The DPOC will discuss:

• Proposed shortened comment letter periods for potential exposure drafts on (1) Classification of Liabilities as Current or Non-current (Amendments to IAS 1) and (2) IFRS 16 Leases related to covid-19 related rent concessions.
• Updated on the Due Process Handbook review.

Agenda papers for the meeting are available on the IASB's website.

The IFRS Foundation is seeking four Trustees: one from Europe, two from the Americas and one from the At Large category. Trustees’ responsibilities include oversight of the organisation in the public interest, its strategic direction, appointments to the Board, the IFRS Interpretations Committee and the IFRS Advisory Council, and ensuring the financing of the organisation and approving its budget. The role description notes:

Qualified candidates should have top-level experience in an organisation with an interest in accounting standards. They should demonstrate a firm commitment to serving the public interest, to the work of the Foundation and to the Board as a high quality global standard-setter. They should be financially knowledgeable and be able to meet the time commitment, which includes, but is not limited to, at least three three-day meetings each year. Trustees should have an understanding of, and be sensitive to, the challenges associated with the adoption and application of high quality global accounting standards developed for use in the world’s capital markets as well as to relevant current issues such as the impact of new technologies on corporate reporting, the development of non-financial reporting and changes in investors and markets demands.

Please click to access the press release on the IASB website.

Accounting for COVID-19-related rent concession: The staff recommend that the Board amend IFRS 16 to provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. Entities applying the exemption would account for the changes as if they were not lease modifications. The exemption would have to be applied retrospectively but comparative figures would not be restated. A lessee would recognise any difference arising on initial application of the amendment in opening retained earnings (or other component of equity, as appropriate) in the annual reporting period that includes the date of initial application. The exemption would be effective immediately, when the final amendment is issued.

The staff also recommend that the Board ask the Trustees to approve a 14-day comment period for the proposed amendment. The staff think it would be possible to finalise an amendment to IFRS 16 by the end of May 2020, if the Board agrees with its recommendations and the Trustees approve a 14-day comment period.

Board timelines, impact of COVID-19: The staff set out proposed changes to project timelines, as a result of the COVID-19 pandemic. Some projects continue to be high priority despite the unprecedented global crisis including the project on IBOR Phase 2 and the project on amendments to IFRS 17.

The staff recommend that the Board:

• (a) delay by one year the effective date of Classification of Liabilities as Current or Non-current (Amendments to IAS 1) to annual reporting periods beginning on or after 1 January 2023.
• (b) extend the consultation period by (approximately) three months for the following consultation documents:
  • the Exposure Draft General Presentation and Disclosures;
  • the Request for Information Comprehensive Review of the IFRS for SMEs Standard; and
  • the Discussion Paper Business Combinations—Disclosures, Goodwill and Impairment.

The publication dates of forthcoming major consultation documents planned for 2020 will also be delayed.

For the delay in the IAS 1 amendment the staff recommend the changed effective date be exposed with a 30 day comment period.

The full agenda for the meeting and our pre-meet­ing summaries can be found here. We will update this page for any changes to the agenda and our Deloitte observer notes from the meeting as they become available.

Similar to the guidance on IFRS 9 published in March, the new guidance on IFRS 16 Leases is intended to support the consistent application of requirements in IFRSs. Therefore, it highlights requirements within IFRS 16 and other IFRSs that are relevant for companies considering how to account for rent concessions granted as a result of the covid-19 pandemic; it does not change, remove nor add to, the requirements of IFRS 16. Please click to access the document on the IASB website. The IASB has also announced that the issue will be discussed by the IASB in a supplementary meeting on 17 April.

At the meeting, the IASB will also discuss:

• whether to propose a deferral by one year to 1 January 2023 of the effective date of the amendments to IAS 1 regarding the classification of liabilities;
• whether to extend the consultation period for three major ongoing consultations (the ED General Presentation and Disclosures, the RfI Comprehensive Review of the IFRS for SMEs Standard, and the DP Business Combinations — Disclosures, Goodwill and Impairment) by three months; and
• delaying the publication of forthcoming major consultation documents originally planned for 2020.

The Appendix A of agenda paper 32 for the meeting offers a tabular overview over the proposed changes to consultation document timelines.

The Board will discuss the following:

• Management Commentary
• Financial instruments with characteristics of equity
• Maintenance and consistent application
• Post-implementation review of IFRS 10–12
• Disclosure Initiative—Subsidiaries that are SMEs
• Amendments to IFRS 17 Insurance Contracts (oral update)
• SME Standard review and update

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.

The significance of the individual issues discussed in the webcasts will vary by industry and by entity, but we believe that the topics covered will be the most pervasive and difficult to address. The first webcast in the series discusses judgements and estimates, events after the reporting period and non-financial assets within the scope of IAS 36. Further webcasts will be made available over time.

Please click here to find an overview of the webcasts that have been published so far.

Background

Interbank offered rates (IBORs) are interest reference rates, such as LIBOR, EURIBOR and TIBOR, that represent the cost of obtaining unsecured funding, in a particular combination of currency and maturity and in a particular interbank term lending market. Recent market developments have brought into question the long-term viability of those benchmarks.

The IASB addresses the issues in a project split into two phases: Phase 1 dealt with pre-replacement issues (issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark). This part of the project was concluded on 26 September 2019 by publishing Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7).

Phase 2 of the project deals with replacement issues, therefore, the proposed amendments published today are intended to address issues that might affect financial reporting when an existing interest rate benchmark is actually replaced.

Suggested changes

The changes proposed in ED/2020/1 Interest Rate Benchmark Reform — Phase 2 (Proposed amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) relate to the modification of financial assets, financial liabilities and lease liabilities, specific hedge accounting requirements, and disclosure requirements applying IFRS 7 to accompany the Board’s proposals for classification and measurement and hedge accounting.

• Modification of financial assets, financial liabilities and lease liabilities. The IASB proposes a practical expedient for modifications required by the reform (modifications required as a direct consequence of the IBOR reform and made on an economically equivalent basis). These modifications are accounted for by updating the effective interest rate. All other modifications are accounted for using the current IFRS requirements. A similar practical expedient is proposed for lessee accounting applying IFRS 16. For qualifying modifications, there would be no specific gain or loss associated with the replacement of the IBOR rate.
• Specific hedge accounting requirements. Under the IASB's proposals, hedge accounting would not discontinued solely because of the IBOR reform. Hedging relationships (and related documentation) must be amended to reflect modifications to the hedged item, hedging instrument and hedged risk. Any valuation adjustments resulting from the amendments are recognised as part of ineffectiveness. Amended hedging relationship should meet all qualifying criteria to apply hedge accounting, including effectiveness requirements.
• Disclosures. In order to allow users to understand the nature and extent of risks arising from the IBOR reform to which the entity is exposed to and how the entity manages those risks as well as the entity’s progress in transitioning from IBORs to alternative benchmark rates, and how the entity is managing this transition, the exposure draft proposes that an entity would disclose information about
  • how the transition from interest rate benchmarks to alternative benchmark rates is managed and progress made at the reporting date,
  • the carrying amount of financial assets and financial liabilities that continue to reference benchmarks subject to the reform, disaggregated by significant interest rate benchmark,
  • for each significant alternative benchmark rate to which the entity is exposed, an explanation of how the entity determined which modifications qualified for the practical expedient, including a description of significant judgements the entity made to determine qualifying modifications, and
  • to the extent that the IBOR reform has resulted in changes to an entity’s risk management strategy, a description of these changes and how is the entity managing those risks.

The IASB also proposes to amend IFRS 4 to require insurers that apply the temporary exemption from IFRS 9 to apply the amendments in accounting for modifications directly required by IBOR reform.

The IASB also proposes that the application of all proposed amendments should be mandatory. The IASB has also come to the conclusion that the nature of the proposed amendments is such that they can only be applied to modifications of financial instruments and changes to hedging relationships that satisfy the relevant criteria and, as such, no specific end of application requirements need to be specified.

Comments on the proposed changes are requested by 25 May 2020.

Effective date

The exposure draft proposes that the amendments would be effective for annual periods beginning on or after 1 January 2021 and would be applied retrospectively. Early application would be permitted.

Additional information

Please click for:

• IASB press release (link to IASB website)
• Access to the exposure draft on the IASB website
• Short Snapshot overview of the proposed amendments (link to IASB website)
• IFRS in Focus newsletter explaining the proposed amendments
• Our IAS Plus project page on IBOR reform and the effects on financial reporting — Phase 2

In 2019, the European Securities and Markets Authority (ESMA) was commissioned by the EC to carry out research on potential short-term pressures in securities markets. The results, published in December 2019, included the finding that ESMA's investigation did not identify any need for amending existing accounting requirements. Rather, ESMA suggested three other areas where decisive action would support long-term investment behaviour:

• amending the Non-Financial Reporting Directive to establish principles for high quality non-financial information along with a limited set of specific disclosure requirements;
• promoting a single set of international ESG disclosure standards; and
• requiring the inclusion of non-financial statements in annual financial reports.

Notwithstanding these findings, the new EC consultation document contains the following question:

Question 16: Do you see any further areas in existing financial accounting rules (based on the IFRS framework) which may hamper the adequate and timely recognition and consistent measurement of climate and environmental risks?

The question can be answered with yes/no/don't know. However, only when answering "yes", a new question 16.1 pops up that allows the respondent to elaborate. Four areas where the accounting rules may prove contrary to sustainable finance are then suggested (impairment and depreciation rules, provision rules, contingent liabilities, and other) and it is possible to provide details.

Please click to access the consultation on the EC website. Comments are requested by 15 July.

The IFRS Foundation initiated the new compilation series in October 2019 and will continue it by publishing new volumes biannually in April and October. For more information, see the press release and compilation on the IASB website.

The objective of the document is to indicate the accounting implications of COVID-19-related government initiatives, including how IPSAS and other IPSASB guidance deal with transactions and events which arise because of the pandemic. The publication does not constitute an authoritative pronouncement of the IPSASB, nor does it intend to amend, or override the requirements of existing IPSAS or provide further implementation guidance.

Please click to access the publication on the IPSASB website.