Dr Freiberg, Head of BDO Germany’s Accounting Advisory and Technical Accounting Groups, is a former member of the IFRS Advisory Council and was a member of the IFRS Committee of the German standard-setter DRSC. He is also a member of the TRG for IFRS 17.

The appointment, effective immediately, is until 30 June 2022.

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

Specifically, the podcast discusses the Board’s decisions related to effective date of IFRS 17 and the expiry date of the IFRS 9 temporary exemption in IFRS 4.

The podcast can be accessed through the press release on the IASB website. Our summary of the meeting and the results of the IASB's votes is available here.

Please click to access the following information on the Accountancy Europe website.

The article explores coronavirus’ effects on:

• accounting and reporting for companies as of 31 December 2019,
• accounting and reporting for companies with year-ends in 2020,
• auditing financial statements on 31 December 2019 and beyond, and
• practical matters for the audit of financial statements.

The list of resources relevant for European professional accountants will be updated regularly.

Below is an analysis of all changes made to the work plan since our last analysis on 28 February 2020.

Standard-setting projects

• No changes

Maintenance projects

• No changes - the work plan still shows final amendments to IAS 16 regarding proceeds before intended use to be expected in "March 2020"

Research projects

• Goodwill and impairment — A discussion paper was published earlier this week; the feedback received will be discussed in the second half of 2020
• Post-implementation Review of IFRS 10, IFRS 11 and IFRS 12 — due to the reduced agenda for the March meeting, the research review has been rescheduled to April 2020 (previously March 2020)

Other projects

• IFRS Taxonomy 2019 — Update 1 Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) was published earlier this week and has therefore been removed from the work plan.

The above is a faithful comparison of the IASB work plan at 28 February 2020 and at 21 March 2020. For access to the current IASB work plan at any time, please click here.

Rate-regulated Activities: The staff have been drafting the ED for the accounting model for regulatory assets and regulatory liabilities since last July. The Board decided to clarify whether some components included in the regulated rates in a period form part of total allowed compensation for the goods or services supplied by an entity in the same period or in a different period. In particular, the Board decided to clarify whether regulatory returns and performance incentives included in the regulated rates for a period form part of the total allowed compensation for to the goods or services supplied in the same period.

Management Commentary: The Board continued its discussions about the objective of management commentary, and decided that it should support primary users in assessing an entity’s prospects of future cash flows and assessing management’s stewardship of the entity’s economic resources. The primary users are existing and potential investors, lenders and other creditors and they are expected to have a reasonable knowledge of business and economic activities. The staff also introduced their thinking on developing disclosure objectives for various types of content to be included in management commentary.

Amendments to IFRS 17 Insurance Contracts: The Board decided to defer the effective date of IFRS 17 (incorporating the amendments) to annual reporting periods beginning on or after 1 January 2023 and to extend the fixed expiry date of the temporary exemption from applying IFRS 9 in IFRS 4 to the same date. The staff expect that the amendments will be issued in the second quarter of 2020.

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

Newly added IFRSs are:

• Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) (issued in September 2019).

For more information, see the press release (in Japanese only) on the FSA website.

The agenda for the meeting is summarised below:

For more information, please see the agenda and meeting papers on the IASB's website.

The IFRS Foundation is currently reviewing how to deliver an alternative conference combined with the World Standard-Setters meeting in September 2020.

The announcement is available on the IASB website.

The letter notes that the COVID-19 outbreak and the resulting global pandemic have created a huge amount of uncertainty around the world. The enormous market volatility and the fact that valuers have to value assets when there is limited to no comparable evidence and all markets are facing an uncertain future, can make valuing challenging. The letter can be downloaded from the IVSC website.

The IVSC has also set up a resource page Covid-19: research, analysis and guidance for the valuation profession.

Background

The IASB's project on goodwill and impairment results from the post-implementation review of IFRS 3 Business Combinations.

The feedback on the post-implementation review had revealed that impairment of goodwill is not always recognised in a timely fashion and that disclosures required by IFRSs do not provide enough information to understand whether the acquired business is performing as was expected at the time of the acquisition. There were also comments that the impairment test required for goodwill under IAS 36 Impairment of Assets is costly and complex. Some respondents also suggested reintroducing amortisation of good will.

In February 2015, to address the concerns mentioned and investigate possible improvements to IFRS 3 Business Combinations and IAS 36, the IASB added to its research agenda the following areas of focus, which later evolved into the goodwill and impairment project:

• improving the impairment test in IAS 36;
• subsequent accounting for goodwill (including the relative merits of an impairment-only approach and an amortisation and impairment approach); and
• identification and measurement of intangible assets acquired in a business combination.

The discussions leading to the discussion paper published today were taken up in September 2015.

Summary of preliminary views

The discussion paper DP/2020/1 Business Combinations — Disclosures, Goodwill and Impairment presents preliminary views on the following topics:

Improving disclosures about acquisitions. The IASB believes that companies should be required to disclose the strategic rationale for an acquisition, the objectives for the acquisition, and the metrics for monitoring achievement of objectives. This should be disclosed at the acquisition date. After the acquisition date the performance against the objectives should be disclosed. Companies would disclose information management uses internally to monitor acquisitions, therefore, they would not need to create information solely for external reporting purposes. Disclosure would be required for as long as the performance is monitored by management. If the company ceases to monitor the performance or if the metrics for monitoring the performance are changed, the reason for doing so would be disclosed. The Board also believes that it should develop additional proposals that would require companies to disclose the amount, or range, of synergies expected from the acquisition, to disclose the amount of defined benefit pension liabilities and debt of the acquiree, and to disclose both actual and pro-forma revenue, operating profit and cash flows from operating activities.

Improving accounting for goodwill — Can the impairment test be made more effective? The Board believes that significantly improving the effectiveness of the test at a reasonable cost is not feasible. It also points out that shielding cannot be eliminated because goodwill has to be tested for impairment with other assets. The discussion paper also notes that an impairments test cannot always signal how an acquisition is performing, but that does not mean that the test has failed. When performed well, the test can be expected to achieve its objective of ensuring that the carrying amount of the cash-generating unit as a whole is not higher than its combined recoverable amount. The disclosure ideas discussed above could help provide investors with the information about the performance of acquisition they need. Finally, the discussion paper notes that if estimates of cash flows are too optimistic, this is best addressed by auditors and regulators, not by changing IFRSs.

Improving accounting for goodwill — Should amortisation of goodwill be reintroduced? Having concluded that the impairment test cannot be significantly improved at a reasonable cost, the Board considered whether to reintroduce amortisation of goodwill (an impairment test would still be required). The discussion paper notes that Board members have different views on this topic, but by (narrow) majority came to the preliminary view that the Board should retain the impairment only approach because there is no compelling evidence that amortisation would significantly improve financial reporting. The impairment test is believed to provide more useful information than an arbitrary amortisation charge and is more effective at holding management to account for acquisition decisions. The Board believes that it would not be appropriate to reintroduce amortisation solely because of concerns that the impairment test is not being applied rigorously or simply to reduce goodwill carrying amounts. In this context, the Board also came to the preliminary conclusion that it should develop a proposal to require companies to present on their balance sheets total equity before goodwill.

Improving accounting for goodwill — Simplifying the impairment test. The Board is of the preliminary view that it should provide relief from the mandatory annual quantitative impairment test. A quantitative impairment test would be required only if there is an indication of impairment. The Board believes that the reduction in robustness of the test would be marginal because it is unlikely that material impairment losses occur with no indicator. Similarly, the Board is of the opinion that the benefit of performing the test when there is no indicator is marginal. The Board also intends to improve the calculation of value in use. This would be achieved by removing the restriction in IAS 36 that prohibits companies from including uncommitted restructuring and asset enhancement cash flows and by allowing companies to use post-tax inputs and post-tax discount rates in calculating value in use.

Other topics. The discussion paper also sets out the Board's preliminary view that it should continue to require identifiable intangible assets to be recognised separately from goodwill. The Board believes that there is no compelling evidence that the requirements in IAS 38 should be amended. Considering whether to align the accounting treatments for acquired and internally generated intangible assets would be beyond the scope of the project.

The comment period on the discussion paper was extended until 31 December 2020.

Additional information

• Press release on the IASB's website
• Discussion Paper DP/2020/1 Business Combinations — Disclosures, Goodwill and Impairment (link to IASB website)
• IASB Snapshot introducing the DP (link to IASB website)
• IFRS in Focus newsletter outlining the key concepts of the DP
• IAS Plus project page on Goodwill and impairment