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 September 2022 would mean that the annual reporting period began on 1 July 2022. Similarly, 2nd quarters ending on 30 September 2022 refer to annual periods that began on 1 April 2022, 3rd quarters ending on 30 September 2022 refer to annual periods that began on 1 January 2022, and 4th quarters ending on 30 September 2022 refer to annual periods that began on 1 October 2021.
The information below reflects developments to 31 October 2022 and will be updated through to December 2022 to reflect new and revised financial reporting requirements that need to be considered for financial reporting periods ending on 30 September 2022. For accounts approved after September 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
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 September 2022, for various quarterly reporting periods:
| Pronouncement |
Effective date* |
Mandatory at 30 September 2022? |
| 1st qtrs |
2nd qtrs |
3rd qtrs |
Full yrs |
| AMENDMENTS |
|
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4)
|
1 January 2018 |
Optional° |
Optional° |
Optional° |
Optional° |
|
Interest Rate Benchmark Reform — Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
|
1 January 2021 |
** |
** |
** |
Yes |
| Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16) |
1 April 2021 |
** |
** |
Yes |
Yes |
| Reference to the Conceptual Framework (Amendments to IFRS 3) |
1 January 2022 |
Yes |
Yes |
Yes |
- |
| Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16) |
1 January 2022 |
Yes |
Yes |
Yes |
- |
| Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37) |
1 January 2022 |
Yes |
Yes |
Yes |
- |
| Annual Improvements to IFRS Standards 2018–2020 |
1 January 2022 |
Yes |
Yes |
Yes |
- |
* 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.
|
Financial statement considerations in adopting new and revised pronouncements
Where new and revised pronouncements are applied for the first time, there can be consequential impacts on annual financial statements, including:
- Updates to accounting policies. The terminology and substance of disclosed accounting policies may need to be updated to reflect new recognition, measurement and other requirements, e.g. IAS 19 Employee Benefits may impact the measurement of certain employee benefits.
- Impact of transitional provisions. IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors contains a general requirement that changes in accounting policies are retrospectively applied, but this does not apply to the extent an individual pronouncement has specific transitional provisions.
- Disclosures about changes in accounting policies. Where an entity changes its accounting policy as a result of the initial application of an IFRS and it has an effect on the current period or any prior period, IAS 8 requires the disclosure of a number of matters, e.g. the title of the IFRS, the nature of the change in accounting policy, a description of the transitional provisions, and the amount of the adjustment for each financial statement line item affected
- Third statement of financial position. IAS 1 Presentation of Financial Statements requires the presentation of a third statement of financial position as at the beginning of the preceding period in addition to the minimum comparative financial statements in a number of situations, including if an entity applies an accounting policy retrospectively and the retrospective application has a material effect on the information in the statement of financial position at the beginning of the preceding period
- Earnings per share (EPS). Where applicable to the entity, IAS 33 Earnings Per Share requires basic and diluted EPS to be adjusted for the impacts of adjustments result from changes in accounting policies accounted for retrospectively and IAS 8 requires the disclosure of the amount of any such adjustments.
Whilst disclosures associated with changes in accounting policies resulting from the initial application of new and revised pronouncements are less in interim financial reports under IAS 34 Interim Financial Reporting, some disclosures are required, e.g. description of the nature and effect of any change in accounting policies and methods of computation.
|
New or revised standards
New or revised pronouncement
When effective
Application at 30 September 2022 to
1st qtrs
2nd qtrs
3rd qtrs
Full yrs
IFRS 17 Insurance Contracts
IFRS 17 requires insurance liabilities to be measured at a current fulfillment value and provides a more uniform measurement and presentation approach for all insurance contracts. These requirements are designed to achieve the goal of a consistent, principle-based accounting for insurance contracts. IFRS 17 supersedes IFRS 4 Insurance Contracts as of 1 January 2023.
Issued: 18 May 2017
Effective date:
Applicable to annual reporting periods beginning on or after 1 January 2023
Endorsed for use in the EU, albeit with an optional exemption from applying the annual cohort requirement.
First quarters ending 30 September 2022:
Optional
Second quarters ending 30 September 2022:
Optional
Third quarters ending 30 September 2022:
Optional
Annual periods ending 30 September 2022:
Optional
Amendments
New or revised pronouncement
When effective
Application at 30 September 2022 to
1st qtrs
2nd qtrs
3rd qtrs
Full yrs
Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4)
Amends IFRS 4 Insurance Contracts provide two options for entities that issue insurance contracts within the scope of IFRS 4:
- an option that permits entities to reclassify, from profit or loss to other comprehensive income, some of the income or expenses arising from designated financial assets; this is the so-called overlay approach;
- an optional temporary exemption from applying IFRS 9 for entities whose predominant activity is issuing contracts within the scope of IFRS 4; this is the so-called deferral approach.
The application of both approaches is optional and an entity is permitted to stop applying them before the new insurance contracts standard is applied.
Issued: 12 September 2016
Effective date:
Overlay approach to be applied when IFRS 9 is first applied. Deferral approach effective for annual periods beginning on or after 1 January 2018 and only available for five years after that date.
First quarters ending 30 September 2022:
Optional
Second quarters ending 30 September 2022:
Optional
Third quarters ending 30 September 2022:
Optional
Annual periods ending 30 September 2022:
Optional
Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)
The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current.
Issued: 23 January 2020
Effective date:
Annual reporting periods beginning on or after 1 January 2024
Not yet endorsed for use in the EU.
First quarters ending 30 September 2022:
Optional
Second quarters ending 30 September 2022:
Optional
Third quarters ending 30 September 2022:
Optional
Annual periods ending 30 September 2022:
Optional
Reference to the Conceptual Framework (Amendments to IFRS 3)
The amendments update an outdated reference to the Conceptual Framework in IFRS 3 without significantly changing the requirements in the standard.
Issued: 14 May 2020
Effective date:
Annual reporting periods beginning on or after 1 January 2022
First quarters ending 30 September 2022:
Mandatory
Second quarters ending 30 September 2022:
Mandatory
Third quarters ending 30 September 2022:
Mandatory
Annual periods ending 30 September 2022:
Optional
Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16)
The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss.
Issued: 14 May 2020
Effective date:
Annual reporting periods beginning on or after 1 January 2022
First quarters ending 30 September 2022:
Mandatory
Second quarters ending 30 September 2022:
Mandatory
Third quarters ending 30 September 2022:
Mandatory
Annual periods ending 30 September 2022:
Optional
Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37)
The amendments specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).
Issued: 14 May 2020
Effective date:
Annual reporting periods beginning on or after 1 January 2022
First quarters ending 30 September 2022:
Mandatory
Second quarters ending 30 September 2022:
Mandatory
Third quarters ending 30 September 2022:
Mandatory
Annual periods ending 30 September 2022:
Optional
Annual Improvements to IFRS Standards 2018–2020
Makes amendments to the following standards:
- IFRS 1 – The amendment permits a subsidiary that applies paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by its parent, based on the parent’s date of transition to IFRSs.
- IFRS 9 – The amendment clarifies which fees an entity includes when it applies the ‘10 per cent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognise a financial liability. An entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other’s behalf.
- IFRS 16 – The amendment to Illustrative Example 13 accompanying IFRS 16 removes from the example the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives are illustrated in that example.
- IAS 41 – The amendment removes the requirement in paragraph 22 of IAS 41 for entities to exclude taxation cash flows when measuring the fair value of a biological asset using a present value technique.
Issued: 14 May 2020
Effective date:
Annual reporting periods beginning on or after 1 January 2022
First quarters ending 30 September 2022:
Mandatory
Second quarters ending 30 September 2022:
Mandatory
Third quarters ending 30 September 2022:
Mandatory
Annual periods ending 30 September 2022:
Optional
Amendments to IFRS 17
Amends IFRS 17 to address concerns and implementation challenges that were identified after IFRS 17 Insurance Contracts was published in 2017. The main changes are:
- Deferral of the date of initial application of IFRS 17 by two years to annual periods beginning on or after 1 January 2023
- Additional scope exclusion for credit card contracts and similar contracts that provide insurance coverage as well as optional scope exclusion for loan contracts that transfer significant insurance risk
- Recognition of insurance acquisition cash flows relating to expected contract renewals, including transition provisions and guidance for insurance acquisition cash flows recognised in a business acquired in a business combination
- Clarification of the application of IFRS 17 in interim financial statements allowing an accounting policy choice at a reporting entity level
- Clarification of the application of contractual service margin (CSM) attributable to investment-return service and investment-related service and changes to the corresponding disclosure requirements
- Extension of the risk mitigation option to include reinsurance contracts held and non-financial derivatives
- Amendments to require an entity that at initial recognition recognises losses on onerous insurance contracts issued to also recognise a gain on reinsurance contracts held
- Simplified presentation of insurance contracts in the statement of financial position so that entities would present insurance contract assets and liabilities in the statement of financial position determined using portfolios of insurance contracts rather than groups of insurance contracts
- Additional transition relief for business combinations and additional transition relief for the date of application of the risk mitigation option and the use of the fair value transition approach
Issued: 25 June 2020
Effective date:
Annual reporting periods beginning on or after 1 January 2023
First quarters ending 30 September 2022:
Optional
Second quarters ending 30 September 2022:
Optional
Third quarters ending 30 September 2022:
Optional
Annual periods ending 30 September 2022:
Optional
Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)
The amendment changes the fixed expiry date for the temporary exemption in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2023.
Issued: 25 June 2020
Effective date:
Immediately available.
First quarters ending 30 September 2022:
Optional
Second quarters ending 30 September 2022:
Optional
Third quarters ending 30 September 2022:
Optional
Annual periods ending 30 September 2022:
Optional
Classification of Liabilities as Current or Non-current — Deferral of Effective Date (Amendment to IAS 1)
The amendment defers the effective date of the January 2020 amendments by one year, so that entities would be required to apply the amendment for annual periods beginning on or after 1 January 2024.
Issued: 15 July 2020
Effective date:
Immediately available.
Not yet endorsed for use in the EU.
First quarters ending 30 September 2022:
Optional
Second quarters ending 30 September 2022:
Optional
Third quarters ending 30 September 2022:
Optional
Annual periods ending 30 September 2022:
Optional
Interest Rate Benchmark Reform — Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
The amendments in Interest Rate Benchmark Reform — Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) introduce a practical expedient for modifications required by the reform, clarify that hedge accounting is not discontinued solely because of the IBOR reform, and introduce disclosures that allow users to understand the nature and extent of risks arising from the IBOR reform to which the entity is exposed to and how the entity manages those risks as well as the entity’s progress in transitioning from IBORs to alternative benchmark rates, and how the entity is managing this transition.
Issued: 27 August 2020
Effective date:
Annual reporting periods beginning on or after 1 January 2021
First quarters ending 30 September 2022:
[Note 1]
Second quarters ending 30 September 2022:
[Note 1]
Third quarters ending 30 September 2022:
[Note 1]
Annual periods ending 30 September 2022:
Mandatory
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
The amendments require that an entity discloses its material accounting policies, instead of its significant accounting policies. Further amendments explain how an entity can identify a material accounting policy. Examples of when an accounting policy is likely to be material are added. To support the amendment, the Board has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2.
Issued: 12 February 2021
Effective date:
Annual reporting periods beginning on or after 1 January 2023
Endorsed for use in the EU, however, as practice statements are not endorsed for application in the European Union, the amendments to IFRS Practice Statement 2 have not been endorsed.
First quarters ending 30 September 2022:
Optional
Second quarters ending 30 September 2022:
Optional
Third quarters ending 30 September 2022:
Optional
Annual periods ending 30 September 2022:
Optional
Definition of Accounting Estimates (Amendments to IAS 8)
The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”. Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The amendments clarify that a change in accounting estimate that results from new information or new developments is not the correction of an error.
Issued: 12 February 2021
Effective date:
Annual reporting periods beginning on or after 1 January 2023
First quarters ending 30 September 2022:
Optional
Second quarters ending 30 September 2022:
Optional
Third quarters ending 30 September 2022:
Optional
Annual periods ending 30 September 2022:
Optional
Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)
The amendment extends, by one year, the May 2020 amendment that provides lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification.
Issued: 31 March 2021
Effective date:
Annual reporting periods beginning on or after 1 April 2021
First quarters ending 30 September 2022:
[Note 1]
Second quarters ending 30 September 2022:
[Note 1]
Third quarters ending 30 September 2022:
Mandatory
Annual periods ending 30 September 2022:
Mandatory
Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
The amendments clarify that the initial recognition exemption does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition.
Issued: 7 May 2021
Effective date:
Annual reporting periods beginning on or after 1 January 2023
First quarters ending 30 September 2022:
Optional
Second quarters ending 30 September 2022:
Optional
Third quarters ending 30 September 2022:
Optional
Annual periods ending 30 September 2022:
Optional
Initial Application of IFRS 17 and IFRS 9 — Comparative Information (Amendment to IFRS 17)
The amendment permits entities that first apply IFRS 17 and IFRS 9 at the same time to present comparative information about a financial asset as if the classification and measurement requirements of IFRS 9 had been applied to that financial asset before.
Issued: 9 December 2021
Effective date:
An entity that elects to apply the amendment applies it when it first applies IFRS 17
First quarters ending 30 September 2022:
Optional
Second quarters ending 30 September 2022:
Optional
Third quarters ending 30 September 2022:
Optional
Annual periods ending 30 September 2022:
Optional
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
The amendment clarifies how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale.
Issued: 22 September 2022
Effective date:
Annual reporting periods beginning on or after 1 January 2024
First quarters ending 30 September 2022:
Optional
Second quarters ending 30 September 2022:
Optional
Third quarters ending 30 September 2022:
Optional
Annual periods ending 30 September 2022:
Optional
Non-current Liabilities with Covenants (Amendments to IAS 1)
The amendment clarifies how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability.
Issued: 31 October 2022
Effective date:
Annual reporting periods beginning on or after 1 January 2024
First quarters ending 30 September 2022:
Optional
Second quarters ending 30 September 2022:
Optional
Third quarters ending 30 September 2022:
Optional
Annual periods ending 30 September 2022:
Optional
Editorial Corrections (various)
The IASB periodically issues Editorial Corrections and changes to IFRSs and other pronouncements. Since the beginning of calendar 2021, such corrections have been made in June 2021, October 2021, December 2021, January 2022, July 2022 and October 2022.
Note: For details of these editorial corrections, see our IASB editorial corrections page.
Effective date:
As minor editorial corrections, these changes are effectively immediately applicable under IFRS
See comment in previous column
Notes
Note 1. This pronouncement has already been implemented in previous periods by entities with this reporting date (where it applied to the entity).