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December 2020 IFRS Interpretations Committee meeting agenda posted

20 Nov 2020

The IFRS Interpretations Committee has posted the agenda for its next meeting, which will be held by video conference on 1-2 December 2020.

The Committee will discuss the following:

  • Administrative matters
  • IAS 1 — Classification of debt with covenants as current or non-current
  • IAS 19 — Attributing benefit to periods of service
  • Supply chain financing arrangements — reverse factoring
  • IAS 38 — Configuration or customisation costs in a cloud computing arrangement
  • IFRS 9 — Hedging variability in cash flows due to real interest rates
  • Work in progress

The full agenda for the meeting can be found here. We will post any updates to the agenda, our comprehensive pre-meeting summaries as well as observer notes from the meeting on this page as they become available.

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November 2020 IASB meeting notes posted

20 Nov 2020

The IASB met via video conference on 18 November 2020 to discuss five topics and on 19 November it met with the FASB in an educational meeting. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

IASB meeting

Board work plan update: Last month the Board decided to begin the post-implementation review (PIR) of the IFRS 9 classification and measurement requirements and reconsider at a later date when to begin the PIRs of the IFRS 9 impairment and hedge accounting requirements and of IFRS 15. The Board will consider the start dates of those PIRs in the second half of 2021.

Post-implementation review of IFRS 10, IFRS 11 and IFRS 12: The Board confirmed the publication of the request for information (RFI), with a 150-day comment period (rather than the 180 days recommended by the staff). The RFI is expected to be published in December.

Maintenance and Consistent Application—Deferred Tax related to Assets and Liabilities arising from a Single Transaction: The Board is finalising amendments to IAS 12. The amendments are expected to be published in the second quarter of 2021 and will have an effective date of 1 January 2023.

Management Commentary: The staff raised some issues identified during drafting of the Exposure Draft (“sweep issues”). The Board decided that entities not applying IFRS Standards should be permitted to apply the Practice Statement. They also decided to use the term ‘accuracy’ rather than ‘freedom of error, emphasising that it applies to quantitative and qualitative information.

Disclosure Initiative, Subsidiaries that are SMEs: The IASB is developing a Standard setting out reduced disclosure requirements for subsidiaries apply IFRS Standards but meet the definition of an SME. The Board decided to have exceptions to the process for adapting disclosure requirements when preparing the analysis of adaptions to the disclosure requirements of the IFRS for SMEs Standard.  

For an analysis of how the IASB work plan has changed after this meeting, please see

Joint IASB—FASB education meeting

The boards updated each other on individual projects that partially or entirely overlap with a project of the other board. The purpose of the meeting was to share information. As such, no decisions were made.

COVID-19: The boards explained the steps they have taken to respond to the COVID-19, such as implementation and educational guidance and adjustments to their work plans. Much of the discussion focused on the accounting for government grants.

Leases other than COVID-19: The IASB staff explained the recent application questions discussed by the IFRS Interpretations Committee and narrow-scope standard-setting that has been initiated with regard to sale and leaseback transactions. The FASB is monitoring the implementation of its equivalent Standard and in July 2020 added a project to its technical agenda to address issues on which the FASB can act because it already has sufficient information from stakeholders. Both boards highlighted that they should continue to strive for as much convergence as possible between the respective Standards.

Goodwill and Impairment: Both the FASB and the IASB have on their respective agendas projects covering accounting for goodwill. Those projects do not constitute a joint project. However, both boards previously decided to monitor each other’s work because of the largely converged accounting models for business combinations. The FASB’s project is in an active project phase while the IASB’s project is in a research phase.

The initial discussion focused on the IASB’s preliminary view that an entity should be required to disclose the metrics that management (the chief operating decision maker or ‘CODM’ as described in IFRS 8) will use to monitor whether the objectives of the acquisition are met. The boards also discussed the subsequent accounting for goodwill.

Supply chain financing: The IASB described the issues that have been submitted to the IFRS Interpretations Committee, and the tentative agenda decision it has published. The IASB also outlined a possible narrow-scope standard-setting project in early 2021. The Big 4 firms submitted an agenda request to the FASB in October 2019 for guidance on disclosure and cash flow statement presentation of supplier finance programmes involving trade payables. Having undertaken research and outreach, the FASB decided in October 2020 to add a project to its agenda to develop disclosure requirements related to supplier finance programmes involving trade payables (a narrow scope). The FASB noted that there is increased disclosure in the US as a consequence of SEC staff speeches and guidance that encourages qualitative and quantitative disclosures in MD&A.

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

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Updated IASB work plan — Analysis (November 2020 meeting)

20 Nov 2020

Following the IASB's November 2020 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 in October 2020.

Below is an analysis of all changes made to the work plan since our last analysis on 31 October 2020.

Standard-setting projects

  • Disclosure initiative — Subsidiaries that are SMEs — the decision of whether to issue a discussion paper or an exposure draft is now expected in January 2021 (previously December 2020)
  • Management commentary — the issuance of an exposure draft is now expected in the second quarter of 2021 (previously first half of 2021)
  • Rate-regulated activities — the issuance of an exposure draft is now expected in January 2021 (previously first quarter of 2021)

Maintenance projects

  • Accounting policies and accounting estimates (Amendments to IAS 8) — the issuance of final amendments is now expected in the first quarter of 2021 (previously December 2020)
  • Deferred tax related to assets and liabilities arising from a single transaction — the issuance of final amendments is now expected in the second quarter of 2021 (previously no date given)
  • Disclosure initiative — Accounting policies — the issuance of final amendments is now expected in the first quarter of 2021 (previously December 2020)

Research projects

  • Dynamic risk management — the feedback on the core model is expected to be discussed in the second quarter of 2021 (previously first half of 2021)
  • Extractive activities — a decision on the project direction is now expected in the first quarter of 2021 (previously first half of 2021)
  • Post-implementation review of IFRS 9 — newly added to the work plan; next stept in the project will be the issuance of a request for information (no date given)

Other projects

  • IFRS Taxonomy Update — Amendments to IAS 1, IAS 8 and IFRS Practice Statement 2 — the issuance of a proposed IFRS Taxonomy Update is now expected in the first quarter of 2021 (previously December 2020)
  • IFRS Taxonomy Update — Common practice (IAS 19) — the expected date for the issuance of a proposed IFRS Taxonomy Update has been dropped, however, the IASB announced in a press release that the proposed IFRS Taxonomy Update will be issued on 24 November 2020
  • IFRS Taxonomy Update — Interest Rate Benchmark Reform — Phase 2 — the feedback on the proposed IFRS Taxonomy Update has been discussed and a final IFRS Taxonomy Update is now expected in December 2020

The above is a faithful comparison of the IASB work plan at 31 October 2020 and 20 November 2020. For access to the current IASB work plan at any time, please click here.

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Educational material on applying IFRSs to climate-related matters

20 Nov 2020

The IFRS Foundation has released a publication that shows how existing IFRS requirements require companies to consider climate-related matters when their effect is material to the financial statements.

The publication mainly consists of a non-exhaustive list of examples illustrating when IFRS Standards may require companies to consider the effects of climate-related matters in applying the principles in a number of standards.

The examples in the list refer to the following standards:

  • IAS 1 Presentation of Financial Statements
  • IAS 2 Inventories
  • IAS 12 Income Taxes
  • IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets
  • IAS 36 Impairment of Assets
  • IAS 37 Provisions, Contingent Liabilities and Contingent Assets and IFRIC 21 Levies
  • IFRS 7 Financial Instruments: Disclosures
  • IFRS 9 Financial Instruments
  • IFRS 13 Fair Value Measurement
  • IFRS 17 Insurance Contracts

The publication also notes that in addition to the specific requirements outlined in the table, IAS 1 contains some overarching requirements that could be relevant when considering climate-related matters.

In an article published in November 2019, IASB Board member Nick Anderson had already explained how IFRS requirements can be used to report on climate and other emerging risks.

Please click to access Effects of climate-related matters on financial statements on the IASB website.

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Global investors call for the Paris Agreement to be factored into financial reporting

19 Nov 2020

The Institutional Investors Group on Climate Change (IIGCC), the European membership body for investor collaboration on climate change, has published 'Investor Expectations for Paris-aligned Accounts'.

The publication notes that companies can no longer afford to ignore what climate change means for their business as climate change is material and investors need visibility about the effects in company accounts. The group is therefore, not calling for sustainability disclosures or reports but for reflecting climate change effects in IFRS accounting. In an article published in November 2019, IASB Board member Nick Anderson had already explained how IFRS requirements can be used to report on climate and other emerging risks.

Investor Expectations for Paris-aligned Accounts sets out investor expectations in five clear steps companies can take in preparing ‘Paris aligned’ company accounts:

  • An affirmation that climate risks are incorporated into the accounts;
  • Adjustments to critical assumptions and estimates;
  • Sensitivity analyses and their results linked to variations in judgements or estimates;
  • Dividend resilience and implications for dividend paying capacity of Paris-alignment; and
  • Confirmation of consistency between narrative reporting on climate risks and the accounting assumptions.

The publication also outlines specific investor expectations for auditors to call out where accounts are ignoring material climate risks; making it clear they should say when accounts are not ‘Paris-aligned’.

Where these expectations are not met, three courses of investor action are identified: engagement (engage with boards and audit committees to press for Paris-aligned accounting), vote (vote against reappointments where performance is inadequate) and divestment (sell shares in companies that fail to provide reliable 'Paris-aligned' accounts).

Please click to download Investor Expectations for Paris-aligned Accounts from the IIGCC website.

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ISAR 37 — presentations available

19 Nov 2020

The thirty-seventh 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 a hybrid format (allowing participation in Geneva in person as well as remotely) on 2 - 6 November 2020.

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 case studies
  • Climate-related financial disclosures in mainstream entity reporting: good practices and key challenges

The keynote address on the second topic was given by Erkki Liikanen, Chair of the IFRS Foundation Trustees.

All presentations from the meeting (including the presentations from the workshop on "Assurance on sustainability reports: current practices and challenges“ on 30 October 2020) can now be accessed online and there are also recordings of all sessions.

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Accountancy Europe response to ad personam mandate on non-financial reporting standard setting

19 Nov 2020

Accountancy Europe has responded to the request of the President of the EFRAG Board to share views on the future governance and framework of EFRAG in the context of possible changes to non-financial reporting by companies.

Accountancy Europe especially raises points around the governance, structure and financing of the European Financial Reporting Advisory Group (EFRAG) that need to be considered if a standard-setter for non-financial information were to be established under the umbrella of EFRAG.

As before in its paper on interconnected standard-setting for corporate reporting, Accountancy Europe points out that standard-setting needs to follow the principles of legitimacy, independence, transparency, public accountability, due process, and balance and notes that:

Particularly, a multi-stakeholder involvement guarantees high quality and balanced standards; whereas independence affects the public perception of standard setting and resultantly, legitimacy.

Applying these principles to a possible standard-setter for non-financial information (NFI), the comment letter makes the following suggestions:

  • setting up a new body within EFRAG to address NFI standards activities;
  • providing adequate governance and oversight to the NFI standards activities body (distinct from the governance and oversight of the financial reporting activities);
  • ensuring connectivity between NFI and financial activities within the EFRAG where appropriate;
  • providing adequate governance and oversight of the EFRAG organisation as a whole;
  • enlarging the EFRAG General Assembly;
  • setting up a new NFI EFRAG Advisory Council; and
  • reforming the EFRAG European Reporting Lab.

The comment letter also emphasises the other on-going initiatives in the field and especially notes the work of CDP-CDSB-GRI-IIRC-SASB as well as the IFRS Foundation consultation towards a comprehensive reporting system. Accountancy Europe proposes that EFRAG uses the NFI standards from these initiatives as a basis upon which to add regional (EU) requirements and only develops separate standards if it becomes clear that a global solution will not be timely available as broad market acceptance also depends on leveraging to the maximum possible the relevant work of recognised NFI frameworks and standards organisations.

On financing, the comment letter makes clear that that the more demands are put on EFRAG, the more human and financial resources will be needed. To this end, stable funding from both the private sector (financially and, in particular, in kind) and from the European Commission is required, both for the EFRAG ac­tiv­i­ties related to financial reporting and the ones related to the wider corporate reporting including NFI reporting.

Please click to access the full comment letter on the website of Accountancy Europe.

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Updated IPSAS-IFRS alignment dashboard

19 Nov 2020

The International Public Sector Accounting Standards Board (IPSASB), which develops the International Public Sector Accounting Standards (IPSAS) for financial reporting by governments and other public sector entities, has released an updated IPSAS-IFRS alignment dashboard showing how far individual IPSAS are aligned with corresponding IFRSs.

Please click to access the updated alignment dashboard prepared for the December 2020 IPSASB meeting on the IPSASB website.

Deloitte offers a summary of the provisions of all IPSAS in our IPSAS in your pocket publication.

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Recordings of the webinars on Trustees' sustainability consultation

19 Nov 2020

On 17 November 2020, the Trustees of the IFRS Foundation offered two webinars and moderated Q&As on their sustainability consultation launched in September.

The consultation is intended to assess demand for global sustainability standards and what role the Foundation might play in the development of such standards.

Please click for access to the recordings on the IASB website. The introductory part in both sessions is the same, the questions put forward by the audience differ.

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IASB officially adds PIR of IFRS 9 to its work plan

19 Nov 2020

The Board has started its post-implementation review (PIR) of the classification and measurement requirements in IFRS 9 'Financial Instruments'.

At its October 2020 meeting, the Board decided unanimously to separate the PIR of the IFRS 9 classification and measurement requirements (including FVOCI equity instruments) from the PIR of the rest of IFRS 9 and to start the PIR on classification and measurement as soon as possible.

One argument brought forward for a separation of classification and measurement was that this part of IFRS 9 did not have a transition resource group (TRG) and thus application issues have not been addressed since publication of the standard. It was also noted that there is not much overlap between classification and measurement and the rest of IFRS 9, so the PIRs can be done separately.

Please see the press release on the IASB website for more information.

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