Dr Barckow began his speech by discussing convergence between the  IASB and FASB standards. He discussed that there are two angles related to convergence: product-related view (compatibility of standards) and process-related view (maintenance). He noted that by ‘bringing the two boards together for education and information-sharing sessions, by talking regularly to our colleagues at FASB at all levels, and by alerting each other of new information and developments arising’, the IASB and FASB can continue to keep their converged standards converged.

Next, Dr Barckow highlighted areas that the IASB will focus on over the next five years. This includes finalizing current projects in its work plan, working with the ISSB to make sure both boards collaborate where possible, and three new projects on intangible assets, statement of cash flows, and climate-related risks. In addition, he discussed why a project on cryptocurrencies was not added to the work plan but suggested that the IASB will continue to monitor any developments in this area and connect with the FASB on their project.

Full transcript of the speech is available on the IFRS Foundation’s website.

The presentation discussed the following topics:

• Background (objective, scope and framework)
• Main proposals
• Other topics the IASB is seeking feedback on

The record­ing can be accessed through the press release or con­fer­ence page (sign-in required) on the IFRS Foundation’s website.

The following topics are on the agenda.

Financial Instruments with Characteristics of Equity (FICE)

The staff recommend that no changes are made to the presentation requirements in IAS 32 for equity instruments or to specifically address financial liabilities containing contractual obligations to pay amounts based on the entity’s performance or changes in the entity’s net assets. However, the staff recommend entities with these types of financial liabilities measured at fair value through profit or loss be required to disclose the total gains or losses recognised in profit or loss in each reporting period that arise from remeasuring such financial liabilities.

Work Plan

The staff expects that the IASB will conclude its post-implementation review (PIR) of the classification and measurement requirements in IFRS 9 with the publication of its Feedback Statement in December 2022. The staff also expects that the IASB will conclude its Disclosure Initiative—Targeted-Standards Level Review of Disclosures with the publication of its Project Summary in Q1 2023. In addition, the staff expects that the IASB will issue final amendments for International Tax Reform—Pillar Two Model Rules and Supplier Finance Arrangements in Q2 2023.

Rate-regulated Activities

The staff recommend that an entity not recognise inflation adjustments to the regulatory capital base as a regulatory asset. They also recommend that an entity recognise a regulatory asset (regulatory liability) relating to an allowable expense or performance incentive included in its regulatory capital base when there is a direct relationship between the entity’s regulatory capital base and its property, plant and equipment, and the entity has an enforceable present right (obligation) to add (deduct) the allowable expense or performance incentive to (from) future regulated rates. An entity would not recognise a regulatory asset (regulatory liability) relating to an allowable expense or performance incentive included in its regulatory capital base when there is no direct relationship between the entity’s regulatory capital base and its property, plant and equipment.

Maintenance and consistent application

The IASB will discuss matters raised in the feedback on the Exposure Draft (ED) Lack of Exchangeability. The staff recommend that the IASB proceed with its proposals in the ED with some changes. For factors to consider when assessing exchangeability, clarify that an entity does not consider ‘unofficial markets’ in assessing exchangeability but, when exchangeability is lacking, it can use exchange rates from these markets to estimate the spot exchange rate and that all factors are to be considered holistically. For determining the spot exchange rate—the staff recommend to amend proposed paragraph 19A to state that an entity’s objective in estimating the spot exchange rate is to reflect at the measurement date the rate at which an orderly exchange transaction would take place between market participants under prevailing economic conditions.

Equity Method

In this session, the IASB will discuss applying the preferred approach after purchase of an additional interest in an associate and two application questions. The staff recommend the IASB proceed with the view that an investor is measuring a single investment in the associate rather than layers of the investment in the associate. The staff also recommend that an investor that has reduced its interest in an associate to zero does not recognise the unrecognised losses from the cost of the additional interest in the associate. Lastly, the staff recommend that an investor recognises its share of comprehensive income until its interest in the associate is reduced to zero.

Goodwill and Impairment

The staff recommend that the IASB move the project from the research programme to the standard-setting work plan.

Digital Financial Reporting Strategy

This paper sets out a strategic framework that is intended to provide strategic direction and boundaries to help identify possible digital financial reporting activities that the IASB could undertake and provide consistent language for communicating the digital financial reporting strategy. There are no recommendations.

Disclosure Initiative—Subsidiaries without Public Accountability: Disclosures

The staff recommend that the IASB confirms its proposals in the draft Standard, that the application of the disclosure requirements in IFRS 8, IFRS 17 and IAS 33 remain applicable for a subsidiary applying the Standard, and reduced disclosure requirements for IAS 34 in the Standard.

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

The following topics are on the agenda:

ISSB Consultation on Agenda Priorities

The ISSB has begun work on a Request for Information (RFI) as part of its consultation for developing its work plan. The RFI will include two main components: foundational work and potential projects. ISSB staff have conducted outreach and research activities to put together a short-list of potential projects to be considered for inclusion within the RFI. The four potential projects identified are biodiversity, including ecosystems, ecosystem services and other nature-related issues; human capital, with a focus on diversity, equity and inclusion (DEI); human rights, particularly in the context of the value chain, with a focus on worker, labour and community rights; and connectivity in reporting, management commentary and integrated reporting.

General Sustainability-related Disclosures

The staff recommend that the ISSB provide some clarifications to the proposals: the framing and objective of [draft] S1 in with respect to the relationship between value and sustainability; and identifying sustainability-related risks and opportunities and assessment of material information.

Climate-related Disclosures

The staff recommend that the ISSB address specific feedback received during the comment period in relation to the disclosure requirements for Scope 1 and 2 GHG Emissions. For Scope 3 GHG emissions the staff recommend that the ISSB provide some dislcosure relief, introduce a framework for measuring Scope 3 GHG emissions, provide relief related to an entity’s value chain, require an entity to reassess the ‘scope’ of its sustainability-related risks and opportunities in its value chain only upon the occurrence of either a significant event or a significant change in circumstances, and confirm that no additional relief will be provided regarding the proposal that an entity is required to include information about which of the 15 Scope 3 GHG emissions categories described in the GHG Protocol Value Chain Standard are included within the entity’s measure of Scope 3 GHG emissions. In relation to financed emissions, the staff recommend that the ISSB confirm the proposed disclosure requirements for financed emissions for three industries—Asset Management & Custody Activities, Commercial Banks and Insurance but not for the Investment Banking & Brokerage industry. There are other more detailed changes recommended by the staff.

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

The IPSASB’s immediate action will be to establish a Sustainability Task Force to lead the first critical phase of research and scoping. The Board’s prioritised research topics are:

• General requirements for disclosure of sustainability-related financial information,
• Climate-related disclosures, and
• Natural resources – Non-financial disclosures.

Please click for more information on the IPSASB website.

The IPTF's discussion document for the 9 November 2022 meeting is now available and states the following view of the Task Force:

Countries with three-year cumulative inflation rates exceeding 100%:

• Argentina
• Ethiopia
• Iran
• Lebanon
• South Sudan
• Sudan
• Suriname
• Turkey
• Venezuela
• Yemen
• Zimbabwe

Countries with projected three-year cumulative inflation rates exceeding 100%:

There are no countries in this category for this period.

Countries where the three-year cumulative inflation rates had exceeded 100% in recent years:

There are no countries in this category for this period.

Countries with recent three-year cumulative inflation rates exceeding 100% after a spike in inflation in a discrete period:

There are no countries in this category for this period.

Countries with projected three-year cumulative inflation rates between 70% and 100% or with a significant (25% or more) increase in inflation during the current period

• Angola
• Ghana (new entry)
• Haiti
• Moldova (new entry)
• Sierra Leone (new entry)
• Sri Lanka (new entry)
• Ukraine (new entry)

The IPTF also notes that there may be additional countries with three-year cumulative inflation rates exceeding 100% or that should be monitored which are not included in the analysis as the necessary data is not available. Examples cited are Afghanistan and Syria.

The full list, including exact numbers, detailed explanations of the calculation of the numbers, and observations of the Task Force is available on the CAQ website.

In the first part of his speech, Mr Barckow looked back over the 21 years of collaboration between IASB and EFRAG and called them "21 years of shared success". When, in 2002, Europe adopted the IAS Regulation requiring companies listed on regulated securities markets to prepare their consolidated financial statements in accordance with International Accounting Standards from 2005 onwards this encouraged most of the rest of the world to follow suit. Mr Barckow pointed out that, therefore, the IASB's success is also Europe’s success.

Mr Barckow also noted EFRAG’s ongoing contribution to the technical work of the IASB and praised it as being well informed and immensely helpful. He noted that at times EFRAG may bring different perspectives to the table than does the IASB, but be also stressed that the discussions and debates have always been conducted with the aim of enhancing financial reporting and over the years the IASB and EFRAG have collectively resolved many reporting challenges.

In the second part of his speech, Mr Barckow looked at the future. He noted as key priority for both the IASB and EFRAG the necessity to balance the varied needs of a wide range of stakeholders. The standard setters need to carefully choose areas to concentrate on and to be mindful of stakeholders’ capacity to cope with changes. As overall aim of the collaboration between the IASB and EFRAG Mr Barckow stressed "maintaining and further enhancing a global financial reporting language and [...] fostering one global capital market".

Mr Barckow's overall message at EFRAG's 21^st anniversary conference was:

The IASB and EFRAG certainly have a special relationship. It spans many years of collaboration, debate and discussion. We have always shared a common goal, regardless of our stances on various matters. That goal is to create a global passport in financial reporting for multinational companies — with EFRAG from an EU perspective, and the IASB as the international standard-setter.

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

The following topics were discussed:

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

The IASB discussed financial liabilities and own credit. The IASB confirmed that 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 discussed managing equity and notional alignment of designated assets and liabilities. The IASB decided that equity not be an eligible item in the DRM model. The IASB also agreed to amend 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 continued redeliberating the proposals in the Exposure Draft Regulatory Assets and Regulatory Liabilities. The IASB decided 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 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. If there is 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 IASB decided to 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 IASB decided to proceed with its proposals in the ED with some changes.

Amendments to the Classification and Measurement of Financial Instruments

The IASB discussed a sweep issue related to contractually linked instruments (CLI) and the derecognition requirements in IFRS 9 for the settlement of a financial asset or a financial liability via electronic cash transfers. The IASB decided to clarify 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 IASB also decided to clarify 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 IASB decided to refine 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 IASB decided to retain the impairment-only model for goodwill.

Business Combinations under Common Control (BCUCC)

The IASB continued discussing the selection of the measurement method to apply to a BCUCC. The staff set out their initial views, but did not make any recommendations. The IASB agreed with the general direction set out in its 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 IASB confirmed 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 IASB also decided, by a bare majority, not to proceed with the proposal that the parent’s consolidated financial statements are ‘available for public use’.

An analysis of how the IASB’s work plan has changed after the meeting is available on here.

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

The 13-minute webcast:

• provides a brief background on the IFRS for SMEs;
• describes the approach taken in the second comprehensive review of the standard that led to the publication of the ED; and
• summarises the main proposals in the ED.

The webcast can be accessed through the press release on the website of the IFRS Foundation.

New item: IFRS 16 Leases—Definition of a Lease: Substitution Rights: The Committee received a submission about how to assess whether a contract contains a lease applying IFRS 16 when the supplier has particular substitution rights and at what level an entity evaluates whether that right is substantive. The contract in the fact pattern is for the use of 100 similar assets. The supplier has the practical ability to substitute alternative assets throughout the period of use but is expected to benefit economically from the exercise of its right to substitute only after some time into the period of the lease. The Committee members generally agreed with the staff conclusion that there is an identified asset because the supplier’s substitution right is not substantive but had various comments on how the tentative agenda decision analyses it and reaches that conclusion. Most of the Committee members agreed that the level to evaluate whether the substitution right is substantive is on each asset. The Committee voted in favour of not adding a standard-setting project to the work plan and instead to publish a tentative agenda decision, with the drafting amended to take comments into consideration that have been raised by Committee members during the meeting.

Potential annual improvements to IFRS Accounting Standards: The Committee members shared their views on the staff’s preliminary views on the following six proposed amendments to IFRS Accounting Standards and to include them in the next annual improvements cycle:

• IFRS 1 First-time Adoption of International Financial Reporting Standards—terminology update
• IFRS 10 Consolidated Financial Statements—'De facto agent’ assessment
• IFRS 9 Financial Instruments—terminology update
• IAS 7 Statement of Cash Flows—terminology update
• IFRS 7 Financial Instruments: Disclosures—reference update
• IFRS 7 Financial Instruments: Disclosures—implementation guidance

Input on IASB project: Post-implementation Review (PIR) of IFRS 15 Revenue from Contracts with Customers: The IASB has started the PIR of IFRS 15 which aims at assessing whether the effects of applying new requirements on users of financial statements, preparers, auditors and regulators are as intended when the IASB developed those requirements. The Committee members shared their views on the implementation and ongoing application of IFRS 15, including the matters that the Committee members think the IASB should consider in the PIR of the Standard.

Work in progress: There are two new matters that have not been presented to the Committee.

More In­for­ma­tion

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