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October 2020 IASB meeting notes posted

04 Nov 2020

The IASB met on Tuesday 27, Wednesday 28 and Thursday 29 October 2020 via video conference. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

Board work plan update: This was the first periodical update of the work plan, replacing the research update. The staff have been reviewing the timing of consultation documents and recommend some changes to the timing of consultations (such as delaying the Management commentary ED until May 2021) and extending some comment periods (such as for the DP on BCUCC), all of which the Board supported. The work plan on the IFRS Foundation website was updated after the meeting.

2020 Agenda consultation: The IASB is preparing to issue a Request for Information (RFI) in the first quarter of 2021, as part of the public consultation on its work plan that it is required to undertake every five years. The Board decided that the RFI describe 27 potential projects identified from outreach undertaken.

Maintenance and consistent application — Deferred tax related to assets and liabilities arising from a single transaction: In July 2019, the Board published an ED proposing amendments to IAS 12. The Board confirmed the proposal to narrow the scope of the recognition exemption so that it will not apply to transactions that give rise to equal amounts of taxable and deductible temporary differences. The Board also decided to remove the capping proposal.  

Management commentary: This was the last decision-making meeting for the ED. The Board gave the staff permission to begin the formal drafting and balloting processes. The staff papers included the working draft of their guidance on the provision of information about matters that could affect an entity’s long-term prospects, intangible resources and relationships, and ESG matters, but this was to elicit feedback rather than seeking any formal decisions. The ED is expected to be published in May 2021.

Extractive activities: The staff presented findings on the diversity of accounting policies applied to exploration and evaluation expenditure within the scope of IFRS 6. The staff’s research indicates that diversity is primarily due to the extent to which an entity recognises exploration and evaluation expenditure incurred during the reporting period as an asset and the unit of account that an entity decides to apply to its exploration and evaluation expenditure asset. Most of the entities in the sample use area of interest accounting.  The ‘full cost’ and successful efforts methods are the most common accounting policies for oil and gas companies not applying ‘area of interest’ accounting. The Board was not being asked to make any decisions. Board members mentioned that a potential solution could be to amend IFRS 6 by requiring further disclosures but that the staff have to increase engagement with financial statement users for a better understanding of the disclosures that they would consider relevant.

Equity method: Work on reviewing aspects of IAS 28 began in May. The Board decided that the objective of this review be to assess whether application problems with the equity method for associates and joint ventures can be addressed by identifying and explaining the principles of IAS 28. The Board decided not to consider whether the equity method is a one-line consolidation method or a measurement method, whether it should be replaced by one of the measurement bases in the Conceptual Framework or whether significant influence should be the basis for when to apply the equity method.

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. At this meeting the IASB decided on how entities will communicate that they have applied the reduced disclosure requirements and how the disclosure requirements of IAS 8 should be applied by these entities.

The staff gave an oral update on Dynamic Risk Management (DRM). The staff is setting up meetings to discuss the DRM model with 25 banks from different jurisdictions between now and the end of January 2021. The staff expect to present the feedback from this outreach to the Board in March or April 2021. The Board will then decide the project direction.

The staff gave an oral update on the IFRS Taxonomy, and the proposed updates (PTU/2019/1 Interest Rate Benchmark Reform—Amendments to IFRS 9, IAS 39 and IFRS 7 and PTU/2020/2 Amendments to IFRS 17, Extension of the Temporary Exemption from Applying IFRS 9 and Property, Plant and Equipment—Proceeds before Intended Use). Concerns continue to be raised about the paucity of comment letters (only one was received for PTU/2019/1 and none for PTU/2020/2).

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

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EFRAG-IASB joint webinar on business combinations and subsequent accounting for goodwill – summary report

04 Nov 2020

On 16 October 2020, EFRAG, along with the IASB, hosted an outreach event to discuss business combinations and the subsequent accounting for goodwill. A summary report is now available.

The online event covered the following topics:

  • Improving disclosure about business combinations;
  • improvements to the goodwill impairment test; and
  • a possible reintroduction of amortisation of goodwill.

During the discussion, participants from a range of backgrounds such as enforcement, auditing, academia, valuation and preparation of accounts, shared their views and concerns around the proposals contained in the Discussion Paper Business Combinations —  Disclosures, Goodwill and Impairment.

Please click to access the summary report on the EFRAG website.

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Summary of the October 2020 ASAF meeting now available

03 Nov 2020

The IASB staff have published a summary of the Accounting Standards Advisory Forum (ASAF) meeting held via remote participation on 2 October 2020.

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

  • Goodwill and impairment (1–9): The ASAF discussed the initial feedback on the discussion paper from their stakeholders, and how that feedback compared to what the Board has heard so far. In addition, the ASAF members outlined their plans for outreach and fieldwork to stimulate feedback to the discussion paper.
  • Business combinations under common control (10–15): The ASAF was given an update on the outreach plans for the forthcoming discussion paper. The ASAF members provided feedback on the proposed focus in the outreach, stakeholder events in their jurisdictions, and on how to facilitate effective stakeholder engagement.
  • Conceptual Framework for Financial Reporting (16–19): The FASB provided an overview of its proposed Chapter 4 Elements of Financial Statements of FASB Concepts Statement No. 8 Conceptual Framework for Financial Reporting.
  • Update and agenda planning (20–23): The ASAF members discussed the Board’s current work plan and planned topics for the December 2020 ASAF meeting.

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

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Updated IASB work plan — Analysis (October 2020 meeting)

31 Oct 2020

Following the IASB's October 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 September 2020. Changes are numerous.

Below is an analysis of all changes made to the work plan since our last analysis on 28 September 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 December 2020 (previously fourth quarter of 2020)
  • Management commentary — the issuance of an exposure draft is now expected in the first half of 2021 (previously first quarter of 2021)
  • Primary financial statements — the review of the feedback to the exposure draft is now expected in December 2020 (previously fourth quarter of 2020)

Maintenance projects

  • 2019 Comprehensive review of the IFRS for SMEs — the feedback on the request for information is now expected to be discussed in December 2020 (previously fourth quarter of 2020)
  • Accounting Policies and Accounting Estimates (Amendments to IAS 8) — the issuance of final amendments is now expected in December 2020 (previously fourth quarter of 2020)
  • Deferred tax related to assets and liabilities arising from a single transaction — the Board decided to finalise the amendments (no date given)
  • Disclosure initiative — Accounting policies — the issuance of final amendments is now expected in December 2020 (previously fourth quarter of 2020)
  • Disclosure initiative — Targeted standards-level review of disclosures — the issuance of an exposure draft is now expected in the first quarter of 2021 (previously first half of 2021)
  • Lack of exchangeability — the issuance of an exposure draft is now expected in the first quarter of 2021 (previously no date given)

Research projects

  • Dynamic risk management — the feedback on the core model is expected to be discussed in the first half of 2021 (outreach was undertaken through October 2020)
  • Equity method — a project newly added to the work plan, a project direction is yet to be decided
  • Financial instruments with characteristics of equity — a decision on the project direction is now expected in December 2020 (previously fourth quarter of 2020)
  • Goodwill and impairment — the feedback on the discussion paper is now expected to be discussed in the first quarter of 2021 (previously first half of 2021)
  • Pension benefits that depend on asset returns — a review of the research is now expected in December 2020 (previously November 2020)
  • Post-implementation review of IFRS 10, IFRS 11 and IFRS 12 — the issuance of a request for information is now expected in December 2020 (previously fourth quarter of 2020)

Other projects

  • 2020 Agenda Consultation — the issuance of a request for information is now expected in the first quarter of 2021 (previously first half of 2021)
  • IFRS Taxonomy Update — 2020 General Improvements and Common Practice — a proposed IFRS Taxonomy Update was published on 29 October 2020 and the feedback is expected to be discussed in the first quarter of 2021
  • IFRS Taxonomy Update — Amendments to IAS 1, IAS 8 and IFRS Practice Statement 2 — this project has been added to the work plan and a proposed IFRS Taxonomy Update is expected in December 2020
  • IFRS Taxonomy Update — Amendments to IFRS 17, IFRS 4 and IAS 16 — the feedback on the proposed IFRS Taxonomy Update has been discussed and a final IFRS Taxonomy Update is expected in the first quarter of 2021
  • IFRS Taxonomy Update — Interest Rate Benchmark Reform — Phase 2 — the feedback on the proposed IFRS Taxonomy Update was expected to be discussed in October 2020, however, the date entry has been removed
  • Sustainability reporting — newly added to the work plan; the feedback on the Trustees' consultation paper is expected to be discussed in December 2020 (although the consultation period does not end until 31 December 2020)

The above is a faithful comparison of the IASB work plan at 28 September 2020 and 31 October 2020. For access to the current IASB work plan at any time, please click here.

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IFRS Foundation Trustees and Due Process Oversight Committee hold October 2020 meeting

31 Oct 2020

The IFRS Foundation Trustees and the Due Process Oversight Committee (DPOC) met by video conference on 15 October 2020.

Meeting activities included the following:

  • Executive session:
    • Report of the Executive Director — The Trustees received a report from the Executive Director Lee White on activities since the last meeting.
    • Update on sustainability reporting — The Trustees discussed the initial reactions to the consultation paper on sustainability reporting that they published in September.
    • Committee reports — The Trustees discussed reports from the Business Process and Technology Committee, the Audit, Finance and Risk Committee, the Human Capital Committee, the Nominating Committee, and the DPOC. (A report of the DPOC meeting is attached to the meeting summary.)
  • IASB Chairman’s report — The Chair of the IASB noted the successful completion of time-sensitive amendments to IFRS 17 Insurance Contracts and to the financial instruments standards to address the effects of the ongoing IBOR reform, and updated the Trustees on the continuing discussion in the EU about endorsement of IFRS 17.

For more information, see the full summary on the IFRS Foundation Trustees’ and DPOC meeting on the IASB’s website.

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IASB publishes editorial corrections

30 Oct 2020

The IASB has published editorial corrections to IFRS 7 'Financial Instruments: Disclosures'.

The error identified first occurred in Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) published in September 2019 and was later reproduced in the Red Book and the annotated Red Book 2020 as well as the Blue Book and the annotated Blue Book 2020.

Editorial corrections do not change the meaning or application of pronouncements, but instead correct inadvertent errors. The editorial corrections can be viewed on the editorial corrections page of the IASB's website.

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Webinar on Trustees' sustainability consultation

29 Oct 2020

The Trustees of the IFRS Foundation have announced a webinar and moderated Q&A 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.

For the convenience of participants from different time zones, there will be two sessions of the webinar both discussing the same topics:

  • Tuesday 17 November 2020, 10:00–11:00 GMT and
  • Tuesday 17 November 2020, 15:00–16:00 GMT.

Each session will last a maximum of 60 minutes and include a moderated question-and-answer session. Questions can be submitted in advance.

Please click for more information, registration, and submitting questions in the press release on the IASB website.

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IASB publishes proposed IFRS Taxonomy update

29 Oct 2020

The IASB has published PTU/2020/4 'IFRS Taxonomy 2020 — 'General Improvements and Common Practice — Presentation of information in primary financial statements''.

The proposed update includes elements to reflect common reporting practice and new and amended labels to clarify the accounting meaning and intended use of some existing elements.

For more information, see the press release and proposed update on the IASB’s website. Comments are requested by 5 January 2021.

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Chair of the IOSCO Task Force on Sustainable Finance reconfirms that IOSCO stands ready to support global sustainability reporting standards

29 Oct 2020

As reported earlier, the CDP, Climate Disclosure Standards Board, Global Reporting Initiative, International Integrated Reporting Council and Sustainability Accounting Standards Board sent an open letter to Erik Thedéen, Chair of the Sustainable Finance Task Force of the International Organization of Securities Commissions, on the need to work together to meet the needs of the capital markets as regards global sustainability reporting standards. Mr Thedéen already acknowledged the letter and responded to it in a speech in September, however, he has now released an open response.

In his response, Mr Thedéen repeats the April 2020 IOSCO statement that IOSCO is looking to play an important role in the area of sustainability reporting. Commenting once more on the IFRS Foundation sustainability reporting consultation and the statement of intent of CDP, CDSB, GRI, IIRC, and SASB, he notes again that while these initiatives are currently running in parallel, IOSCO is keen to see them come together.

On IOSCO's role and the path forward, Mr Thedéen reconfirms that IOSCO stands ready to offer support and help. He writes:

As noted, we agree that there is an urgent need to improve the completeness, consistency and comparability of sustainability reporting. Together your joint initiative and that of the IFRS Foundation [...] can set the foundations of a global system architecture that will deliver a more coherent and comprehensive corporate reporting system. [...] We believe that IOSCO is in a unique position to help in this process - just as we did 20 years ago when we endorsed IFRS for use in cross-border offerings and listings and set the foundations of the current three-tier governance structure that the IFRS Foundation enjoys today. We look forward to continuing and deepening our collaboration with your organisations and the IFRS Foundation.

Please click to access the full letter on the IOSCO website.

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New TCFD status report, additional guidance, public consultation

29 Oct 2020

The Task Force on Climate-related Financial Disclosures (TCFD) set up by the Financial Stability Board (FSB) to develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to lenders, insurers, investors and other stakeholders has published a third status report providing an overview of the extent to which companies in their 2019 reports included information aligned with the core TCFD recommendations published in June 2017.

The TCFD surveyed disclosures of around 1,700 firms from diverse sectors with broad geographical representation (69 countries). It found that:

  • Nearly 60% of the world’s 100 largest public companies support the TCFD, report in line with the TCFD recommendations, or both.
  • Disclosure of climate-related financial information has increased since 2017, but continuing progress is needed.
  • Energy companies and materials and buildings companies lead on disclosure.
  • One in 15 companies reviewed disclosed information on the resilience of its strategy.
  • Asset manager and asset owner reporting to their clients and beneficiaries, respectively, is likely insufficient.

The report also notes that expert users find the impact of climate change on a company’s business and strategy as the “most useful” for decision-making, an insight which might provide a road map for preparers.

The TCFD also published guidance on climate-related scenario analysis for non-financial firms and on integrating climate-related risks into existing risk management processes. Additionally, the TCFD published a public consultation on forward-looking climate metrics for financial firms (with responses due by 27 January 2021).

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

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.