, broadly supporting interoperability and will allow the ISSB to receive extremely valuable feedback to finalise its work.

Following this line of argument, the DPOC members unanimously gave the Chair and Vice-Chair of the ISSB the permission to publish the two exposure drafts before the ISSB is quorate as long as all subsequent due process steps are adhered to.

A summary of the meeting has been made available on the IFRS Foundation website.

After publication of six working papers in Batch 1, three working papers in Batch 2, one working paper in Batch 3, seven working papers in Batch 4, and two working papers in Batch 5, Batch 6 consists of the following two papers (all links to the EFRAG website):

• ESRS 1 General Provisions
• Cover Note

The Cover Note explains that concepts, principles and some disclosure requirements that were initially included in other ESRS and also fundamental principles that were so far only addressed in ESRG were incorporated into ESRS 1:

• some disclosure requirements about strategies and business model of an entity which provide context for their sustainability reporting so far part of ESRS 2,
• certain disclosure requirements on the development of entity-specific disclosures and the quality of sustainability information so far part of ESRS 4,
• and the entire ESRS 5 with definitions for policies, targets, action plans and resources (ESRS 5 is superseded by ESRS 1).

The agenda for the meeting is sum­marised below.

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

In amending the IFRS Foundation Constitution in October 2021 to accommodate the establishment of the ISSB, the Trustees provided the ISSB Chair and Vice-Chair, in consultation with any appointed ISSB members, with the option to publish exposure drafts on General Requirements and Climate-Related Disclosures before the ISSB is quorate.

The Trustees provided this option in the light of:

1. the maturity and high-quality of the Technical Readiness Working Group’s (TRWG) preparatory work on the prototype standards
2. calls from stakeholders for the ISSB to develop standards urgently, particularly on climate;
3. the intention for the ISSB’s Standards to build on established frameworks; and
4. the possible length of time between the appointment of the Chair and Vice-Chair and there being a quorate ISSB.

Agenda papers for the meeting are available on the IFRS Foundation's website and provide background information and the rationale of ISSB Chair and Vice-Chair.

Financial reporting considerations related to the Russia-Ukraine War
Below is our usual analysis of new and amended standards, however, we are also aware that many entities will have been impacted by Russia's invasion into Ukraine. Please see our IFRS in Focus — Financial reporting considerations related to the Russia-Ukraine War highlighting some of the key issues to be considered by the entities in preparing their financial statements.

This table can be used for all annual accounting periods. A 1st quarter ending on 31 March 2022 would mean that the annual reporting period began on 1 January 2022. Similarly, 2nd quarters ending on 31 March 2022 refer to annual periods that began on 1 October 2021, 3rd quarters ending on 31 March 2022 refer to annual periods that began on 1 July 2021, and 4th quarters ending on 31 March 2022 refer to annual periods that began on 1 April 2021.

The information below reflects developments to 18 March 2022 and will be updated through to June 2022 to reflect new and revised financial reporting requirements that need to be considered for financial reporting periods ending on 31 March 2022. For accounts approved after March 2022, please also refer to subsequent versions of this document for any new and revised IFRSs that have additionally been issued that might require disclosure in the accounts under IAS 8:30.

The information below is organised as follows:

• Summary
• New or revised standards
• Amendments

Summary

Pronouncements applicable to entities applying IFRSs at the IASB effective dates

The table below provides a summary of the pronouncements which will be mandatorily applied by entities for the first time at 31 March 2022, for various quarterly reporting periods:

* Generally annual periods beginning on or after the date indicated, may only apply to first-time adopters in some limited cases (see the detailed information for each pronouncement below for full details).

** This pronouncement has already been implemented in previous periods by entities with this reporting date (where it applied to the entity).

° The application of both approaches (overlay approach/ deferral approach) is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.

More information about these pronouncements, and all new and revised pronouncements, is set out below.

New or revised standards

Amendments

Notes

Note 1. This pronouncement has already been implemented in previous periods by entities with this reporting date (where it applied to the entity).

Because of its broader impact on these macroeconomic conditions, many entities globally may need to consider the effect of the war on certain accounting and financial reporting matters. The degree to which entities are or will be affected by them largely depends on the nature and duration of uncertain and unpredictable events, such as further military action, additional sanctions, and reactions to ongoing developments by global financial markets.

Political events and sanctions are continually changing and differ across the globe. Whilst this alert does not address such activities specifically, it is intended to raise awareness of some of the key impacts of the Russia-Ukraine war that entities need to consider. These include:

• Interruptions or stoppage of production in affected areas and neighbouring countries.
• Damage or loss of inventories and other assets.
• Closure of roads and facilities in affected areas.
• Supply-chain and travel disruptions in Eastern Europe.
• Volatility in commodity prices and currencies.
• Disruption in banking systems and capital markets.
• Reductions in sales and earnings of business in affected areas.
• Increased costs and expenditures.
• Cyberattacks.

Click to view Deloitte’s IFRS in Focus — Financial reporting considerations related to the Russia-Ukraine War.