Mr Barckow began his speech by pointing out what the existing, principles-based standards already require: consideration of every emerging risk (be it climate-related or not) and deciding how these issues may affect the measurement of assets and liabilities as well as consideration of disclosures required to enable users to understand the effect of some events and conditions on the company’s financial statements. Examples he cited included the recognition and measurement of impairment losses on tangible and intangible assets, the recognition and measurement of provisions for government levies, remediation of environmental damage and onerous contracts, and the measurement of loan contracts with climate-related targets. Events and circumstances that led to the recognition of an impairment loss need to disclosed as well as key assumptions made.

However, Mr Barckow acknowledged, there is a widespread demand for more disclosure on sustainability. He therefore turned to the future of standard-setting. In this context, Mr Barckow pointed to two developments: the IASB's agenda consultation and the cooperation with the ISSB. He noted that at its March and April meetings, the IASB will continue deliberating feedback on its agenda consultation to decide whether and, if so, what more it could do about the accounting for climate-related risks in the financial statements. This would include considering how the IASB's climate education material has led to better covering of the implications of sustainability matters in the financial statements.

Finally, Mr Barckow turned to what he called "virtuous cycle of standard-setting". While the IASB focuses on the financial statements, which reflect transactions and events that have taken place up until the reporting date with some assumptions about the future to the extent that they relate to assets and liabilities recognised, the ISSB standards will require disclosure of information about the sustainability-related risks and opportunities that affect the company’s future cashflows and business model and, thus, its enterprise value — matters that again affect future financial statements. Mr Barckow concluded:

Together, the two boards can help investors connect these two complementary information sets into a single, holistic package to foster transparency, accountability and efficiency in global capital markets.

Please click to access the full transcript of the speech on the IASB website.

On IASB-related matters, the DPOC was provided with an update on the activities of the IASB and the IFRS Interpretations Committee. The DPOC was updated on the due process documents that had been published in the period and noted that the Interpretations Committee would be considering its first application question relating to IFRS 17 at the Committee’s March meeting. The update provided also included the goodwill and impairment project and practical questions that would arise if the IASB were to reintroduce amortisation of goodwill and possible refinements to the post-implementation review process.

On ISSB-related matters, the DPOC discussed the due process to be applied by the ISSB. The DPOC acknowledged that the ISSB’s due process will have to develop over time, but also noted that respondents to the Trustees’ consultation paper on sustainability reporting had said that a key motivating factor behind them encouraging the IFRS Foundation to establish the ISSB was the transparent due process applied by the IASB. The DPOC decided that the ISSB will begin by applying the IASB due process and the DPOC will work proactively with the ISSB leadership to consider whether any adaptations are required.

Please click to access the full report on the IFRS Foundation website.

The papers reflect the current state of the standard-setting work carried out by the Task Force following the due process the PTF-ESRS has defined for itself.

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

• ESRS S2 Own Workforce – Working Conditions
• ESRS S3 Own Workforce - Equal Opportunities
• ESRS G1 Governance, Risk Management and Internal Control
• ESRS G3 Business Conduct

Again, the PTF emphasises that the publication of these working papers is to ensure a transparent process, there is, however, no public consultation at this point; this is planned for a later date, which, however, is not specified. However, an early analysis of the working papers might be helpful given that as early as June 2022 EFRAG will have to submit the drafts of its sustainability reporting standards to the European Commission. 

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 conclude 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. The staff recommend publishing a tentative agenda decision to that effect.

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 conclude 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 staff recommend publishing a tentative agenda decision to that effect. In addition, for the lessee accounting on the forgiven lease payments, the staff suggest a standard-setting project (annual improvement) given the possible alternative interpretations of the principles and requirements in IFRS 16.

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.

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 staff recommend publishing a tentative agenda decision to that effect.

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 staff responded to the comments and recommend finalising the agenda decision with some editorial changes

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).

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

The Board will discuss the following:

• Agenda consultation
• Extractive activities
• Financial instruments with characteristics of equity
• Post-implementation review of IFRS 9
• Maintenance and consistent application
• Primary financial statements
• Business combinations under common control
• Second comprehensive review of the IFRS for SMEs
• Management commentary

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 SRB membership comprises three Chapters:

• European Stakeholder Organisations (up to eight members)
• National Organisations (up to nine members, including reserved seats for the national standard setters of France, Germany, Italy, and Spain)
• Civil Society Organisations (five members)

A full list of members is available on the EFRAG website. A Chair of the SRB is yet to be announced.

The full agenda for the meeting is summarised below:

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

The paper aims to facilitate discussion of possible solutions to a perceived financial statements information gap relating to intangible assets, focusing on disclosures about unrecognised internally generated intangible assets that could be made in financial statements, having regard to costs and benefits. It considers:

• a spectrum of possible disclosures, whether of a financial (cost or fair value) or non-financial (quantitative, non-quantitative or narrative) nature, or a combination of all or some thereof, that could be made in financial statements;
• the types of entities that should be subject to the disclosures;
• whether the disclosures should be mandated or encouraged; and
• how a standard-setting project could be structured and progressed to achieve timely improvements to disclosures.

As a first step, the paper concludes that consideration could be given to making improvements to the current approach to disclosures about unrecognised internally generated intangible assets by publicly-accountable for-profit private-sector entities.

Please click to access the staff paper on the AASB website.

With the EU and individual countries imposing sanctions, European accountants need to consider how these, and other consequences of the war, affect their activities. Therefore, the article on the Accountancy Europe website draws their attention to points of alert on accounting, audit, and reporting as well as anti-money laundering and cybersecurity. In addition, link at the top of the article leads to an overview of the overview of responses from Accountancy Europe members and national accountancy bodies, including in other languages.

Specifically, the Trustees are seeking individuals who have a preparer focus and individuals with direct and relevant experience in the application of IFRSs. Members are expected to attend approximately six two-day meetings each year held in London. Terms of membership will begin 1 July 2022 and will expire on 30 June 2025. Membership is unpaid, but the IFRS Foundation meets members' reasonable expenses of travel on IFRS IC business.

Applications are accepted until 8 April 2022.

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