Please click for more information and registration in the press release on the EFRAG website.

The statement notes that the standards being developed by the ISSB provide a unique opportunity. They can support global convergence of sustainability-related disclosure, create a common reporting baseline, and help mainstream sustainability-related issues into regular business strategy and management.

However, they also warn that a narrow interpretation of enterprise value could mean that ISSB standards could leave out important sustainability risks and opportunities and that the ISSB standards could result in selective disclosure by reporting companies. 

The statement also includes proposed additional elements to consider for improving the standards:

• Including clear guidance on what constitutes appropriate sustainability analysis and management;
• encouraging entities to set sustainability targets;
• requiring geographically contextualized disclosures; and 
• adopting an explicit long-term time horizon. 

Please click to access the full statement on the UN website.

The press release on the IFRS Foundation website notes that the extra month is needed to finalise the remaining procedures necessary to complete the legal consolidation.

This support will help the IFRS Foundation to fully establish the ISSB within the Canadian sustainability ecosystem. In exchange, the IFRS Foundation has committed to scheduling initial ISSB meetings to be held in Montreal in October and December 2022 and hosting the inaugural ISSB Symposium in Montreal, with the dates to be confirmed.

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

In his speech, Mr Alder noted that by endorsing the standards, IOSCO would send a strong signal to its large membership of market regulators that they should examine how they might adopt the standards in their own jurisdictions.

While the critical step in evaluating the ISSB standards and finally endorsing them would be to consider the degree to which and how they can be adopted in practice, there were also more detailed points to be considered by IOSCO as well:

• the ISSB standards should be compatible and connected with existing accounting and financial reporting standards — serving as a “bridge”;
• they should act as a common base for jurisdiction-level requirements, making them interoperable with one another using a building blocks approach;
• they should provide the degree of consistency necessary to enable markets to reliably price sustainability-related risks and opportunities and support capital allocation; and
• they should form the basis for the development of a credible assurance framework.

Mr Alder stressed that he firmly believed the ISSB was the most credible mechanism for achieving the above and creating a baseline for climate disclosure standards.

Mr Alder also commented on the relationship between sustainability disclosures and traditional financial statements and noted this had become increasingly important. He suggested that the ISSB should work closely with the International Accounting Standards Board (IASB) to consider how preparers could be encouraged to develop the factors relevant to calculating enterprise value from a quantitative perspective, and to consider how that calculation might connect to traditional financial statements. The overall aspiration was to bridge the divide between conventional financial disclosures and ISSB sustainability disclosures centred on the concept of enterprise value, so that in combination they paint the full picture.

Please click for the full summary on the SFC website.

The declaration mentions the work and progress of the International Sustainability Standards Board (ISSB) and highlights the need of sustainability disclosures for mobilising private sector finance to support the transition to a sustainable economy. It notes:

We welcome the inauguration of the International Sustainability Standards Board’s (ISSB) and its progress of work on the global baseline of sustainability reporting standards. We support mandatory climate-related financial disclosures and look forward to the recommendations of the Taskforce on Nature-related Financial Disclosures.

Please click to access the full statement on the G7 website.

Below is an analysis of all changes made to the work plan since our last analysis on 30 May 2022.

Standard-setting projects

• Climate-related disclosures — Feedback on the exposure draft will now be discussed in Q4 2022 (previously H2 2022)
• Disclosure initiative — Subsidiaries without public accountability: Disclosures — The IASB decided to publish a final accounting standard as next project step (no date given)
• Disclosure initiative — Targeted standards-level review of disclosures — Following the discussion received on the exposure draft, the IASB will decide on the project direction in Q3 2022
• Dynamic risk management — After deciding on the future direction of the project, the IASB will publish an exposure draft as next project step (no date given)
• General sustainability-related disclosures — Feedback on the exposure draft will now be discussed in Q4 2022 (previously H2 2022)

Maintenance projects

• Contractual cash flow characteristics of financial assets — This project has been moved from the standard-setting agenda to the maintenance agenda
• Lack of exchangeability — The entry of when a decision on the project direction is to be expected has been removed
• Non-current liabilities with covenants — After discussing the feedback received, the IASB decided to publish a final amendment as next project step in Q4 2022
• Supplier finance arrangements — Feedback on the exposure draft will now be discussed in July 2022 (previously June 2022)

Research projects

• Goodwill and impairment — A decision on the project direction is now expected in Q4 2022 (previously H2 2022)
• Post-implementation review of IFRS 10-12 — The project has been concluded by publishing a feedback statement and has therefore been removed from the work plan

Other projects

• IFRS Sustainability disclosure taxonomy — Feedback on the staff request for feedback will be now be discussed in Q4 2022 (previously H2 2022)
• IFRS Taxonomy update — 2022 General improvements and common practice — This project has been renamed from 2021 to 2022

The above is a faithful comparison of the IASB and ISSB work plan at 30 May 2022 and 27 June 2022. For access to the current work plan at any time, please click here.

The following topics were discussed:

Primary Financial Statements

The IASB decided to add a requirement that additional subtotals and line items that are presented in the statement(s) of financial performance in accordance with paragraph 42 of the ED fit into the structure of the proposed categories. The IASB also decided to withdraw the proposal to specifically prohibit columns when presenting MPMs in the statement(s) of financial performance.

Maintenance and consistent application

In November 2010, the IFRS Interpretations Committee asked the IASB to consider amending IAS 1 to clarify when a liability should be classified as current or non-current. That request led to exposure drafts (EDs) in 2012 and 2015 and an amendment in 2020. The effective date of the 2020 amendment was deferred pending further clarifications. In November 2021, the IASB published new amendments with the comment period ending in March 2022. At this meeting the IASB decided to finalise the latest amendments, although not the proposal to require an entity to present separately non-current liabilities with covenants. The IASB also decided to defer the 2020 amendments again, to align them with the effective date of these new, additional, amendments, which would be no earlier than annual reporting periods beginning on or after 1 January 2024.

Post-implementation Review of IFRS 9

The IASB continued to consider feedback from the Request for Information (RFI) Post-implementation Review—IFRS 9 Financial Instruments—Classification and Measurement. At this meeting, the IASB discussed feedback in relation to equity instruments and other comprehensive income. No decisions were made.

Second Comprehensive Review of the IFRS for SMEs Standard

This was the last public decision-making meeting for this project. The IASB granted permission for the staff to prepare the ED and are proposing a comment period of 180 days.

Disclosure Initiative—Subsidiaries without Public Accountability: Disclosures

The IASB decided to proceed to finalise the draft Standard and not to publish a ‘catch-up’ ED that considers amendments to (and new) IFRS Accounting Standards issued after 28 February 2021 before finalising the Standard. The staff will develop a plan for deliberating the feedback on the ED.

Business Combinations under Common Control

The IASB discussed whether some or all BCUCCs are similar to or differ from IFRS 3 BCs. The staff recommended that assessing whether some or all BCUCCs are similar to or differ from IFRS 3 BCs and assessing the information needs of users will help the IASB tentatively decide whether conceptually the acquisition method or a book-value method should apply to some or all BCUCCs. The IASB was not asked to make any decisions.

Equity Method

At its April 2022 meeting, the IASB discussed possible approaches to the application question and asked the staff to develop its analysis further applying its preferred approach, being that after obtaining significant influence, an investor measures its additional interests in an associate as an accumulation of purchases. The IASB decided that in applying this approach, while retaining significant influence, an investor purchasing an additional interest that is a bargain recognises the bargain purchase gain separately in profit or loss. The IASB rejected the staff recommendation that an investor making a partial disposal determines the portion of the carrying amount of an investment in the associate to be derecognised by applying a specific identification method, if the investor can identify the specific portion of the investment being disposed of and its cost, or the last-in first-out (LIFO) method. The staff will consider whether a different method will be recommended to the IASB.

Contractual Cash Flow Characteristics of Financial Assets

In May 2022, the IASB decided to start a standard-setting project to clarify particular aspects of the IFRS 9 requirements for assessing a financial asset’s contractual cash flow characteristics (i.e. the ‘solely payments of principal and interest’ (SPPI) requirements). The staff set out the proposed objective, scope and an indicative timeline for the project. The proposed objective of this project would be to make clarifying amendments to the application guidance in IFRS 9 to enable the consistent application of the SPPI requirements and to consider whether additional disclosure requirements are needed. The staff plan is for the IASB to consider potential clarifications during the second half of 2022 and publish an ED in the first quarter of 2023. The staff confirmed that the project would not change the mechanics of the effective interest rate method (EIR) but would clarify how to apply the EIR to these instruments.

Financial Instruments with Characteristics of Equity

The IASB has been discussing feedback on the Discussion Paper (DP) published in June 2018, for which the comment period closed in January 2019. IAS 32 has no general requirements on reclassification between financial liabilities and equity instruments and there is diversity in practice when there are changes in the substance of the contractual terms without a modification to the contract such that reassessment would result in a different classification outcome from that initially assessed. The IASB decided to add general requirements on reclassification to IAS 32 to prohibit reclassification other than for changes in the substance of contractual terms arising from changes in circumstances outside the contract. The IASB did not support the staff recommendation to account for a reclassification at the beginning of the first reporting period after the change. The IASB instead decided that the change would be recognised in the period it occurs. It also decided that on reclassification from equity to financial liability, a financial liability would be measured at fair value at the date of reclassification and any difference between the carrying amount of the equity instrument and the fair value of the financial liability would be recognised in equity; and on reclassification of a financial liability to equity, an equity instrument is measured at the carrying value of the financial liability at the date of reclassification and no gain or loss is recognised. The IASB decided to add disclosure requirements for these circumstances.

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

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 30 June 2022 would mean that the annual reporting period began on 1 April 2022. Similarly, 2nd quarters ending on 30 June 2022 refer to annual periods that began on 1 January 2022, 3rd quarters ending on 30 June 2022 refer to annual periods that began on 1 October 2021, and 4th quarters ending on 30 June 2022 refer to annual periods that began on 1 July 2021.

The information below reflects developments to 22 September 2022 and will be updated through to September 2022 to reflect new and revised financial reporting requirements that need to be considered for financial reporting periods ending on 30 June 2022. For accounts approved after June 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 30 June 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).

Mr Barckow grouped his arguments into five major messages the IASB received from its stakeholders:

• Completing the IASB's current work plan. The IASB will prioritise completing projects currently on the agenda before beginning new ones. It expects to continue the deliberations on its current projects throughout 2022 and the majority (if not all) of 2023. Mr Barckow described the projects on primary financial statements, goodwill and impairment, and rate-regulated activities as being "in an intense stage of decision-making".
• Balancing the IASB's activities. Even though standard-setting is the core activity of the IASB, it also engages in supporting the consistent application of IFRSs, assisting the digital consumption of financial reports, and actively involving in stakeholder engagement around the world. The feedback received indicates that the balance of the IASB’s activities is about right, however, there were calls for increasing the efforts on digital reporting and on understandability and accessibility of the standards. Therefore, the IASB will provide for a modest increase in these two areas.
• Two new research pipeline projects. The IASB considered the suggestions made by stakeholders and weighed them against the criteria set for adding new projects to its agenda and the likely time needed to complete its current projects. The IASB has decided to add a comprehensive review of its standard on intangible assets, IAS 38, and a project devoted to the statement of cash flows and related matters.
• Climate-related risks as a maintenance pipeline project. As the IASB has already published educational guidance on how to consider climate-related risks in financial statements, this will not be a full-scale project in its own right. The IASB wants to investigate whether there are any shortcomings in today’s reporting in the financial statements by entities and, if so, whether these shortcomings are due to a deficiency in its literature. Interaction with the ISSB has also to be considered in this case. 
• A limited reserve list of two further projects. The IASB has decided to create a reserve list of projects and add operating segments and pollutant pricing mechanisms to it. They will only be added to the work plan if additional capacity becomes available unexpectedly. If they are not activated, they will be included for consideration in the next agenda consultation.

Mr Barckow concluded his remarks with short a short discussion of the connectivity between the IASB and the ISSB and where projects on the agenda of the two Boards may overlap. Please click to access the full transcript of his speech on the IFRS Foundation website.