January

IASB member discusses merger and acquisition disclosures and goodwill accounting

31 Jan 2023

The IASB has issued an article ‘In Brief’ which discusses two decisions related to the Business Combinations — Disclosures, Goodwill and Impairment project.

Specifically, IASB member Rika Suzuki takes a looks into how companies could disclose better information about business combinations and whether to retain the impairment-only model to account for goodwill or to explore reintroducing amortisation of goodwill.

For more information, see the press release and ‘In Brief’ article on the IFRS Foundation’s website. In addition, a Japanese translation of the article is available.

IFRS Advisory Council membership update

31 Jan 2023

The Trustees of the IFRS Foundation have announced appointments and re-appointments to the IFRS Advisory Council effective 1 January 2023.

The Advisory Council is the formal advisory body to the Trustees, the IASB, and the ISSB. It advises the IFRS Foundation on its strategic direction, technical work plan and priorities.

The Trustees have agreed to a temporary expansion of the Advisory Council to reflect the recent creation of the ISSB that has led to an expanded remit of the Advisory Council. Among the newly appointed organisations are the Organisation for Economic Co-operation and Development (OECD), Principles for Responsible Investment (PRI), and the United Nations (UN).

Please see the press release on the IFRS Foundation website for more information. A full list of current members is available here.

Webinar on call for papers on IFRS 9 hedge accounting requirements

31 Jan 2023

On 8 February 2023, the IASB is offering a live webinar for academics to explain what academic research it is interested in receiving to inform its forthcoming post-implementation review of the hedge accounting requirements in IFRS 9 (and related new disclosure requirements in IFRS 7).

The focus of the webinar, which accompanies the December 2022 call for papers on IFRS 9 hedge accounting requirements, will be on potential research on the usefulness of the hedge accounting disclosure requirements for investors. IASB technical staff will be presenting in the webinar and there will be an opportunity for academics to ask questions.

Please click for more information and registration on the IFRS Foundation website.

Updated IASB and ISSB work plan — Analysis (January 2023)

30 Jan 2023

Following the IASB's and ISSB's January 2023 meetings, we have analysed the work plan on the IFRS Foundation website to see what changes have resulted from the meetings and other developments since the work plan was last revised in December 2022.

Below is an analysis of all changes made to the work plan since our last analysis on 19 December 2022.

Stan­dard-set­ting projects

  • Disclosure Initiative — Targeted Standards-level Review of Disclosures  — The project summary is now expected in March 2023 (previously Q1 2023).
  • Second comprehensive review of the IFRS for SMEs Accounting Standard — Feedback on the exposure draft is expected in Q2 2023 (previously H1 2023).

Main­te­nance projects

  • Amend­ments to the clas­si­fi­ca­tion and mea­sure­ment of financial in­stru­ments — This project exposure draft is now expected in March 2023 (pre­vi­ously Q1 2023).
  • International Tax Reform — Pillar Two Model Rules — Feedback on the exposure draft is expected by April 2023.
  • Lack of ex­change­abil­ity (amend­ments to IAS 21) — Final amend­ments to IAS 21 are expected in H2 2023 (previously H1 2023).

Research projects

  • Equity Method— A decision on the project direction is expected in April 2023.
  • Extractive Activities — A decision on the project direction is now expected in H2 2023 (previously Q2 2023).
  • Post-implementation Review of IFRS 15 — Request for information is expected in Q2 2023 (previously H1 2023).
  • Post-implementation review — IFRS 9 (Classification and measurement) — Removed from the work plan since the release of the final project report and feedback statement concluded the project on 21 December 2022.

Strategy & governance projects

  • ISSB Consultation on Agenda Priorities — Request for information is expected in Q2 2023 (previously H1 2023).

Other projects

  • IFRS Sustainability Disclosure Taxonomy — The proposed IFRS Sustainability Disclosure Taxonomy is expected in H2 2023.

The above is a faithful com­par­i­son of the IASB and ISSB work plan at 19 December 2022 and 30 January 2023. For access to the current work plan at any time, please click here.

EFRAG draft comment letter on IAS 12 and pillar two income taxes

30 Jan 2023

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the exposure draft 'International Tax Reform — Pillar Two Model Rules (Proposed amendments to IAS 12)' the IASB published to respond to stakeholders’ concerns about the potential implications of the imminent implementation of the OECD pillar two model rules on the accounting for income taxes.

In the draft comment letter, EFRAG welcomes the IASB’s efforts to address the concerns of stakeholders about the implications for income tax accounting resulting from jurisdictions implementing the OECD rules.

EFRAG supports the IASB’s proposal to a temporary exception to the requirements in IAS 12. However, EFRAG will engage with its constituents during the outreach of the exposure draft to ascertain the usefulness of the proposed targeted disclosures for users and to assess the feasibility (including costs) for preparers.

Comments on EFRAG's draft comment letter are requested by 27 February 2023. For more information, see the press release and the draft comment letter on the EFRAG website.

Two academic studies sponsored by EFRAG and ICAS

27 Jan 2023

The European Financial Reporting Advisory Group (EFRAG) and the Institute of Chartered Accountants of Scotland (ICAS) have jointly sponsored two academic studies, one on intangibles and one on discounting.

The study Do companies disclose relevant information about intangibles? – Insights from business model reporting and risk reporting investigates the role of intellectual capital in the value creation process and provides a baseline in intangibles reporting for a sample of intellectual capital intensive high-tech companies. It can be downloaded here from the EFRAG website.

The study The Theory and Practice of Discounting in Financial Reporting under IFRS notes the different discounting objectives and theoretical bases in different IFRSs and looks at:

  • the underlying rationale for the different approaches in each IFRS; 
  • the economic consequences of the different approaches used; and
  • where appropriate, alternative methods that may be applicable. 

It can be downloaded here from the EFRAG website.

ESAs issue opinions on ESRS

27 Jan 2023

On 25 November 2022, the European Commission requested the European Supervisory Authorities (ESAs) to provide an opinion on the technical advice on the first set of European Sustainability Reporting Standards (ESRS), which the European Financial Reporting Advisory Group (EFRAG) submitted on 22 November 2022.

The following quotes give a general impression of the opinions issued by the ESAs:

European Securities and Markets Authority (ESMA)

To bring Set 1 from broadly capable to fully capable of meeting that objective, ESMA advises the European Commission to address selected technical issues set out in the opinion. Most notably, these issues relate to possible improvements of the level of consistency vis-à-vis the requirements of the Corporate Sustainability Reporting Directive and other pieces of EU legislation, important clarifications of definitions and terminology and further guidance on the materiality assessment process.

European Banking Authority (EBA)

In particular, the EBA acknowledges the significant improvement of the draft ESRS prepared by EFRAG compared to the versions put out for consultation. Overall, the EBA welcomes the consistency of ESRS with international standards and relevant EU Regulation, and a better alignment with the disclosure requirements under the EBA Pillar 3 framework. As regards proportionality, the EBA believes that the draft standards offer a well-balanced approach with the relevant phasing-in provisions in place. A few aspects should deserve further consideration by the European Commission, including the timetable for the development of the sector-specific standards for credit institutions.

European Insurance and Occupational Pensions Authority (EIOPA)

Concerning international standards, EIOPA underlines the importance of avoiding the fragmentation of sustainability reporting requirements across jurisdictions. To this end, compatibility between ESRS standards and IFRS standards should be ensured so that European companies reporting according to ESRS are automatically considered to be compliant with the IFRS sustainability reporting framework.

The full opinions are are are available on the ESAs website:

January 2023 ISSB meeting notes posted

24 Jan 2023

The ISSB met in Frankfurt on Tuesday 17, Wednesday 18 and Thursday 19 January 2023. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The following topics were discussed.

Metrics and Targets

The ISSB agreed minor drafting changes to clarify that the objective of disclosures on metrics and targets in the proposals is to enable users to understand performance on sustainability-related risks and opportunities, including (but not limited to) how an entity measures, monitors and manages such risks and opportunities.

Disclosure of judgements, assumptions and estimates

The ISSB decided to require, in addition to requiring disclosure of the sources of estimation uncertainty, the judgements that the entity has made in the process of preparing and disclosing its sustainability-related financial information. They also decided requiring disclosure of the sources that have been applied in preparing the entity’s sustainability-related financial disclosures, including the industry or industries specified in IFRS Sustainability Disclosure Standards, SASB Standards or other industry-based sources of guidance.

In addition, the ISSB decided to clarify that the words ‘to the extent possible’ mean ‘to the extent possible taking into consideration the requirements of IFRS Accounting Standards (or other relevant GAAP)’ and to require an entity to explain significant differences in the financial data and assumptions that the entity has used in preparing its sustainability-related financial disclosures, in comparison to those that the entity has used in preparing its financial statements.

Furthermore, the ISSB decided to clarify that the disclosure requirements on estimation uncertainty relating to metrics also apply to current and anticipated effects of sustainability-related risks and opportunities on the entity’s financial position, financial performance and cash flows. The ISSB also decided to provide guidance on the disclosure of judgements, assumptions and estimates that an entity is required to make in applying IFRS Sustainability Disclosure Standards.

Commercially sensitive information about opportunities

The ISSB decided to introduce an exemption in [draft] S1 that would permit entities, in limited circumstances, to exclude information about a sustainability-related opportunity when the information is commercially sensitive. It would specify that this would not be applicable to information which is already publicly available, nor would it able to be used to justify broad non-disclosure, using commercial sensitivity as a justification, or to avoid disclosing information about risks.

Reasonable and supportable information that is available at the reporting date without undue cost or effort

The ISSB decided to introduce the concept of ‘reasonable and supportable information that is available at the reporting date without undue cost or effort’ into IFRS S1 and IFRS S2, to help an entity to apply specific requirements in the Standards.

Current and anticipated financial effects and connected information

The ISSB decided to make minor drafting changes to clarify that when sustainability-related risks and opportunities have affected or are expected to affect the information in an entity’s financial statements, the entity is required to explain the connections between those current and anticipated financial effects and the sustainability-related risks and opportunities. They also decided to clarify the relationship between resilience assessment requirements and the requirements to disclose current and anticipated financial effects by emphasising those requirements can be applied independently, but the resilience assessment can inform the disclosures of current and anticipated financial effects. Furthermore, the ISSB decided to clarify that there is no requirement for an entity to perform a resilience assessment to determine current and anticipated financial effects of sustainability-related risks and opportunities.

Using scenario analysis to assess climate resilience

The ISSB decided to require an entity to use an approach to climate-related scenario analysis that enables the entity to consider all reasonable and supportable information that is available without undue cost or effort, at the reporting date, including information about past events, current conditions and forecasts of future economic conditions, taking into consideration the degree of the entity’s exposure to climate-related risks and opportunities and the skills, capabilities and resources available to the entity to conduct climate-related scenario analysis.

Greenhouse gas emissions—reporting period relief

The ISSB decided to provide relief that allows an entity to measure its GHG emissions using information for reporting periods that are different from the entity’s reporting period when that information arises from entities in its value chain with reporting periods that are different from that of the entity, on condition that the entity uses the most recent data available without undue cost or effort to measure and disclose its GHG emissions, the length of the reporting periods is the same and the entity discloses the effects of significant events and changes in circumstances (relevant to its GHG emissions information) that occur between the reporting dates of the entities in its value chain and the date of the entity’s general purpose financial reporting.

Climate-related targets—Latest international agreement on climate change

The ISSB decided to amend the proposal in paragraph 23(e) of [draft] S2 to require an entity to disclose how the latest international agreement on climate change has informed any climate-related targets it has set.

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

ISSB issues podcast on latest Board developments (January 2023)

24 Jan 2023

The IFRS Foundation has released a podcast discussing highlights from the January 2023 ISSB meeting. The podcast is hosted by ISSB Chair Emmanuel Faber and Vice-Chair Sue Lloyd.

Highlights of the podcast include discussions on:

  • 2023 priorities and milestones;
  • clarity on metrics in S1 and S2;
  • judgements, assumptions and estimates;
  • repurposing the IASB's concept of ‘reasonable and supportable information’;
  • commercially sensitive information about opportunities;
  • current and anticipated financial effects and connected information; and
  • the rollout and adoption of S1 and S2.

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

Podcast on Q4 2022 IFRS Interpretations Committee developments

23 Jan 2023

The IASB has issued a podcast on the developments of the IFRS Interpretations Committee during the fourth quarter of 2022.

The podcast is hosted by IFRS In­ter­pre­ta­tions Committee Chair and IASB member Bruce Mackenzie and Technical Staff members Riana Wiesner and Jawaid Dossani and focused on whether a contract that includes a particular substitution right is considered a lease (IFRS 16).

For more in­for­ma­tion, see the press release on the IFRS Foun­da­tion’s website.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.