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Pre-meeting summaries for the November 2021 IASB meeting

12 Nov 2021

The IASB meets in London on Monday, Tuesday and Friday of the week beginning 15 November 2021. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. We summarised the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

The following topics are on the agenda:

Third Agenda Consultation: The Board published its Request for Information (RfI) Third Agenda Consultation in March 2021. The purpose of this meeting is to provide the Board with a summary of the feedback on the RfI. Most respondents commented on the strategic direction and balance of the Board’s activities and supported the Board’s current strategic direction. In terms of specific projects, most respondents rated climate-related risks, cryptocurrencies and related transactions, and intangible assets as high priority. Many rated going concern, pollutant pricing mechanisms, and the statement of cash flows and related matters as high priority.

Goodwill and Impairment: In September 2021, the Board decided to prioritise making tentative decisions about proposing disclosures about business combinations and perform further analysis of the feedback received on the subsequent accounting for goodwill. In this meeting, the Board will continue to make tentative decisions about the package of disclosures about business combinations. The proposals include a requirement to disclose quantitative information about expected synergies from a business combination. The staff recommendation not defining ‘synergies’. The staff recommend that rather than requiring an entity to explain when expected synergies from a business combination are expected to be realised they should be required to disclose information about when the benefits from synergies are expected to start, and the expected duration of those benefits.

Primary Financial Statements: The staff recommend that the Board retain ‘providing insight into management’s view of an aspect of performance’ as the objective of the requirements for MPMs and ‘management’s view of an aspect of performance’ in the definition of MPMs. The staff also recommend that the Board establish a rebuttable presumption that a subtotal of income and expenses included in public communications outside financial statements represents management’s view of an aspect of performance, allow an entity to rebut the presumption when there is reasonable and supportable information demonstrating that a subtotal of income and expenses does not represent management’s view of an aspect of performance and provide application guidance on how to assess whether there is reasonable and supportable information to support the rebuttal. The staff recommend that the Board narrow the scope of public communications considered for the purposes of applying the definition of MPMs to exclude oral communications, transcripts, and social media posts. The staff also recommend that the Board add application guidance clarifying how an entity applies the requirement to describe an MPM in a clear and understandable manner that does not mislead users.

Board Work Plan—Timing of PIRs: The staff suggest the Board begin the PIR of the impairment requirements of IFRS 9, and of IFRS 15 in the second half of 2022 and consider in the second half of 2022 when to begin the PIR of the hedge accounting requirements of IFRS 9, and IFRS 16.

Post-implementation Review of IFRS 10-12: The purpose of this session is for the Board to conclude which, if any, topics it could consider further. The staff have identified as medium priorities: the relationship between substantive rights and protective rights; a change in relevant activities during the life-cycle of an investee; assessing non-contractual agency relationships and accounting for disproportionate share of output compared to share of ownership. The staff will prepare a “Report and Feedback Statement” on the PIR, subject to Board approval.

Dynamic Risk Management: The staff recommend revising the definition of the target profile to “the range (risk limits) within which the current net open risk position can vary while still being consistent with the entity’s risk management strategy”. They also recommend introducing the risk mitigation intention, described as “the extent to which an entity intends to mitigate the current net open risk position through the use of derivatives” The staff asks whether the Board agrees with the staff view that no further refinements to the DRM model are needed in respect of the designation of a portion of prepayable assets.

Second Comprehensive Review of the IFRS for SMEs Standard: The Board will continue to deliberate specific sections of the IFRS for SMEs Standard that could be aligned with IFRS requirements. The staff recommend the Board develop amendments to the IFRS for SMEs Standard to align Section 20 with IFRS 16, with simplifications for the determination of the discount rate and the subsequent measurement of the lease liability (reassessment). The staff also recommend that the Board align with the 2011 amendments to IAS 19 in respective of the recognition requirement for termination benefits and eliminate the accounting policy option in paragraph 28.24 of the IFRS for SMEs Standard and require actuarial gains and losses to be presented in other comprehensive income.

Rate-regulated Activities: In January 2021, the Board published Exposure Draft ED/2021/1 Regulatory Assets and Regulatory Liabilities. Most respondents agreed with the proposals to present all regulatory income minus all regulatory expense, including regulatory interest income and regulatory interest expense, as a separate line item immediately below revenue. Most respondents who commented agreed with the focus of the proposed overall disclosure objective on information about an entity’s regulatory income, regulatory expense, regulatory assets and regulatory liabilities. Some suggested the Board develop a broader overall objective of providing users of financial statements with information about the nature of the regulatory agreement, the risks associated with it and its effects on an entity’s financial performance, financial position or cash flows. Most respondents did not support the proposed requirement to apply the Standard retrospectively on initial application. Most respondents who commented asked for a longer transition period.

Our pre-meet­ing summaries is available on our November meeting notes page and will be sup­ple­mented with our popular meeting notes after the meeting.

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ISAR 38 — presentations available

12 Nov 2021

The thirty-eighth 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 Geneva on 9 - 12 November 2021.

The two main topics for the meeting were:

  • Review of practical implementation, including measurement, of core indicators for entity reporting on the contribution towards the attainment of the Sustainable Development Goals; and
  • Climate-related financial disclosures in mainstream entity reporting: good practices and key challenges.

The presentations from the meeting (including the presentations from the workshop on "Impact of COVID 19 on company financial and non-financial reporting“ on 8 November 2021) can now be accessed online.

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Recordings of the IASB Research Forum

12 Nov 2021

The International Accounting Standards Board (IASB) hosted its eighth Research Forum on 3 and 4 November 2021 as a virtual event. The meeting saw the presentation of nine academic papers as well as responses by academics and IASB members.

Audio recordings and slides from the presentations at the research forum are now available on the IASB website.

In addition, the IASB reminds academics that the next research forum will be held jointly with the US standard setter FASB on 2-4 November 2022 and that the call for submissions for this conference is open until May 2022.

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IASB releases three webcasts on the reduced disclosure proposal

10 Nov 2021

The IASB has released three webcasts on its Exposure Draft (ED), ‘Subsidiaries without Public Accountability: Disclosures’. The ED would permit eligible subsidiaries that are small and medium-sized entities (SMEs) to apply IFRSs but with reduced disclosure requirements.

The three webcasts discuss:

  • Objectives and scope of the project.
  • Proposed disclosure requirements.
  • Structure and application of the draft Standard.

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

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EFRAG draft comment letter on the request for information on the post-implementation review of IFRS 9

09 Nov 2021

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB's request for information (RFI) seeking comments from stakeholders to identify whether the classification and measurement requirements in IFRS 9 'Financial Instruments' provide information that is useful to users of financial statements; whether there are requirements that are difficult to implement and may prevent the consistent implementation of the standard; and whether unexpected costs have arisen in connection with applying or enforcing the standard.

In its draft comment letter, EFRAG notes a number of issues that are considered to be prevalent in Europe and might deserve standard-setting activities. EFRAG believes the following issues should be of highest priority:

  • the application of the SPPI test to sustainable finance products,
  • the absence of recycling for FVOCI equity instruments,
  • the treatment of equity-type instruments, and
  • reporting on reverse factoring.

Comments on EFRAG's draft comment letter are requested by 14 January 2022. For more information, see the press release and the draft comment letter on the EFRAG website.

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EFRAG survey on reduced disclosures

09 Nov 2021

In connection with the IASB exposure draft 'Subsidiaries without Public Accountability: Disclosures', the European Financial Reporting Advisory Group (EFRAG) has launched a survey seeking the input of preparers of financial statements (parents and subsidiaries) on the costs and benefits and some of the content of the IASB proposals.

Please click for more information on the EFRAG website.

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Agenda updated for the November IASB meeting

09 Nov 2021

The IASB has updated the agenda for its November meeting by moving the session on the Third Agenda Consultation from Friday to Monday and moving the sessions on Dynamic Risk Management and the Second Comprehensive Review of the IFRS for SMEs Standard from Monday to Friday.

View the updated agenda.

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Agenda for the November 2021 IFRS Advisory Council meeting

08 Nov 2021

An agenda has been released for the meeting of the IFRS Advisory Council that will be held by remote participation on 10 November 2021.

A summary of the agenda is set out below:

Wednesday 10 November 2021 (12:00-15:25)

  • Welcome and Chair's preview
  • Updates on Trustees and Board’s Ac­tiv­i­ties
  • Feedback from previous Advisory Council meetings
  • Sus­tain­abil­ity reporting
  • Chair summary

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

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Summary of the October 2021 ASAF meeting now available

08 Nov 2021

The IASB staff have published a summary of the Accounting Standards Advisory Forum (ASAF) meeting held via remote participation on 1 October 2021.

The topics covered during the meeting were the following (numbers in brackets are ref­er­ences to the cor­re­spond­ing para­graphs of the summary):

  • Equity method (1–17): The ASAF members were provided with an update on the equity method research project and discussed the application question on changes in an investor’s interest in an associate without change in significant influence and application question that have recurrent themes outside the scope of the project.
  • Management commentary (18–26): The ASAF members discussed the IASB’s outreach on the Exposure Draft Management Commentary and provided feedback on the proposal’s objective-based approach, long-term prospects, intangible resources and relationships and environmental, social and governance (ESG) matters, qualified and unqualified statements of compliance, and the interaction between the proposals and local reporting requirements and practices.
  • Primary financial statement (27–50): The ASAF members were presented with an update on the Exposure Draft General Presentation and Disclosures and discussed subtotals and categories, disaggregation, management performance measures, and other comments
  • Rate-reg­u­lated ac­tiv­i­ties (51): ASAF members were presented with an overview of the feedback on Exposure Draft Reg­u­la­tory Assets and Reg­u­la­tory Li­a­bil­i­ties.
  • Agenda planning (52): The ASAF members discussed topics for the December 2021 ASAF meeting.

A full summary of the meeting is available on the IASB's website.

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Intangibles: Joint webinar

08 Nov 2021

On Tuesday 30 November, there is a public webinar to discuss the results and practical recommendations from a large-scale research project on reporting of intangibles. The project was funded by the Institute of Chartered Accountants of Scotland (ICAS) and supported by the European Financial Reporting Advisory Group (EFRAG) and the European Federation of Financial Analysts Societies (EFFAS).

Key themes and topics of the webinar will be:

  • Production processes and disclosure modes of intangibles – traditional accounting and non-financial/narrative information;
  • The desired "consumption" processes of intangibles information by users; and
  • Critical characteristics for corporate production/disclosure and consumption processes, and the authors suggestions for policy makers and standard setters to address them.

Please click for more information and registration on the ICAS website.

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