The Committee will discuss the following:

• IFRS 17 — Quantity of the benefits provided under a group of annuity contracts
• IAS 7 — Demand deposits with restrictions on use
• IFRS 9 and IFRS 16 — Rent concessions: Lessors and lessees
• IAS 32 — Special Purpose Acquisition Companies (SPAC): Classification of public shares as financial liabilities or equity
• Special Purpose Acquisition Companies (SPAC): Accounting for warrants at acquisition
• Work in progress

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 session began with four presentations on different sustainability initiatives.

A representative of the International Sustainability Standards Board (ISSB) explained about the growing and urgent demand for global standards to improve consistency and comparability that led the IFRS Foundation Trustees to establish the ISSB and to generally create the necessary institutional arrangements and technical groundwork for a global sustainability standard setter for the financial markets. After publication of prototype requirements on Climate-related Disclosures and on General Requirements for Disclosure of Sustainability-related Information in November 2021, the development of exposure drafts is well under way, the publication of the exposure drafts is expected by the end of March 2022. Chair and Vice Chair of the ISSB still need to decide on the comment letter period and whether to approach the DPOC for a shortened comment letter period (three months). The look and feel of the exposure drafts will be very similar to IASB exposure drafts and also include a comprehensive basis for conclusions. The ISSB representative concluded with a call to action and encouraged the IFASS members to familiarise themselves with the prototypes and to get ready to respond to the upcoming consultation documents by engaging with stakeholders in their jurisdictions.

The second presentation on the work of the EFRAG Project Task Force on European Sustainability Reporting Standards (PTF-ESRS) explained about the EU context of sustainability reporting, the development of a sustainability reporting pillar as part of EFRAG and the task force's achievements so far and next steps. A key concept of European sustainability reporting will be double materiality, the location and timing of reporting are to be in the management report and at the same time as financial statements. Mandatory audit is envisioned. Working papers on the forthcoming exposure drafts are being made available as they are being discussed by the task force - they are available here on the EFRAG website. The final exposure drafts are expected by the end of April 2022. Outreach events in several EU locations are planned for May and possibly early June 2022.

A representative of the Australian Accounting Standards Board (AASB) discussed positioning sustainability reporting requirements in Australia and explained about two recent consultation documents: the AASB Agenda Consultation 2022-2026 and a consultation on extended external reporting. Australian stakeholders expressed their belief that sustainability reporting is important and pointed to the increased in demand for more transparent, consistent and comparable sustainability information. They were supportive of the AASB expanding its scope of activities to include sustainability reporting. However, respondents also warned that that the scope of sustainability reporting is broad and its objectives differ from that of financial reporting. Respondents also commented that the AASB should consider international alignment as a priority in developing sustainability reporting requirements for Australia, however, there were mixed views about which international approach the AASB should align with. At its February 2022 meeting, the AASB discussed the feedback received and the possible way forward (please see agenda papers 3.1 - 3.9 on this AASB website). Preliminary decisions include that the AASB will include sustainability standard-setting in its remit and will develop a separate suit of sustainability reporting standards. The AASB will apply the existing AASB due process for its standard-setting and starting point will be the ISSB standards.

The fourth presentation by the Korea Accounting Standards Board (KASB) gave a very high-level overview of the decisions to be made when considering the adoption - or development - of sustainability reporting standards. A Planning Committee of the Korea Accounting Institute (KAI) under which the KASB operates is currently developing an adoption and implementation plan of Korea sustainability disclosure standards. The major adoption question to be answered is whether to adopt only ISSB standards, whether to adopt ISSB standards and supplement them with local requirements or whether to adopt only some ISSB standards/requirements and supplement them with local requirements. For the implementation phase, legal, organisational and technical questions need to be considered. The legal questions (mandatory or voluntary, scope, reporting channel, reporting entity's boundary) have a potential to increase the burden on Korean entities, while the Korean approach in general is aimed at reducing the burden. Similarly, the question of dual reporting (use of an existing reporting framework and application of the ISSB's disclosure requirements) vs. converged reporting (one set of reporting requirements) has a burden aspect. Finally, the Committee is looking into who the standard setter should be: (1) Expand the remit of the KASB (at the price of the lack of expertise), (2) establish an KSSB under the roof of the KAI (to ensure connectivity), or (3) establish an independent KSSB (at the price of a lack of structure and financing).

Following the presentations, the floor was opened for questions, comments and observations:

• While for the EFRAG approach a possible structure of a report was presented that looked rather straightforward, it was admitted that there will be no single measurement unit - information would be narrative, qualitative, quantitative etc. The estimate was that a report would present 30-40 different measuring units so that combining numbers into single measures such as "profit", "loss" or "equity" would not be possible.
• Asked about international co-operation, the ISSB representative clarified that international exchange (including with EFRAG) had been very helpful in developing the forthcoming exposure drafts and would continue in the future. An ASAF equivalent (the SSAF) will be set up. However, the ISSB is not only aiming at interoperability with different jurisdictions around the world, but also interoperability with broader stakeholder groups.
• An IASB representative voiced concerns about the amount of consultation documents that will potentially stretch the stakeholders' ability to cope with them.
• Asked about including (although at a later stage) smaller entities in the comprehensive EU requirements although the burden would considerably, the EFRAG representative replied that not including the smaller entities could in fact mean actively excluding them going forward as banks might be asking for the information or as entities might be required to provide them anyway as part of supply chains.
• It was observed that some jurisdictions (as e.g. Australia and Korea) are just beginning to develop sustainability reporting structures. While the speed of the ISSB is highly appreciated, it might make it difficult for some jurisdictions to comment in an informed manner.
• In a similar vein, EFRAG was asked whether the detailed, comprehensive requirements developed now would not make it difficult later to converge/harmonise with ISSB standards later (the EFRAG representative was positive that there was a lot of common ground already).
• It was commented that connectivity between IASB and ISSB should not be discussed at project level, but at an overarching integrated reporting level.
• Asked about the wider sphere of sustainable development and the SDGs, the ISSB representative pointed at the Sustainability Consultative Committee to be set up. Membership would comprise multilateral institutions, including the UN. The group would bring topics of emerging focus to the ISSB's attention who would then decide how this is relevant for and can be reflected in the ISSB's work.

A summary of the agenda is set out below:

The IASB issued the IFRS for SMEs in 2009 and amended in it 2015 with the 2015 amendments becoming effective on 1 January 2017. In 2018, the IASB began thinking about the second review of the IFRS for SMEs with first discussions beginning in 2019. A request for information was published in January 2020. By now, all major topics — including those that were held back in the first round of amendments because they were considered too recent to provide enough experience for their application by SMEs — have been discussed with only disclosures, transition and some sweep issues remaining. The IASB staff hopes to be able to issue an exposure draft by the end of 2022.

First discussions by the IASB quickly revealed that an overarching framework was needed for decisions made in the project. Board member views ranged from complete alignment of the IFRS for SMEs with full IFRSs to treating the IFRS for SMEs as an independent standard and only updating it for specific issues arising from application. The IASB agreed three alignment principles to find a balance between full alignment and treating the IFRS for SMEs as a standalone standard:

• Relevance to SMEs — Would a change make a difference to the decisions of users?
• Simplification — Can appropriate simplifications be made?
• Faithful representation — Does the outcome faithfully represent economics?

It also turned out that a cost/benefits analysis was an underpinning question.

Applying the alignment principles and cost/benefit consideration, the IASB has come up with three groups of (non-)alignments:

1. Alignment with IFRSs;
2. Partial alignment with IFRSs; or
3. Not to align with IFRSs.

Translated into main tentative decisions so far made by the IASB, this means:

These tentative decisions have diverse reasons, background or extent. While, for example a new section on fair value measurement would be introduced, this would not come with new requirements, just the collection of the current requirements into one new section. And the IFRS 9 amendments would introduce a dual model consisting of incurred and expected credit losses. A detailed list of all 35 tentative decisions made to date is available on the IASB website.

Questions from the IFASS members included what format the forthcoming ED will have (new sections will be identified as fully new, amended sections in the usual style of EDs) and whether the IASB really believes that three levels of standards are needed (full IFRSs, new IFRS with reduced disclosure requirements, and the IFRS for SMEs — a paper on this question will be brought to the March IASB meeting). Opinions on whether the IFRS for SMEs should be aligned with IFRS 16 were divided.

The MB discussed the ongoing activities of the IASB, the findings of its agenda consultation and the work on digital financial reporting. The MB members also discussed the progress made by the ISSB in developing a comprehensive global baseline of high-quality sustainability disclosure standards to meet investor needs.

Please click to access the report on the IOSCO website.

Please click to access the updated alignment dashboard prepared for the March 2022 IPSASB meeting on the IPSASB website.

In this context, please see also our 2021 edition of IPSAS in your pocket published in February.

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, and one working paper in Batch 3, Batch 4 consists of one paper on presentation, five papers on social matters, and one paper on the environmental topic biodiversity (all links to the EFRAG website):

• ESRS P1 Sustainability Statements
• ESRS S1 Own Workforce General Standard
• ESRS S4 Other work-related rights
• ESRS S5 Workers in the Value Chain
• ESRS S6 Affected Communities
• ESRS S7 Consumers and End-users
• ESRS E4 Biodiversity and Ecosystems standard

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. 

Highlights of the podcast include discussions on: 

• an update on the agenda consultation and developments in the project on financial instruments with characteristics of equity;
• decisions as a result of the post-implementation review of IFRS 10-12 and in the development of the IFRS for SMEs exposure draft;
• deliberations in the projects on primary financial statements and rate-regulated activities; and
• feedback on the projects on dynamic risk management and the targeted standards level review of disclosures.

The podcast can be accessed through the press release on the IASB website.

Please click to view the detailed notes taken by Deloitte observers for the IASB meeting.

The memoranda of understanding formalise the partnerships and funding arrangements required to establish the ISSB in Frankfurt. While the ISSB will have a global, multi-location presence, the Frankfurt office will provide the seat of the Board and the office of the ISSB Chair. The office will provide key support functions for the ISSB, including the hosting of board meetings, and will act as a hub for the Europe, Middle East and Africa region.

Please click for additional information in the press release on the IFRS Foundation website.

The full agenda for the meeting is summarised below.

Mr Mackenzie, who is an IASB Board member and before that served six years as a member of the IFRS Interpretations Committee, follows Sue Lloyd who has been appointed Vice Chair of the newly formed the International Sustainability Standards Board (ISSB).

Please click for more information in the press release on the IFRS Foundation website.