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News

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FRC launches 'Horizons' project series

05 Nov 2019

The Financial Reporting Lab of the UK Financial Reporting Council (FRC) is inviting investors and companies to participate in a new project on the disclosure of business models, strategy and the longer-term. The project is part of a new series focused around integrating longer-term time horizons into reporting.

The project will consider what users want from business model and strategy disclosures and how companies might best communicate the longer-term. It is likely to: 

  • explore how companies develop, monitor and communicate their business model and strategy;
  • examine how companies include a longer-term focus in their reporting;
  • consider how companies communicate uncertainty in their disclosures;
  • analyse how investors use this information in their decision-making process and identify whether emerging reporting meets investor needs;
  • discuss which areas of reporting are most challenging for companies; 
  • consider the extent to which UK companies can learn lessons from emerging international reporting practice; and 
  • highlight best practice in current company reporting. 

Please click for more information on the FRC website.

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Recordings from the sixth IASB Research Forum

04 Nov 2019

The International Accounting Standards Board (IASB) hosted its sixth Research Forum on 28–29 October 2019 in Short Hills, New Jersey, with the Journal of International Accounting Research (JIAR). The IASB has now released audio recordings and slides from the presentations given at the forum.

The meeting saw the pre­sen­ta­tion on four academic papers, responses by academics and stan­dard-set­ters as well as a general dis­cus­sion with the audience. In addition, two case studies were discussed during breakout sessions.

For more information, see the press release and access the slides and audio recordings on the IASB’s website.

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Recent sustainability reporting developments

04 Nov 2019

A summary of recent developments at the European Commission, GRI, Deloitte, CFA Society Denmark, CDSB, and SSE.

The European Commission (EC) has published a final report on EU Climate Benchmarks and Benchmarks’ ESG Disclosures by its Technical Expert Group (TEG) on Sustainable Finance. The report recommends a set of Environmental, Social and Governance (ESG) disclosure requirements, including the standard format to be used for the reporting. The final report and supporting documents are available here.

The Global Reporting Initiative (GRI) is inviting companies and stakeholders to join a webinar on 5 December to discuss the future of reporting on responsible minerals sourcing. More information and access to the report Advancing Reporting on Responsible Minerals Sourcing the webinar builds on is available on the GRI website.

Deloitte's Annual report insights 2019, based on reports from 100 UK companies, reveals that companies are increasingly going beyond financial drivers and focusing on ‘success factors’ such as societal and environmental impacts. Please click to access the report here.

The CFA Society Denmark has published ESG key figures in the annual report that includes 15 proposals for standard ESG key figures for companies' environmental and climate impact and for their social and management commitment, which large Danish companies are invited to include in the annual report. The report is also available in an English language version and can be accessed here.

GRI has signed a collaboration agreement with the Indonesian Government that commits to support and provide the reporting frameworks for the country’s commitments to the UN Sustainable Development Goals (SDGs). Aim of the agreement is to promote SDG reporting by publicly listed companies by using the GRI Standards. Please see the press release on the GRI website.

GRI also announces that the three universal standards and all 33 topic-specific standards have been published in Italian and are now freely available for any Italian speaking organisation to download and use. Please click for more information on the GRI website.

The Climate Disclosure Standards Board (CDSB) announces that its TCFD Implementation Guide is now also available in a Japanese translation. Please click for more information on the CDSB website.

The United Nations Sustainable Stock Exchanges (SSE) initiative and the World Federation of Exchanges (WFE) have signed an exchange of letters formalising how the two organisations will work together in the future. The exchange of letters also outlines potential areas of further collaboration including building capacity and providing technical assistance to stock exchanges on ESG disclosure. Please click for more information on the SSE website.

The SSE member Luxembourg Stock Exchange (LuxSE) has published a new set of guidelines for reporting ESG information to investors. Please click for more information on the SSE website.

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Presentations at ISAR 36

04 Nov 2019

The thirty-sixth session of the United Nations Conference on Trade and Development (UNCTAD) Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) was held in Geneva on 30 October - 1 November 2019. Presentations from the meeting are now available on the ISAR website.

The two main topics for the meeting were:

  • Practical implementation, including measurement, of core indicators for entity reporting on the contribution towards the attainment of the Sustainable Development Goals
  • Review of current developments in international standards of accounting and reporting in the public and private sectors

The background papers for these two topics are available in Arabic, Chinese, English, French, Spanish, and Russian and can be accessed here (please click on the "Documents" tab).

Speakers at ISAR 36 included Chungwoo Suh, IASB member as well as representatives of AOSSG, EFRAG, PAFA, IPSASB, SASB, UNCTAD, and ACCA. All 42 presentations from the meeting are available here (please click on the "Presentations" tab).

The workshop before the ISAR meeting this year focused on "Practical implementation of climate-related financial disclosures and their relationship to the SDGs“. Speakers included representatives of CDSB, SASB, the European Commission, EFRAG, ACCA, WBCSD, and UNCTAD. All presentations from the workshop are available here (please click on the "Presentations" tab).

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IASB issues podcast on latest Board developments (October 2019)

31 Oct 2019

The IASB has released a podcast, featuring IASB Chair Hans Hoogervorst and Vice-Chair Sue Lloyd as well as communications team member Kasia Gilewska, to discuss the deliberations at the October 2019 IASB meeting and other developments.

The 19-minute podcast features discussions related to financial instruments on the following topics:

  • Amendments to IFRS Standards as a result of the second phase of the IBOR project.
  • Work on the accounting model that will enable investors to understand a company’s dynamic risk management.
  • Timeline for the financial instruments with characteristics of equity project.
  • Developments in the management commentary project.
  • The predecessor approach being considered by the Board for the accounting for combinations of businesses under common control.

The podcast can be accessed through the press release on the IASB website. More information on the topics discussed is available through our comprehensive notes taken by Deloitte observers at the October IASB meeting.

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Updated IASB work plan — Analysis (October 2019)

25 Oct 2019

Following the IASB's October 2019 meeting, we have analysed the IASB work plan to see what changes have resulted from the meeting and other developments since the work plan was last revised.

Below is an analysis of all changes that were made to the work plan since our last analysis on 1 October 2019.

Stan­dard-set­ting projects

  • Primary Financial Statements — Exposure draft is expected in December 2019 (previously fourth quarter of 2019).

Main­te­nance projects

  • 2019 Comprehensive Review of the IFRS for SMEs Standard — the request for information is now expected in the first quarter of 2020 (previously fourth quarter of 2019)
  • Accounting Policies and Accounting Estimates — dis­cus­sions on the project direction happened in October 2019 (previously fourth quarter of 2019).
  • Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37) — An IFRS amendment is expect in the first half of 2020.

Research projects

  • Dynamic Risk Management — core model will occur in December 2019 (previously fourth quarter of 2019).
  • Financial Instruments With Characteristics of Equity — decision on the project’s direction will occur in the first quarter of 2020 (pre­vi­ously fourth quarter of 2019).
  • Pensions Benefits That Depend on Asset Returns — Research review is expected in December 2019 (previously fourth quarter of 2019).
  • Post-Implementation Review of IFRS 10, IFRS 11 and IFRS 12 — This project is now under research (previously listed under maintenance projects).
  • Provisions — Research review is expected in January 2020 (previously fourth quarter of 2019).
  • Subsidiaries That Are SMEs — Research review is expected in January 2020 (previously fourth quarter of 2019).

Other projects

  • IFRS Taxonomy Update — Interest Rate Benchmark Reform (Amend­ments to IFRS 9, IAS 39 and IFRS 7) —a proposed IFRS Taxonomy Update was issued in October 2019. Feedback update is expected in December 2019.

The above is a faithful com­par­i­son of the IASB work plan at 1 October 2019 and at 25 October 2019. For access to the current IASB work plan at any time, please click here.

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October 2019 IASB meeting notes posted

25 Oct 2019

The IASB met on Tuesday 22 and Wednesday 23 October 2019. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

Implementation matters:

  • Onerous Contracts: For the planned amendments to IAS 37 the Board decided to replace the examples proposed in the ED with a clarification that the costs that relate directly to the contract consist of both the incremental costs of fulfilling that contract and an allocation of costs that relate directly to fulfilling that and other contracts.
  • PPE—Proceeds before intended use: The Board decided that the forthcoming amendments to IAS 16 will be effective for periods beginning on or after date 1 January 2022 and require retrospective application, but only for PPE made available for use on or after the beginning of the earliest period presented in the financial statements in which an entity applies the amendments. The amendments will prohibit the deduction of the proceeds from testing PPE, before it is capable of operating in the manner intended by management, from its cost.
  • Sale of a single asset entity containing real estate: The Interpretations Committee referred an issue involving the sale of an entity that has only one asset (real estate) and whether it should be in the scope of IFRS 10 or IFRS 15. The Board asked the staff to provide more analysis so that the Board can assess whether it should make a narrow scope amendment to IFRS 10 or IFRS 15.  

Business Combinations under Common Control: The Board decided that, when applying a predecessor approach for a business combination under common control: the acquirer should recognise and measure assets and liabilities at the carrying amounts included in the financial statements of the transferred entity (rather than at the amounts included in the consolidated financial statements of the common controller); and that the acquisition would be accounted for prospectively—i.e. the comparative information of the acquirer would not be adjusted.

Management Commentary: The Board decided that the revised Practice Statement state that the enhancing qualitative characteristics of comparability, verifiability, and understandability are relevant to management commentary along with guidance on how to apply those characteristics, but decided not to include timeliness as a qualitative characteristic. The Board also began its discussions of the business model. 

Accounting Policies and Estimates (amendments to IAS 8): The Board decided to finalise the proposed amendments to the definition of accounting estimates but not amend the definition of accounting policies.

SME Standard Review and Update: The Board decided that the RFI ask whether the IFRS for SMEs Standard should be updated to align the definitions of Section 15 with IFRS 11 by aligning the definitions of ‘control’ and ‘joint control’ (but not the recognition and measurement requirements) and retain three categories (i.e. jointly controlled operations, jointly controlled assets, jointly controlled entities).

Financial Instruments with Characteristics of Equity: The Board has decided to develop amendments to IAS 32 to address practice issues, clarify the underlying principles in IAS 32 and develop additional application guidance. The Board discussed the overall objectives of the project and the project timetable, which could lead to an Exposure Draft in 2021.

Dynamic Risk Management: The Board discussed the outreach plan, which focuses on assessing the viability and operability of the DRM model and whether it will reflect an entity’s risk management strategy. The outreach will focus exclusively on financial institutions and aim to provide feedback to the Board by June 2020.

Subsidiaries that are SMEs: The Board decided that when it tailors the disclosure requirements for subsidiaries that are SMEs if there is no recognition and measurement difference between full IFRS and IFRS for SMEs they will use the disclosures in IFRS for SMEs. If there is a recognition and measurement difference, they will consider the principles in BC157 of the IFRS for SMEs Standard and adapt the disclosures if supported by one of the principles.  

IBOR Reform and the Effects on Financial Reporting: The Board decided to amend IFRS 9 to clarify that an entity should apply the IBOR practical expedient first, by updating the effective interest rate based on the alternative benchmark rate, and then apply IFRS 9 current requirements (but not with an illustrative example). In the context of the IBOR reform, the Board concluded that the current requirements in IFRS 9 provide an adequate basis to determine if any other modifications to that financial instrument are substantial, and propose no other amendments to IFRS 9.

Amendments to IFRS 17 Insurance Contracts: The Board discussed an update on feedback from outreach.  

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

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Accountancy Europe recommends revising the EU Non-Financial Reporting Directive

23 Oct 2019

Accountancy Europe has released a call to action recommending five steps to revise the Non-Financial Reporting Directive and strengthen non-financial reporting requirements in Europe.

Accountancy Europe recommends:

  • Expanding the scope of the Non-Financial Reporting Directive beyond large public listed entities;
  • Indicating a minimum set of mandatory reporting criteria;
  • Requiring companies to disclose their non-financial information in the annual management report;
  • Introducing minimum reporting criteria for forward-looking disclosures; and
  • Ensuring the reliability of reported information.

Please click to access the call to action on the Accountancy Europe website.

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FRC Lab report discussing reporting on climate-related issues

22 Oct 2019

A new report from the Financial Reporting Lab of the UK Financial Reporting Council (FRC) reveals that companies are falling short of investors’ expectations for clearer reporting on climate-related issues. It notes that while reporting on climate change is an evolving practice, investor expectations are changing rapidly.

The report highlights the gap between current reporting and investor expectations as economies increasingly transition towards low carbon and climate resilient futures and calls on companies to bridge this gap. It provides practical guidance about where companies can improve their reporting. The report also outlines what investors want to understand, questions companies should ask themselves, recommended disclosures, and a range of examples of the developing practice of climate-related reporting.

Please click to download the new report Climate-related corporate reporting – Where to next? from the FRC website.

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ESMA announces enforcement priorities for 2019 financial statements

22 Oct 2019

The European Securities and Markets Authority (ESMA) has announced the priority issues that the assessment of listed companies' 2019 financial statements will focus on.

The common enforcement priorities related to 2019 IFRS financial statements include:

  • specific issues related to the application of IFRS 16 Leases;
  • follow-up of specific issues related to the application of IFRS 9 Financial Instruments for credit institutions and IFRS 15 Revenue from Contracts with Customers for corporate issuers; and
  • specific issues related to application of IAS 12 Income Taxes (including application of IFRIC 23 Uncertainty over Income Tax Treatments).

ESMA also highlights potentially significant implications of transition from one interest rate benchmark rate to another on financial reporting and the importance of timely disclosure of its consequences.

In addition, this year’s priorities highlight the requirements to disclose non-financial information, with a focus on environmental matters, and specific aspects of ESMA’s Guidelines on Alternative Performance Measures. ESMA also highlights the importance of disclosures analysing the possible impacts of the decision of the United Kingdom to leave the European Union.

Additionally, the harmonised electronic format for issuers’ annual financial reporting (the European Single Electronic Format, ESEF) will apply to annual financial reports containing financial statements for financial years beginning on or after 1 January 2020. ESMA expects issuers to undertake all the necessary steps to ensure compliance with the new requirements on a timely basis.

ESMA and European national enforcers will monitor and supervise the application of the IFRS requirements outlined in the priorities, with national authorities incorporating them into their reviews and taking corrective actions where appropriate. ESMA will collect data on how European listed entities have applied the priorities and will publish its findings in a separate report.

Please click for the following documents on the ESMA website:

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