Their discussions will consider approval of a shortened comment period for a potential exposure draft of an amendment to IFRS 16 Leases, extending operational relief to lessees in accounting for COVID-19-related rent concessions, and initial analysis of responses to the Trustees’ consultation paper on sustainability reporting.

An agenda paper on the comment period is available on the IASB website.

As reported earlier, the Board of the European Financial Reporting Advisory Group (EFRAG) published positive a draft endorsement advice on IFRS 17, however, it was noted that the EFRAG Board achieved consensus on all issues with the exception of annual cohorts, with nine Board members voting in favour of the cohorts meeting the endorsement criteria and seven members disagreeing.

ESMA's comment letter notes that IFRS 17 has the benefit of providing transparency on insurance accounting aspects that have for a long time remained unregulated under IFRS due to the continued application of IFRS 4, which was initially intended as a temporary solution and which has de facto prevented the application of an accounting model that could provide clear principles on how to recognise, measure and present amounts relating to insurance contracts on the basis of commonly understood accounting principles.

On the annual cohort question, ESMA highlights that a key role in promoting greater transparency and consistency in accounting for insurance contracts in accordance with IFRS 17 is played by the principles for the aggregation of contracts that form an integral part of the new measurement model and that include the annual cohort requirement. ESMA notes that "IFRS 17 is built around a set of checks and balances which have been carefully developed" and ESMA regrets that EFRAG has decided to assess selected requirements in isolation from others. ESMA is of the view that the alternatives proposed cannot be considered to be more effective and efficient than the current annual cohort requirement.

ESMA therefore supports the endorsement of IFRS 17 in its current form. Should further evidence emerge that the effectiveness and efficiency of the requirements can be improved, ESMA believes the IASB should consider these as part of the post-implementation review of IFRS 17.

Please click for the following additional information on the ESMA website:

• Press release
• Comment letter on the draft endorsement advice

We will post any updates to the agenda, our comprehensive pre-meeting summaries as well as observer notes from the meeting on this meeting page as they become available.

Board Work Plan: This was a regular update of the work plan. Within the next six months the IASB expects to finalise amendments related to three projects and publish consultation documents for six projects.

Amendments to be finalised:

• Disclosure Initiative—Accounting Policies (February 2021)
• Accounting Policies and Accounting Estimates (February 2021)
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Q2 2021)

Consultation documents to be published:

• Exposure Draft (ED) on Rate-Regulated Activities (January 2021)
• ED on the Disclosure Initiative—Targeted Standards-level Review of Disclosures (March 2021)
• ED on Lack for Exchangeability (March 2021)
• Request for Information (RFI) on the Agenda Consultation (March 2021)
• ED on Management Commentary (April 2021)
• RFI on the classification and measurement requirements in IFRS 9 (Q3 2021)

The Board will not start any remaining research pipeline projects or the PIR of IFRS 5. Rather, as decided at the Board’s October 2020 meeting, the Board will obtain updated information about those projects as part of the 2020 Agenda Consultation to help reassess their relative priority.

The Board will hold an extraordinary meeting early in February to determine whether a project needs to be added to update the condition in the amendment to IFRS 16 with regard to COVID-19-related rent concessions that any reduction in lease payments affects only payments originally due on or before 30 June 2021.

Maintenance and Consistent Application: The staff presented the December 2020 IFRIC Update. 

Disclosure Initiative—Subsidiaries that are SMEs: The IASB is developing a Standard setting out reduced disclosure requirements for subsidiaries that apply IFRS Standards but meet the definition of an SME. At this meeting, the Board discussed disclosures about cash-generating units containing goodwill and intangible assets with indefinite useful lives and the scope of the proposed Standard. The Board decided that it apply to entities that, at any point during their reporting period, are subsidiaries of a parent presenting consolidated financial statements applying IFRS Standards and that the scope should not be limited to single entity financial statements. They also decided that the consultation document should be an ED.

Primary Financial Statements: In December 2019, the IASB published Exposure Draft ED/2019/7 General Presentation and Disclosures. At the December 2020 meeting, the Board began discussing summarised feedback from the 215 comment letters it received, outreach activities, fieldwork and a review of academic literature. The Board did not discuss four of the 11 papers and at this meeting continued its discussions. The staff also presented a redeliberation plan.

Please click to access the detailed notes taken by Deloitte observers for the entire meeting. For an analysis of how the IASB work plan has changed after this meeting, please see here.

Background

The IASB is developing an accounting model that will require rate-regulated companies to provide information about their incremental rights to add amounts, and incremental obligations to deduct amounts, in determining the future rates to be charged to customers as a result of goods or services already supplied.

Currently, there is no specific guidance in IFRSs addressing the accounting for rate‑regulated activities and companies use different accounting models to report the effects of rate regulation. Consequently, comparing and understanding the effects of rate regulation across different countries and companies is difficult.

The exposure draft published today follows a discussion paper DP/2014/2 Reporting the Financial Effects of Rate Regulation that was published in September 2014 and examined a certain type of rate regulation where customers have little or no choice but to purchase the rate‑regulated goods or services from the entity.

Previous to the publication of DP/2014/2, the IASB published the limited‑scope standard IFRS 14 Regulatory Deferral Accounts in January 2014 to provide a short‑term, interim solution for rate‑regulated entities that have not yet adopted IFRSs but that recognise regulatory deferral balances under their previous GAAP. This was to address the concern that the lack of guidance may be a barrier to the adoption of IFRS Standards of for such entities. Once the exposure draft is finalised, IFRS 14 will be withdrawn.

Key proposals

The main proposals in ED/2021/1 Regulatory Assets and Regulatory Liabilities are the following:

• Objective: The new standard would replace IFRS 14 Regulatory Deferral Accounts by introducing a new comprehensive accounting model for regulatory assets and liabilities.
• Scope: The standard would apply when the entity is party to a regulatory agreement that determines the regulated rate the entity can charge for the goods or services it supplies to customers.
• Recognition: Regulatory assets and liabilities arise when the regulated rate is determined in such a way that some or all of the total allowed compensation for goods or services supplied in one period is charged to customers in a different past or future period. Recognising regulatory assets and liabilities leads to regulatory income and expense.
• Measurement: Regulatory assets and liabilities would be measured at historical cost, modified for subsequent measurement by using updated estimates of the amount and timing of future cash flows. The estimated future cash flows of a regulatory asset or liability would be discounted to their present value by using the regulatory interest rate. After initial recognition, the carrying amount of the regulatory asset or liability would be updated at the end of each reporting period to reflect conditions existing at that date.
• Presentation: In the statement(s) of financial performance, an entity would present all regulatory income and expense as a separate line item immediately below revenue. In the statement of financial position, an entity would present line items for regulatory assets and liabilities.
• Disclosure. The exposure draft includes several proposed disclosure objectives and detailed requirements to achieve these objectives.

The deadline for submitting comments is 30 July 2021.

Alternative view

The basis for conclusions on the exposure draft includes an alternative view by Board member Mary Tokar. Ms Tokar voted against publication of the exposure draft because of the focus on understanding the relationship between an entity’s revenue and expenses and the related proposals to present particular items of regulatory income and regulatory expense in other comprehensive income, and to measure some regulatory assets and regulatory liabilities by reference to the measurement under IFRSs of the related liabilities and related assets. She also disagrees with the proposed scope of the standard.

Effective date and transition

The exposure draft does not contain a proposed effective date as the IASB will decide on the effective date only upon completion of its redeliberations. The expectation is currently that the standard will become effective approximately 18-24 months after being published in its finalised form.

The standard would be applied retrospectively with one transitional provision and early adoption would be permitted.

Additional information

The following additional information is available on the IASB website and on IAS Plus:

• IASB press release (includes a short Debrief introduction)
• Access to the exposure draft
• Access to the basis for inclusions (includes alternative view)
• Access to the illustrative examples
• IASB Snapshot document summarising the proposals
• Deloitte's IFRS in Focus newsletter
• Our IAS Plus Project page on Rate-regulated activities — Comprehensive project

Accountancy Europe agrees that some non-financial information topics such as climate change are urgent and need an urgent solution. This would include non-financial information reporting standards to enable consistent and comparable reporting on this topic. In its letter, Accountancy Europe notes that it is happy to help and collaborate with the task force, EFRAG and the European Commission to achieve progress in this area.

However, Accountancy Europe also stresses the following points:

• A global approach with an additional building block approach is still the preferred solution. This would also be helpful in view of the urgency of the matter. "Re-inventing the wheel" is regarded as too time-consuming and unnecessary. Also, a European approach should consider the developments in the non-financial information playing field since EFRAG received the mandate.
• Many market participants (including preparers) are already familiar with and report under international initiatives such as those of CDP, CDSB, GRI, IIRC and SASB. Introducing a new initiative would result in further fragmentation.
• The outreach document uses new and different terminology compared to the widely used concepts in corporate reporting, non-financial information, sustainability or environmental, social and governance (ESG) terminology. This is considered confusing and unhelpful, especially as it was unclear whether this is intentional or not and what the underlying intention is and why (if there is one).
• The proposals in the document relate to both the standard-setting process and reporting standards’ content, at times intermingling them. A clear split between standard-setting and reporting standards ́ content in the final document would simplify the tasks of a future European standard setter.
• A conceptual framework would be key to a non-financial information principles-based reporting system. It could build on the well-known concepts of the IFRS Conceptual Framework and the concepts of the existing non-financial information frameworks and standards (e.g. CDSB, IIRC, SASB, GRI, etc.). Regional adaptations important for EU non-financial information reporting standards could be made to some items in these frameworks.
• The outreach events to discuss the ideas in the outreach document are appreciated, however, the letter notes that clarification on the due process and the next steps for the project is needed. It is noted that it is common practice within EFRAG to open a consultation period on its preliminary proposals, receive stakeholders’ feedback and ultimately provide its final advice to the European Commission.

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

The Required IFRS Standards 2021 publication contains all official pronouncements that are mandatory on 1 January 2021. It does not include IFRSs with an effective date after 1 January 2021. The Annotated Required IFRS Standards 2021 includes the same content as Required IFRS Standards 2020, but with additional annotations containing extensive cross-references, explanatory notes and IFRS Interpretations Committee agenda decisions.

The books are available in electronic format for subscribers to eIFRS Professional. Printed copies of the books are available for sale through the IASB's web shop.

The staff will provide the ITCG with a summary of the public feedback received on PTU/2020/4 IFRS Taxonomy 2020 — 'General Improvements and Common Practice — Presentation of information in primary financial statements' and the ITCG will discuss the proposed response.

The agenda paper for this meeting is available on the IASB website.

Following the launch of its revised International <IR> Framework, the International Integrated Reporting Council (IIRC) has now made available a recording of the launch event that provides an overview of the revisions. Please click to access the recording on the IIRC website.

In the context of the revised IIRC framework, the South African Integrated Reporting Committee (IRC) has published a version of the International <IR> Framework (2021) with marked up changes. Please click to access the document on the IRC website.

The IRC has also released Delivering a meaningful and concise integrated report. Please click to access the information paper on the IRC website.

A group of 22 leading insurers and reinsurers convened by the UN Environment Finance Initiative (UNEP FI) has published the first comprehensive guidance for the insurance industry to identify and disclose the impact of climate change on their businesses. Please click to access the guidance on the UNEP FI website.

The Global Reporting Initiative (GRI) has published updated version of Linking the SDGs and the GRI Standards. This free resource gives a breakdown of the targets under each of the 17 UN Sustainable Development Goals (SDGs) and maps how they correlate against the disclosures in the GRI Standards, including the latest published versions. Please click to access the publication on the GRI website.

The GRI has also responded to the to the consultation document on the ad personam mandate on potential need for changes to the governance and funding of EFRAG setting out how GRI and the Global Sustainability Standards Board (GSSB) can contribute to a European solution. Please click to access the letter on the EFRAG website.

The European Financial Reporting Advisory Group (EFRAG) has launched a survey on stakeholders’ views on non-financial risks and opportunities reporting practices. Please click to access the survey on the EFRAG website.

Separate questions have been developed for preparers and users of financial statements. Auditors, standard setters and regulators are also invited to participate in the survey. The survey is open until 16 April 2021.

Please click for more information and access to the survey on the EFRAG website.