Council of the European Union adopts CSRD

28 Nov 2022

After the European Parliament adopted the Corporate Sustainability Reporting Directive (CSRD) on 10 November 2022, the Council of the European Union has now given the final green light.

Following the Council’s approval today of the European Parliament's position, the legislative act was adopted. After being signed by the President of the European Parliament and the President of the Council, it will be published in the Official Journal of the European Union and will enter into force 20 days afterwards. The new rules will need to be implemented by member states 18 months later.

Please click to see the press release announcing the adoption on the Council's website.

DPOC to discuss shortened comment period for OECD Pillar Two proposals

28 Nov 2022

The Due Process Oversight Committee (DPOC) will hold a supplementary meeting on 1 December 2022.

There are two topics on the agenda:

  • Approval for a shortened comment period for an exposure draft of proposed amendments to IAS 12 Income Taxes; and
  • Due process review of the post-implementation review of the classification and measurement requirements of IFRS 9 Financial Instruments.

The amendments to IAS 12 relate to the new project the IASB added to its work programme last week, which aims to address concerns about the potential implications of the imminent implementation of the OECD Pillar Two rules on the accounting for income taxes. The IASB has tentatively decided to introduce:

  • a temporary exception from accounting for deferred taxes arising from the implementation of the rules; and
  • targeted disclosures requirements for affected companies.

The IASB expects to publish an exposure draft in January 2023.

Please click to access the full agenda and papers for the meeting on the IFRS Foundation website.

IFRS Foundation proposes second update to IFRS Taxonomy 2022

28 Nov 2022

The IFRS Foundation has issued a proposed IFRS Taxonomy Update, 'IFRS Accounting Taxonomy 2022 Proposed Update 2 — 'Lease Liability in a Sale and Leaseback' and 'Non-current Liabilities with Covenants''.

The proposed changes reflect two recent amendments to IFRS Accounting Standards:

Details on the proposed changes are available in the press release on the IFRS Foundation website and in proposed update itself. Comments are requested by 28 December 2022.

Agenda for the December 2022 ITCG meeting

25 Nov 2022

The agenda is available for the next meeting of the IFRS Taxonomy Consultative Group (ITCG), which will be held by video conference call on 5 December 2022.

The ITCG will discuss the following topics:

  • Digital representation of specific proposals related to the primary financial statements project:
    • subtotals/categories in the statement of profit or loss
    • disclosure of operating expenses by nature in the notes
  • Summary of feedback on the staff draft of the IFRS Sustainability Disclosures Taxonomy

The agenda papers for this meeting are available on the IASB website.

November 2022 ISSB meeting notes posted

25 Nov 2022

The ISSB met in Frankfurt on 15-16 November. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The following topics were discussed:

General Sustainability-related Disclosures

The ISSB decided to clarify that the requirement to revise comparative information to reflect updated estimates applies to current period estimates that were disclosed in prior periods (historic estimates), and does not apply to forward-looking estimates. The ISSB also confirmed the proposed requirement for an entity to report its sustainability-related financial disclosures at the same time as its related financial statements but intends to introduce transitional relief for a limited period of time to permit an entity to report sustainability-related financial disclosures potentially up to half a year after the publication of its annual financial statements. The ISSB has not decided how long the transitional relief should last.

Climate-related Disclosures

The ISSB considered the proposed requirements for an entity to disclose information on strategy and decision-making (including transition planning) and climate-related targets. The ISSB confirmed that an entity would be required to disclose Information about its strategy and decision-making and information about its climate-related targets. The ISSB also decided to introduce additional disclosure requirements about the assumptions made, and dependencies identified, by the entity in developing its transition plan and the implications for the entity’s transition plan if the assumptions are not met. Furthermore, they also decided to include requirements to disclose information about the scope of the target to enable users to understand whether the target applies to the entity in its entirety or to only a part of the entity (for example, specific business units or specific geographic regions).

General Sustainability-related Disclosures and Climate-related Disclosures

The proposed requirements in paragraph 22 of Exposure Draft IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information ([draft] S1) and the equivalent requirements in paragraph 14 of Exposure Draft IFRS S2 Climate-Related Disclosures ([draft] S2) would require entities to disclose the effects of its sustainability-related risks and opportunities on its financial position, financial performance and cash flows for the reporting period and the anticipated effects. The staff presented a summary of the feedback received and asked the ISSB to provide feedback on some illustrative examples they have prepared. 

ISSB Taxonomy

In May 2022, the IFRS Foundation published a staff draft of a taxonomy for digital reporting representing the disclosure proposals in the two ISSB exposure drafts. The staff draft was accompanied by a Request for Feedback soliciting public feedback on staff recommendations on fundamental matters that need to be considered early to enable the ISSB to develop a Taxonomy. The purpose of this meeting was to provide a summary of the feedback obtained during the feedback period.

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

IASB votes to retain impairment-only model

24 Nov 2022

At the IASB meeting today, the IASB discussed whether there was compelling evidence that amortisation of goodwill should be reintroduced.

The IASB did not discuss whether either the impairment-only model or the amortisation model are conceptually superior but rather whether there was compelling evidence that would justify a switch from one model to the other. IASB members expressed different views as to which model they would have preferred, however, ten out of eleven members agreed that there was not enough evidence to change the IASB's original decision to work with an impairment only model. However, IASB members also noted that the decision might be revisited in later years.

After the meeting, the IASB issued a press release on the vote.

OECD Pillar Two discussion to be continued today

24 Nov 2022

At the meeting on 22 November, the IASB asked the staff to explore alternatives to the staff recommendation to require an entity to disclose whether it is in the scope of the Pillar Two model rules and whether it operates in low-tax jurisdictions.

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.

EFRAG submits draft ESRS to EC

23 Nov 2022

The European Financial Reporting Advisory Group (EFRAG) has submitted its draft European Sustainability Reporting Standards (ESRS) to the European Commission (EC).

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.

Recording of EAA-EFRAG-IASB workshop on digital reporting

23 Nov 2022

The International Accounting Standards Board (IASB) in conjunction with the European Accounting Association (EAA) and European Financial Reporting Advisory Group (EFRAG) held a virtual workshop on 18 November 2022 on issues relating to digital financial reporting and digitalisation of financial reports.

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.

ISSB issues podcast on latest Board developments (November 2022)

22 Nov 2022

The IFRS Foundation has released a podcast discussing highlights from the November 2022 ISSB meetings. The podcast is hosted by ISSB Chair Emmanuel Faber and Vice-Chair Sue Lloyd.

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.

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