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IFAC encourages a building blocks approach for reporting sustainability-related information

07 May 2021

In September 2020, the International Federation of Accountants (IFAC) released 'Enhancing Corporate Reporting: The Way Forward' calling for the creation of a new sustainability standards board that would exist alongside the IASB under the IFRS Foundation. The IFAC has now published a revised building blocks approach to reporting sustainability information — enhancing its previously issued roadmap.

As in the predecessor publication, IFAC continues to support a new standard-setting board under the IFRS Foundation that can lead to the coordination and harmonisation of reporting and provide a baseline of requirements addressing sustainability information that is material to enterprise value. With the new publication, IFAC hopes to foster discussion on how the building blocks approach can deliver a global system for consistent, comparable, and assurable sustainability-related information that best meets the needs of investors and other stakeholders.

Please click to access Enhancing Corporate Reporting: Sustainability Building Blocks and a corresponding press release on the IFAC website.

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IASB publishes amendments to IAS 12

07 May 2021

The International Accounting Standards Board (IASB) has published 'Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)' that clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations.



The IFRS Interpretations Committee received a submission about IAS 12 Income Taxes and the recognition of deferred tax in relation to leases (when a lessee recognises an asset and a liability at the lease commencement) and decommissioning obligations (when an entity recognises a liability and includes the decommissioning costs in the cost of the item of of property, plant and equipment). The submitted fact pattern assumed that lease payments and decommissioning costs were deductible for tax purposes when paid and identified different approaches in practice.

The Committee discussed the submission and came to the conclusion that the matter was relevant and widespread, as there are various kinds of contracts and fact patterns affected. Moreover, the question as to whether tax deductions are attributable to a contract, a (single) asset/liability, or rather to cash flows, and as to which consequences this may have for determining temporary differences, is fundamental within IAS 12. Therefore, the Committee recommended that the IASB develop clarifying amendments to IAS 12.

The IASB discussed the issue and in July 2019 published an exposure draft of proposed clarifying amendments, which have now been finalised.



The main change in Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) is an exemption from the initial recognition exemption provided in IAS 12.15(b) and IAS 12.24. Accordingly, the initial recognition exemption does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. This is also explained in the newly inserted paragraph IAS 12.22A.


    Effective date and transition

    The amendments are effective for annual reporting periods beginning on or after 1 January 2023. Early adoption is permitted.

    An entity applies the amendments to transactions that occur on or after the beginning of the earliest comparative period presented. It also, at the beginning of the earliest comparative period presented, recognises deferred tax for all temporary differences related to leases and decommissioning obligations and recognises the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at that date.


    Additional information

    Please click for:


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    Recent sustainability and integrated reporting developments

    06 May 2021

    A summary of recent developments at SEC, CAQ, FASB, IFAC, IFAC/IIRC, IIIRC/SASB, GRI/SASB, SASB, WEF/VBA, WBCSD, EFRAG, ACCA, A4S, SEBI, and SSE.

    The US Securities and Exchange Commission (SEC) has (all links to the SEC website):

    The Center for Audit Quality (CAQ) of the American Institute of Certified Public Accountants (AICPA) has (all links to the CAQ website):

    The US Financial Accounting Standards Board (FASB) has released a staff educational paper on the intersection of environmental, social, and governance matters with financial accounting standards (link to FASB website).

    The International Federation of Accountants (IFAC) has (all links to IFAC website):

    The IIRC and the Sustainability Accounting Standards Board (SASB) have published a joint article on how an integrated report can be strengthened by using SASB Standards (link to IIRC website).

    The Global Reporting Initiative (GRI) and the SASB have published a joint publication A Practical Guide to Sustainability Reporting Using GRI and SASB Standards (link to GRI website).

    The SASB has (all links to SASB website):

    The World Economic Forum (WEF) and the Value Balancing Alliance (VBA) have published a joint statement noting their intention to work together to achieve systematic change in the direction of global sustainability / ESG accounting and reporting standards (link to WEF website).

    The World Business Council for Sustainable Development (WBCSD) has announced the publication of a report Corporate natural capital accounting - from building blocks to a path for standardization (link to WBCSD website).

    The project task force on the reporting of non-financial risks and opportunities and the linkage to the business model of the European Financial Reporting Advisory Group (EFRAG) will host an outreach event on 25 May that aims to get stakeholder feedback on its draft report’s key findings (link to EFRAG website).

    The Association of Chartered Certified Accountants (ACCA) has published a report containing the results of a study that looked at climate change reporting by mining, oil and gas companies (link to ACCA website).

    Accounting for Sustainability (A4S) has published the A4S Essential Guide to Valuations and Climate Change (link to A4S website, publication also available in the French language).

    The Securities and Exchange Board of India (SEBI) has announced to introduce new ESG reporting requirements beginning with the 2022-23 financial year (link to SEBI website).

    The United Nation's Sustainable Stock Exchanges (SSE) announces that (all links to SSE website):


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    IASB issues podcast on latest Board developments (April 2021)

    04 May 2021

    The IASB has released a podcast featuring IASB Chair Hans Hoogervorst and Vice-Chair Sue Lloyd discussing deliberations held during the April 2021 IASB meeting.

    The podcast discusses:

    • Feedback on con­sul­ta­tion in goodwill and impairment project
    • Update on the dynamic risk management project
    • Disclosures in the financial instruments with characteristics of equity project
    • Proposals in the primary financial statements project

    The podcast (12 minutes) can be accessed through the press release on the IASB website.

    The detailed notes taken by Deloitte observers at the meeting are available here.

    IASB (International Accounting Standards Board) (blue) Image

    Updated IASB work plan — Analysis (April 2021)

    30 Apr 2021

    Following the IASB's April 2021 meeting, we have analysed the IASB work plan to see what changes have resulted from the meetings and other developments since the work plan was last revised in March 2021. The IASB has changed the display format of its work plan, which now, for example, also includes references to the standards affected.

    Below is an analysis of all changes made to the work plan since our last analysis on 26 March 2021.

    Stan­dard-set­ting projects

    • Disclosure Initiative — Subsidiaries that are SMEs — the issuance of an exposure draft is now expected in July 2021 (pre­vi­ously Q3 2021).
    • Management Commentary — As reported earlier, the issuance of an exposure draft is now expected in May 2021 (pre­vi­ously April 2021).
    • Second Comprehensive Review of the IFRS for SMEs Standard — This project has been moved from research project to standard-setting project; the next milestone continues to be an exposure draft with no date given.

    Main­te­nance projects

    • IFRS 16 and COVID-19 — This project has been removed from the work plan due to the issuance of the IFRS amendments.
    • Lack of Exchangeability (Amendments to IAS 21) — Discussions on the feedback to the exposure draft published on 20 April 2021 are expected in H2 2021.

    Research projects

    • Dynamic Risk Management — The project is now in the decide project direction stage. No expected date is given.
    • Extractive Activities — The decision on the project direction is pushed into Q3 2021 (previously May 2021).
    • Goodwill and Impairment — The decision on the project direction is now expected in May 2021 (previously April 2021).
    • Pension Benefits that Depend on Asset Returns — The review of the research is now expected in Q3 2021 (previously April 2021).
    • Post-implementation Review of IFRS 9 — Classification and Measurement — A request for information is now expected in Q3 2021 (previously H2 2021).

    Other projects

    • IFRS Taxonomy Update — Amendments to IAS 1, IAS 8 and IFRS Practice Statement 2 — Discussions on the feedback on the proposed IFRS Taxonomy Update published on 21 April 2021 is expected in Q3 2021.
    • Sustainability Reporting — Feedback on the proposed amendments to the IFRS Foundation Constitution is expected in Q4 2021.
    • Third Agenda Consultation — Feedback on the request for information published on 30 March 2021 is expected in H2 2021.

    The above is a faithful com­par­i­son of the IASB work plan at 26 March 2021 and 30 April 2021. For access to the current IASB work plan at any time, please click here.

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    April 2021 IASB meeting notes posted

    30 Apr 2021

    The IASB met on 27–28 April 2021 to discuss five topics. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

    FICE: At its February meeting the staff presented papers on Terms and Conditions, Priority on liquidation and potential dilution, to enable the Board to make its decisions on the objectives and principles of the disclosure requirements and disclosures required to meet these objectives. The staff have brought back refinements to the proposals. The Board supported the staff recommendations for requirements to disclose information about key terms and conditions of instruments (including disclosure of debt-like features in financial instruments that are classified as equity, equity-like features in financial instruments that are classified as financial liabilities and debt-like and equity-like features that determine the classification of components of compound financial instruments); and the potential dilution of ordinary shares arising from financial instruments that could be settled by delivering ordinary shares (for example convertible bonds and derivatives on own equity). The Board asked the staff to bring back the recommendations in relation to liquidation (such as its capital structure disaggregated into categories to enable users of the financial statements to understand its capital structure and the quality of different categories of capital, including priority on liquidation) after undertaking additional analysis.

    Dynamic Risk Management: At this meeting, the Board discussed the feedback from outreach focused on banks. The main messages are that almost all participants supported the objective of the DRM model, but that as risk management strategy commonly defines the target profile on a risk limit basis, this should be incorporated into the DRM model to better reflect the risk management view. Most participants indicated that the issue of accounting mismatch is still not fully resolved in the DRM model or is inconsistent with accounting practices. All participants were concerned about the potential impact of recognising changes in fair value of derivatives in OCI on the regulatory capital and volatility of the capital. Many participants also commented on implementation costs and change of current practices, users’ need for information about DRM and disclosure of sensitive information. Almost all participants responded positively to the ability to designate a net open risk position or core demand deposits. However, in respect of prepayable assets, most participants suggested that the designation of the layer of nominal amounts instead of a percentage (proportion) of portfolio should be allowed. The Board provided feedback and the staff will develop a plan for the next steps in the project.

    Goodwill and Impairment: At this meeting, the Board discussed feedback from users of financial statements and feedback on disclosing information about business combinations, the effectiveness of the impairment test and whether to reintroduce amortisation of goodwill. There was support for enhancing the disclosures for business combinations, including information about subsequent performance of business combinations, but some concerns about the monetary and proprietary costs of doing so. The papers on making a more effective impairment test at a reasonable cost and whether amortisation should be reintroduced were not discussed and are being carried forward to a future meeting. The Board was not asked to make any decisions.

    Maintenance and Consistent Application: The Board ratified the Agenda Decision: Configuration or Customisation Costs in a Cloud Computing Arrangement (IAS 38). The staff presented the latest IFRIC Update. Board members did not comment on either matter.

    Primary Financial Statements: The Board discussed the principles of aggregation and disaggregation and the roles of the primary financial statements and notes. The Board decided to state more clearly the principle relating to the purpose of disaggregation (i.e. items shall be disaggregated if the resulting disaggregated information is material). The Board also decided to include a reference to understandability in the description of the primary financial statements when considering the role of the primary financial statements and the notes.

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

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    IFRS Foundation Trustees propose amendments to the Constitution

    30 Apr 2021

    The Trustees of the IFRS Foundation have proposed amendments to the IFRS Foundation Constitution that would enable the creation of a new sustainability standards board under the governance of the Foundation. They have also released a feedback statement summarising the main messages they received in response to their sustainability consultation paper.

    Proposed amendments to the Constitution

    The Trustees are proposing amendments that are a prerequisite for creating a potential International Sustainability Standards Board (ISSB) within the governance structure of the IFRS Foundation. They regard:

    • The objective of the IFRS Foundation. The objective of the IFRS Foundation would be amended to state that the IFRS Foundation has two standard setters: The International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB). Through the ISSB, the IFRS Foundation would "develop, in the public interest, a single set of high quality, understandable, enforceable and globally accepted sustainability standards based upon clearly articulated principles".
    • The governance of the ISSB and the IASB. The Trustees propose that the Constitution is amended to stipulate that the Executive Director of the Foundation is appointed by the Trustees, in consultation with the chairs of the IASB and the ISSB. This proposed amendment would clarify reporting lines in an organisation with two standard-setting boards.
    • The name of the new board and its standards. The Trustees propose to name the new board the 'International Sustainability Standards Board (ISSB)'. The new board’s standards would be known as ‘IFRS sustainability standards’.
    • The composition of the ISSB. The new board would normally comprise 14 members. The members of the ISSB would appointed by the Trustees. A minority of ISSB members could be part-time members. The main qualifications for membership of the ISSB would be professional competence and relevant professional experience. The board would comprise three members from the Asia-Oceania region, three members from Europe, three members from the Americas, one member from Africa, and four members appointed from any area. The Chair would be chosen by the Trustees from among the full-time members as would a potential Vice-Chair be.

    Please click to access the proposed amendments on the IASB website. Comments are requested by 29 July 2021.

    Feedback statement

    In September 2020, the Trustees published a consultation paper to assess demand for global sustainability standards and what role the Foundation might play in the development of such standards. They received 577 comment letters indicating great international demand for global sustainability standards and broad support for establishing a standard setter for these standards under the governance of the IFRS Foundation. The feedback statement summarises the responses and states how the Trustees have responded to the feedback.

    Please click to access the feedback statement on the IASB website.

    A press release announcing the publication of the proposed amendments to the Constitution and the feedback statement is available on the IASB website.

    In addition, see Deloitte's IFRS in Focus on the proposed amendments.

    EFRAG (European Financial Reporting Advisory Group) (dk green) Image

    EFRAG BCUCC briefing

    30 Apr 2021

    The Secretariat of the European Financial Reporting Advisory Group (EFRAG) has published a briefing ​paper as part of the EFRAG strategy to stimulate debate on the IASB discussions on how to account for ​business combinations under common control.

    For the briefing paper, the EFRAG Secretariat has ​considered how the ​​proposals in the IASB discussion paper would apply to specific transfers of businesses under common control, in particular those that raise questions about the application of IFRSs. The briefing paper does not include questions to constituents. However, constituents are invited to express their views on the topic when responding to the EFRAG draft comment letter​.​

    Please click to access the briefing paper through the press release on the EFRAG website.

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    IFRS Foundation to hold virtual conference

    29 Apr 2021

    The IFRS Foundation has announced its annual conference will be held virtually on 3–4 June 2021 due to covid-19 restrictions.

    The virtual con­fer­ence will include “panel discussions on capital markets and international financial reporting during the past 20 years with key people from this arena; an interactive panel session on the future of corporate reporting with investors, preparers and auditors; and the latest developments in the IFRS Foundation Trustees’ work on sustainability reporting.”

    For more in­for­ma­tion, see the press release and con­fer­ence page on the IASB’s website.

    AASB (Australian Accounting Standards Board) (lt blue) Image

    AASB research into financial reporting by non-corporate or small entities

    29 Apr 2021

    The Australian Accounting Standards Board (AASB) has published its Research Report No. 16 'Financial Reporting by Non-Corporate or Small Entities' that presents an overview of the academic literature on financial reporting by non-corporate and small entities.

    The report’s overall objective is to answer key questions about the coverage of non-corporate and small entities’ reports, their user and stakeholder needs, and their compliance and regulatory oversight. 

    The report shows that there is some consensus in the academic literature about the mismatch between the needs of users and the information that is reported and about difficulties applying a conceptual framework targeted at for-profit entities to the reporting of not-for-profit entities. Some studies raise concerns regarding the compliance burden that detailed reporting requirements places on small entities. 

    The authors of the more than 400 articles surveyed for the report highlight the importance of both financial and non-financial information, of mandatory reporting requirements, and of oversight by large donors, auditors and government authorities. While large donors are normally able to obtain the information required, other users are restricted to financial reports — and the academic literature highlights breaches in compliance and misrepresentation in the financial reporting in this sector. Examples cited are late filing of financial statements, poor coverage of environmental issues, and diversity in reporting of art and heritage assets. The articles also notes that, similar to the for-profit sector sector, there are financial and reputational incentives for non-corporate and small entities to misreport. 

    Please click to access the research report on the AASB website.

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