IASB calls for research on IFRS 7

30 Jun 2023

The International Accounting Standards Board (IASB) is looking to appoint a team of researchers to complete a research project on IFRS 7 'Financial Instruments: Disclosures'.

The project will commence on 1 August 2023 and should be completed by 1 December 2023.

The researchers will collect data from listed companies on how these entities provide credit risk-related information in their annual financial statements and how they apply the credit risk disclosure requirements in IFRS 7. The findings of this research will be summarised in a report that will be used by IASB staff and the IASB to inform the post-implementation review of IFRS 9 Financial Instruments.

Please click for more information in the press release on the IFRS Foundation website.

ISSB Chair talks about crossing a frontier, speaking a new language

30 Jun 2023

At the IFRS Foundation Conference held in London earlier this week, ISSB Chair Emmanuel Faber officially launched the inaugural global ISSB Standards, IFRS S1 and IFRS S2.

In his speech, Mr Faber likened the issuance of the two new standards to crossing a frontier and called the new disclosure requirements "sustainability translated into an accounting language", a new common language to build more resilient economics.

Mr Faber sketched the development of global capital markets and pointed out the many frontiers that needed to be crossed, including setting up the IFRS Foundation and the IASB that developed a truly international financial reporting system that played a huge role global markets to really become global. He noted that this financial reporting system has enabled capital to flow through emerging countries including gradually into Africa.

And yet, Mr Faber stated, the world is very conscious that we are now at an even more challenging frontier for capital markets and for the future of accounting. This is due to the fact, he said, the metrics developed are no longer doing what they were needed to do as linear growth is reaching its limits:

We are reaching the boundaries where uncertainty is growing and is hitting the market, hitting financial stability — the systemic stability — of markets. Because we did not count all that counts and which ESG tries to capture.

Mr Faber then pointed out that the issuance of the first two ISSB standards was the first step in developing a consistent and comprehensive language for broadening the horizons of the financial statements. There is a need, he said, to broaden the scope by going into the entire value chains of companies and to open the time horizon.

The new language would enable companies not only to describe relationships and dependencies, but also the current and anticipated impacts that they may have and the sustainability-related risks and opportunities, as some of them may be material to investment decisions. He concluded his speech by stating:

We know there will be a learning curve. We are very clear that capacity building will be front and centre of our work for the next several months and probably several years, working with everyone in this room and beyond to ensure that this language is used effectively. And that everyone crosses the frontier and starts this critical journey together.

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

IASB issues podcast on latest Board developments (June 2023)

29 Jun 2023

The IASB has released a podcast featuring IASB Vice-Chair Linda Mezon-Hutter and Executive Technical Director Nili Shah discussing deliberations at the June 2023 IASB meeting.

Highlights of the podcast include discussions on:

  • discussions on the primary financial statements project;
  • decisions made in the equity method project;
  • developments on the project on subsidiaries without public accountability;
  • progress in the rate-regulated activities project; and
  • key takeaways from the discussion on the second comprehensive review of the IFRS for SMEs Accounting Standard.

The podcast can be accessed here on the IFRS Foundation website.

IASB publishes request for information on the post-implementation review of IFRS 15

29 Jun 2023

The International Accounting Standards Board (IASB) has issued a request for information (RFI) seeking comments from stakeholders to identify whether the requirements in IFRS 15 'Revenue from Contracts with Customers' provide information that is useful to users of financial statements; whether there are requirements that are difficult to implement and may prevent the consistent implementation of the standard; and whether unexpected costs have arisen in connection with applying or enforcing the standard. Comments on the RFI are requested by 27 October 2023.

IFRS 15 specifies how and when an IFRS reporter will recognise revenue as well as requiring such entities to provide users of financial statements with more informative, relevant disclosures. The standard provides a single, principles based five-step model to be applied to all contracts with customers.

In the post-implementation review of the standard the IASB wants to assess:

  • whether there are fundamental questions (fatal flaws) about the clarity and suitability of the core objectives or principles in the new requirements;
  • whether the benefits to users of financial statements of the information arising from applying the new requirements are significantly lower than expected; and
  • whether the costs of applying the new requirements and auditing and enforcing their application are significantly greater than expected.

The questions in the RFI now published regard stakeholders’ overall views and experiences relating to IFRS 15, specific areas of IFRS 15, interaction with other standards, the convergence with US GAAP, and possible other matters stakeholders have identified.

Accordingly, the RFI is structured into the following questions:

Overall assessment
Asks whether the core principle and the supporting five-step revenue recognition model provide a clear and suitable basis for revenue accounting decisions that result in useful information about an entity’s revenue from contracts with customers, whether further guidance is needed and what the perceived costs and benefits of the standard are.
Specific areas — Performance obligations Asks whether IFRS 15 provides a clear and sufficient basis to identify performance obligations in a contract or whether the requirements are unclear/applied inconsistently, lead to outcomes that do not reflect the underlying economic substance or lead to significant ongoing costs.
Specific areas — Transaction price
Asks whether IFRS 15 provides a clear and sufficient basis to determine the transaction price in a contract, in particular in relation to accounting for consideration payable to a customer.
Specific areas — When to recognise revenue
Asks whether IFRS 15 provides a clear and sufficient basis to determine when to recognise revenue or whether requirements are unclear or are applied inconsistently, in particular in relation to the criteria for recognising revenue over time.
Specific areas — Principal versus agent Asks whether IFRS 15 provides a clear and sufficient basis to determine whether an entity is a principal or an agent or whether requirements are unclear or are applied inconsistently, in particular in relation to the concept of control and related indicators.
Specific areas — Licensing Asks whether IFRS 15 provide a clear and sufficient basis for accounting for contracts involving licences or whether requirements are unclear or are applied inconsistently, in particular in relation to licences that are similar to sales or service provisions, include an obligation to provide goods or services or are renewals.
Specific areas — Disclosure Asks whether the disclosure requirements in IFRS 15 result in entities providing useful information to users of financial statements, whether any disclosure requirements lead to significant ongoing costs or lead to significant variation in the quality of disclosed revenue information.
Specific areas — Transition Asks whether the transition requirements work as intended, whether entities applied the modified retrospective method or the practical expedients, and whether the transition requirements achieved an appropriate balance between reducing costs for preparers and providing useful information to users.
Interaction with other standards Asks whether it is clear how to apply the requirements in IFRS 15 with the requirements in other IFRS, especially in IFRS 3, IFRS 9, IFRS 10, and IFRS 16.
Convergence with US GAAP Asks how important stakeholders believe retaining the current level of convergence between IFRS 15 and US GAAP is.
Other matters Asks whether there any other matters that the Board should examine as part of the PIR of the requirements of IFRS 15.

    Comments on the RFI are requested by 27 October 2023. The request for information and a corresponding press release are available on the IFRS Foundation website. There is also a short video with IASB Board member Patrina Buchanan explaining the RFI. In addition, see Deloitte's iGAAP in Focus newsletter.

    Agenda for the July 2023 ASAF meeting

    29 Jun 2023

    The International Accounting Standards Board (IASB) has released an agenda and meeting papers for the meeting of the Accounting Standards Advisory Forum (ASAF), which is to be held in the IASB's offices in London on 10–11 July 2023.

    A summary of the agenda is set out below:

    Monday 10 July 2023 (9:45-17:15)

    • Agenda planning and feedback from previous ASAF meetings
    • Intangibles
      • Recommendations and feedback following EFRAG’s DP Better Information on Intangibles
      • UKEB Intangible Accounting Stakeholder Views
    • Business combinations — Disclosures, goodwill and impairment
      • Improving disclosures about business combinations
    • Primary financial statements
      • Project update and illustrative examples
    • Business combinations under common control
      • Project direction

    Tuesday 11 July 2023 (9:00-14:00)

    • Provisions — Targeted improvements
      • Present obligation recognition criterion
    • Climate-related risks in the financial statements
      • Project scoping
    • Equity method
      • Format of the exposure draft

    Agenda papers for the meeting are available on the IFRS Foundation website.

    Call for papers – 4th IPSASB research forum

    29 Jun 2023

    In preparation of its 4th Research Forum, which will be co-hosted by Comparative International Governmental Accounting Research Network (CIGAR) at its June 2024 conference, the International Public Sector Accounting Standards Board (IPSASB) is calling for scholarly contributions from the academic community.

    The research areas of interest are:

    • Research on practical IPSAS implementation challenges 
      • Natural resources
      • Presentation of financial statements
    • Sustainability reporting focused research 
      • Climate change and public sector reporting qrelated to sustainability
      • Accounting for biodiversity in the public sector
    • Research on adoption and implementation of specific IPSAS
      • IPSAS 31 Intangible Assets
      • IPSAS 33 First-Time Adoption of Accrual Basis IPSAS
      • IPSAS 42 Social Benefits

    Please click for more information and the call for papers on the IPSASB website.

    Agenda for the SMEIG July meeting

    28 Jun 2023

    The next meeting of the SME Implementation Group (SMEIG) will be held on 13 July 2023.

    The SMEIG will discuss the following topics:

    • Second comprehensive review of the IFRS for SMEs
      • Feedback from comment letters on exposure draft
        • Proposed amendments to the IFRS for SMEs
        • Topics for which amendments were not proposed
      • Outreach feedback summary
      • Proposed revised Section 23 Revenue from Contracts with Customers
    • International tax reform — Pillar two model rules — Proposed amendments to the IFRS for SMEs
      • Comments on the IASB's proposals for an urgent amendment
      • Exposure draft itself

    The papers for the meeting are available on the IFRS Foundation’s website.

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

    27 Jun 2023

    Following the IASB's June 2023 meeting, we have analysed the work plan on the IFRS Foundation website to see what changes have resulted from the meeting and other developments since the work plan was last revised in May 2023. The ISSB did not hold a technical meeting this month, but launched its first two standards, IFRS S1 and IFRS S2.

    Below is an analysis of all changes made to the work plan since our last analysis on 1 June 2023.

    Standard-setting projects

    • Climate-related disclosures — This project has been removed from the work plan since the ISSB issued IFRS S2 Climate-related Disclosures on 26 June 2023.
    • Financial instruments with characteristics of equity — An exposure draft is now expected in Q4 2023 (previously H2 2023).
    • General requirements — This project has been removed from the work plan since the ISSB issued IFRS S1 General Requirements for Disclosure of Sustainability-Related Financial Information on 26 June 2023.
    • Second comprehensive review of the IFRS for SMEs — At its June 2023 meeting, the IASB decided to develop an IFRS Accounting Standard as next step in this project (expected in 2025).

    Maintenance projects

    • Amendments to the IFRS for SMEs Accounting Standard — International Tax Reform — Pillar Two Model Rules — Feedback on the exposure draft is now expected to be discussed in August 2023 (previously Q3 2023).
    • Lack of Exchangeability (Amendments to IAS 21) — An IFRS Accounting Standard amendment is now expected in August 2023 (previously Q3 2023).

    Research projects

    • Post-implementation Review of IFRS 9: Impairment — Feedback on the request for information published in May 2023 is now expected to be discussed in Q4 2023 (previously H2 2023).

    Other projects

    • IFRS Accounting Taxonomy Update — Common Practice (Financial Instruments) and General Improvements — This project has been added to the work plan with a proposed IFRS Taxonomy update expected in Q4 2023.

    The above is a faithful comparison of the IASB and ISSB work plan at 1 June 2023 and 27 June 2023. For access to the current work plan at any time, please click here.

    June 2023 IASB meeting notes posted

    27 Jun 2023

    The IASB met in London on 20-22 June 2023. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

    The following topics were discussed:

    Primary Financial Statements: The IASB discussed issues related to categories and subtotals, and issues related to IAS 29 and IAS 12. The IASB voted in favour of all staff recommendations on how to revise some of the proposals in the ED.

    Equity Method: The IASB decided not to develop proposals on how an investor applies the equity method when an associate issues an equity-settled share-based payment or a share warrant. The IASB also decided to propose that on acquisition of an investment in an associate, an investor should recognise contingent consideration as part of the cost of the investment and measure that contingent consideration at fair value. Furthermore, the IASB will propose that after the acquisition date for contingent consideration classified as equity, an investor accounts for its subsequent settlement within equity, whereas for other contingent consideration, the investor measures contingent consideration at fair value at each reporting date and recognises changes in fair value in profit or loss.

    Disclosure Initiative: Subsidiaries without Public Accountability—Disclosures: The IASB discussed feedback on proposed disclosure requirements in the Exposure Draft Third Edition of the IFRS for SMEs Accounting Standard (SMEs ED) and decided not to make further changes to the proposed disclosure requirements in the draft Standard based on comments received on the SMEs ED.

    Rate-regulated Activities: The IASB continued redeliberating the proposals in the Exposure Draft Regulatory Assets and Regulatory Liabilities (ED), in particular proposals on the measurement basis, cash-flow-based measurement technique and estimating uncertain future cash flows. The IASB decided to make further changes to these proposals when finalising the Standard.

    Second Comprehensive Review of the IFRS for SMEs Accounting Standard: The IASB discussed the feedback received from comment letters and outreach events on the SMEs ED and decided to make changes to the proposed amendments in the ED for the clarification of the definition of public accountability.

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

    IASB Chair discusses the role of financial reporting in uncertain times

    26 Jun 2023

    At the IFRS Foundation Conference currently held in London, IASB Chair Andreas Barckow explained how the IASB is working help to stakeholders address the uncertainties they are experiencing.

    Mr Barckow noted that the IFRS Foundation is fully aware of the current backdrop to companies’ operations and the uncertainties that seem to increase everywhere. And he stated that when conditions change, the need for information you can rely on increases. Useful and trustworthy information enables informed decisions. He gave three examples how the IASB is trying to serve the public interest by helping companies and investors by provide or receive better information for better decisions.

    • Moving urgently when required. The example Mr Barckow gave in this context were the recent amendments to the requirements for accounting for taxes in the financial statements. The IASB amended IAS 12 in about half a year to provide temporary reliefs for companies ― making it easier for them to account for deferred taxes stemming from new OECD requirements. At the same time, the IASB developed some new disclosure requirements so investors can understand how the tax reform will affect companies. 
    • Prioritising projects. The IASB also acts by focusing its resources on the projects that are most important, based on stakeholder feedback from the IASB's agenda consultation that called for focusing on issues that really matter while being mindful of the resources of all those affected new requirements as well as the IASB's own. The IASB also aims at removing uncertainty by making smaller but important improvements to its requirements. The example Mr Barckow gave were the new disclosure requirements for supply chain financing arrangements.
    • Helping companies tell their story. Mr Barckow pointed out that as the IASB's standards are required in more than 140 jurisdictions, global investors can track and compare financial statements. He noted that investors appreciate transparency even when companies tell them the situation as it is ― or exactly because of that. Here, Mr Barckow pointed to the IASB's primary financial statements project where the forthcoming standard will require companies to report operating profit, but will also allow companies to report some of their own performance measures in the financial statements.

    Mr Barckow concluded his remarks by stating:

    I think we can all agree that better information enables better decisions. We are collectively and collaboratively developing accounting solutions that improve the ways companies and investors exchange information ― improve the way they communicate. Good communication is especially important when dealing with challenges.

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

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