The staff have developed an addendum to the paper developed for the 22 November meeting (summarised here). It will discussed today at 13:30 hours.

The number of drafts has been brought down to twelve, two cross-cutting draft standards, five topical draft standards on environment, four topical draft standards on social aspects, and one topical draft standard on governance:

• Cross-cutting:
  • Draft ESRS 1 General requirements
  • Draft ESRS 2 General disclosures
• Environmental:
  • Draft ESRS E1 Climate change
  • Draft ESRS E2 Pollution
  • Draft ESRS E3 Water and marine resources
  • Draft ESRS E4 Biodiversity and ecosystems
  • Draft ESRS E5 Resource use and circular economy
• Social:
  • Draft ESRS S1 Own workforce
  • Draft ESRS S2 Workers in the value chain
  • Draft ESRS S3 Affected communities
  • Draft ESRS S4 Consumers end users
• Governance:
  • Draft ESRS G1 Business conduct

In developing the final drafts, the EFRAG Sustainability Reporting Board (SRB) acknowledged that comment letters had claimed that EFRAG was asking too much and that the proposed disclosure requirements went far too deep. As a consequence the final drafts require considerably less information/data points to be disclosed. The SRB also considered whether re-exposure of the final drafts was required but came to the conclusion that the need to re-expose would only apply if there were any fundamental changes that do not address comments received in the public consultation.

As a next step, the EC now has to approve the ESRS drafts or revise them itself before they are to be applied as a delegated act by companies within the scope of the Corporate Sustainability Reporting Directive (CSRD).

Please click for the press release and access to the draft ESRS on the EFRAG website. Our iGAAP in Focus newsletter provides detailed insights into the proposals.

The two-hour workshop was structured into three sections:

1. What is digital financial reporting?
2. IFRS Accounting Taxonomy, and
3. Digital reporting and standard-setting.

The IASB was represented by IASB member Ann Tarca.

A recording of the workshop is now available on YouTube.

Highlights of the podcast include discussions on:

• scenario analysis;
• reference materials for companies;
• interoperability;
• the digital taxonomy;
• climate transition planning; and
• disclosure timing.

The podcast can be accessed through the press release on the IFRS Foundation’s website.

Please click to view the detailed notes taken by Deloitte observers for the supplementary ISSB meeting held on 1-3 November. Notes for the ISSB meeting held on 15-16 November are available here.

The new guidance, International Non-Profit Accounting Guidance (INPAG), seeks to improve clarity and consistency of Non-Profit Organisation (NPO) financial reports, resulting in greater credibility and trust in the sector globally.

The exposure draft is the first of three parts, each followed by a 4-month consultation period. ED1 addresses four main topics that are important for the framing and context of INPAG:

1. A description of Non-Profit Organisations
2. A framework for INPAG
3. Financial statements presentation
4. Narrative reporting

INPAG will have 36 sections. ED1 contains the preface, sections 1 to 10, and section 35. The remaining sections will be covered in ED2 and ED3 in 2023.

Please click for the press release and the ED and supporting material on the IFR4NPO website.

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

The following topics are on the agenda:

Post-implementation Review (PIR) of IFRS 9—Classification and Measurement

The IASB will discuss financial liabilities and own credit. The IASB will be asked if it is satisfied that the project can be concluded. The next step will be the publication of a Report and Feedback Statement.

Dynamic Risk Management             

The IASB will discuss managing equity and notional alignment of designated assets and liabilities. The staff recommend that equity not be an eligible item in the DRM model. The staff also recommend that the IASB amends its original tentative decision to not require the notionals of eligible assets, liabilities and future transaction for designation in the current net open risk position to be the same.

Rate-regulated Activities

At this meeting, the IASB will continue redeliberating the proposals in the Exposure Draft Regulatory Assets and Regulatory Liabilities. The staff recommend that when there is a direct relationship between an entity’s regulatory capital base and its property, plant and equipment and the regulatory agreement provides the entity with (a) both a debt and equity return on an asset not yet available for use, the entity must reflect in the statement of financial performance during the construction period only those returns in excess of the entity’s capitalised borrowing costs; or (b) only a debt return on an asset not yet available for use, the entity must not reflect the return in the statement of financial performance during the construction period if the entity capitalises its borrowing costs.

Maintenance and consistent application

International Tax Reform (Pillar Two Model Rules)—the staff recommend that the IASB amend IAS 12 to introduce a temporary exception from accounting for deferred taxes arising from legislation enacted to implement the OECD’s Pillar Two model rules (including any qualified domestic minimum top-up tax). The exception would apply until such time that the IASB decides to either remove it or make it permanent. Supplier Finance Arrangements—the staff recommend that the IASB proceed with its proposals in the ED with some changes.

Amendments to the Classification and Measurement of Financial Instruments

The IASB will discuss a sweep issue related to contractually linked instruments and the derecognition requirements in IFRS 9 for the settlement of a financial asset or a financial liability via electronic cash transfers. The staff recommend clarifying that when determining whether a transaction is in the scope of the CLI requirements, an entity excludes any instruments held by the sponsor that has transferred the underlying assets to the issuer. For electronic transfers, the staff are recommending clarifying that an entity applies settlement date accounting when recognising and derecognising financial assets (except for regular way transactions) and financial liabilities. In relation to the accounting alternative for derecognising a financial liability before settlement date, the staff recommend refining the criteria to require an entity to have no ability to withdraw, stop or cancel an electronic payment instruction; to have lost the practical ability to access the cash as a result of the electronic payment instruction; and the settlement risk associated with the electronic payment instruction to be insignificant.

Goodwill and Impairment

The staff will ask the IASB whether they want to retain the impairment-only model or move to an amortisation model.

Business Combinations under Common Control (BCUCC)

The IASB will continue discussing the selection of the measurement method to apply to a BCUCC. The staff set out their initial views, but are not making any recommendations. The staff agree with the IASB’s preliminary views to, in principle, apply the acquisition method to a BCUCC that affects non-controlling shareholders but that the IASB should consider some potential exceptions. If the BCUCC does not affect non-controlling shareholders a book-value method would apply, with no exceptions.

Disclosure Initiative—Subsidiaries without Public Accountability: Disclosures

The staff recommend that the IASB confirms that the subsidiaries eligible to apply the Standard are a ‘subsidiary at the end of the reporting period’ that has an ultimate or intermediate parent that produces consolidated financial statements complying with IFRS Accounting Standards. The staff also recommend not proceeding with the proposal that the parent’s consolidated financial statements are ‘available for public use’.

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

Topics discussed during the meeting included:

• Updates from MASB
• Second comprehensive review of the IFRS for SMEs Accounting Standard
• Post-implementation review of IFRS 9
• Post-implementation review of IFRS 15
• Update on ISSB developments
• Third Agenda consultation
• IFRS Interpretations Committee update

A recording of the meeting is available on the IFRS Foundation’s website.

This issue features:

• In profile — Enitan Adebonojo, Senior Forensic Equity Analyst and Executive Director at CFRA
• Spotlight — Key conclusions from the Third Agenda Consultation
• We need your views — Open consultations
• Stay up to date
• Resources for investors — Recent webcasts and webinars
• IASB Updates and podcasts

The Investor Update newslet­ter is available on the IFRS Foun­da­tion’s website.

The Committee will discuss the following:

• Administrative matters
• Definition of a lease: Substitution rights (IFRS 16)
• Potential annual improvements to IFRS Accounting Standards
• Post-implementation review of IFRS 15

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.