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News

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Pre-meeting summaries for the December 2020 IASB meeting

09 Dec 2020

The IASB is meeting on Monday 14, Tuesday 15 and Wednesday 16 December 2020, by video conference. We have posted our pre-meeting summaries for the meetings that allow you to follow the IASB’s decision making more closely. For each topic to be discussed, we summarise 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.

Maintenance and Consistent Application — IFRIC Update: At its December meeting the IFRS Interpretations Committee finalised an agenda decision in relation to supplier financing. At this meeting, the Board will be asked to clear that decision. If four or more Board members object, the decision will not be published. This is the first agenda decision to be subjected to the revised due process.

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 staff is seeking views on whether the consultation document should include proposed reduced disclosure requirements for IFRS 17; and recommend that IFRS 1 not be amended and that transition provisions are not required. The staff also recommend that if an entity stops applying the reduced disclosure Standard that the comparatives should apply full IFRS; that the reduced disclosures can be applied for the ‘first time’ more than once; and that the Standard is optional and an entity can reverse its decision to apply it.

SME Standard review and update: The IASB published Request for Information (RFI) ‘Comprehensive Review of the IFRS for SMEs Standard' in January. The IASB received 66 comment letters, mainly from accountancy bodies and standard-setting bodies. Overall, respondents expressed support for the IFRS for SMEs Standard to be based on full IFRS Standards. The paper also contains feedback on the specific questions asked in the RFI. The staff recommend that the SME Implementation Group (SMEIG) be asked to develop a set of recommendations for the Board in its review of the IFRS for SMEs Standard. The next meeting of the SMEIG is planned for February 2021.

Disclosure Initiative — Accounting Policies: The Board is amending IAS 1 and its Practice Statement on applying materiality. The staff recommend that the Board does not add transition requirements or an effective date to the amendments to the Practice Statement, as well as a small change to the wording in IAS 1:117B.

Primary Financial Statements: In December 2019, the IASB published Exposure Draft ED/2019/7 General Presentation and Disclosures. The staff have summarised feedback from the 215 comment letters it received, outreach activities, fieldwork and a review of academic literature. There are 11 papers, each summarising an aspect of the feedback. To give a flavour of the feedback, there was support for many aspects of the proposals, such as defined subtotals and categories in the statement of profit or loss and introducing a definition for unusual items. But many respondents thought additional guidance was required and most did not agree with the proposed definition of unusual items. There was broad support for the proposed roles for the primary financial statements and the notes. However, there was almost no support for separating integral and non-integral associates and joint ventures and the proposals related to management performance measures received mixed, and strongly expressed, views. The staff is not asking the Board to make any decisions but are asking for feedback and for the Board to identify areas which would require further research.

Post-implementation review of IFRS 9 — Classification and Measurement: In October 2020, the Board decided to begin the post-implementation review (PIR) of the IFRS 9 classification and measurement requirements. The staff plan to identify and assess the matters to be examined, which will then form the basis for a public Request for Information (RFI). The staff expect the PIR will take around 18-24 months to complete, with the RFI being issued in the third quarter of 2021. The staff will ask the Board if they have any comments on the PIR project objectives or timeline.

Financial Instruments with Characteristics of Equity: The staff recommend that the Board move the FICE project from the research programme to the standard-setting programme.

Pensions Benefits that depend on Asset Returns: In January, the Board decided to develop examples to illustrate how a proposed capped approach would compare to the outcome of the existing requirements in IAS 19 for defined benefit plans with benefits that vary with asset returns. The staff are asking the Board to provide feedback on an illustrative example.

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

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IASB publishes request for information on the post-implementation review of IFRS 10-12

09 Dec 2020

The International Accounting Standards Board (IASB) has issued a request for information (RFI) seeking comments from stakeholders to identify whether IFRS 10 'Consolidated Financial Statements', IFRS 11 'Joint Arrangements', and IFRS 12 'Disclosure of Interests in Other Entities' 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 standards; and whether unexpected costs have arisen in connection with applying or enforcing the standards.

The post-implementation review process for IFRS 10, IFRS 11, and IFRS 12 was officially added to the IASB's agenda in September 2019. The IASB has been gathering information to determine the scope of the review and to identify the main questions that need to be answered before the implementation of IFRS 10, IFRS 11, and IFRS 12 can be assessed.

The information gathered so far indicates that many stakeholders believe that the standards work, however, IASB stakeholders have also indicated that there are areas where the standards to their mind might still benefit from improvements. Based on this feedback, the Board agreed the following matters be examined further in the RFI:

IFRS 10 Consolidated Financial Statements provides a single consolidation model that identifies control as the basis for consolidation for all types of entities. The following areas might warrant further investigation:

  • power over an investee, including relevant activities, rights that give an investor power over an investee and control without a majority of voting rights;
  • the link between power and returns, including principal and agent and non-contractual agency relationships;
  • investment entities, including criteria for identifying an investment entity and subsidiaries that are investment entities; and
  • accounting requirements for
    • transactions that give rise to a change in ownership; and
    • the partial acquisition of a subsidiary that does not constitute a business.

IFRS 11 Joint Arrangements establishes a principle-based approach for the accounting for joint arrangements, in which the parties recognise their rights and obligations arising from the arrangements. The following areas might warrant further investigation:

  • collaborative arrangements outside the scope of IFRS 11;
  • classification of joint arrangements; and
  • accounting requirements for joint operations.

IFRS 12 Disclosure of Interests in Other Entities combines, enhances and replaces the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. There were relatively few comments on IFRS 12 requirements and feedback was mixed. Therefore, the RFI aims to establish to what extent the requirements assist an entity to meet the objective of the standard.

After the comment period ends, the IASB will consider the comments received along with information gathered through other consultation activities. The final conclusions of the IASB will be presented in a report and a feedback statement which will also set out the steps the IASB believes should be taken as a result of the review. The Board could decide to add a standard-setting project to its agenda, consider one or more matters further as part of its research programme, or both. The Board could also decide to take no action.

Comments on the RFI are requested by 10 May 2021. The request for information and a corresponding press release are available on the IASB website. Deloitte has released an IFRS in Focus newsletter outlining the contents of the RFI.

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IASB Vice-Chair speaks at annual AICPA conference

09 Dec 2020

At the 2020 AICPA Conference on Current SEC and PCAOB Developments, which is currently being held by remote participation, IASB Vice-Chair Sue Lloyd spoke about the IASB's reaction to COVID-19 challenges and other important Board developments in 2020. She also noted developments to be expected next year and developments in sustainability reporting.

On COVID-19, Ms Lloyd noted that the IASB's approach to dealing with the effects of the pandemic was similar to the FASB’s approach. The IASB published educational material to explain how to apply the existing requirements in IFRSs in the context of COVID-19 and issued one small amendment to IFRS 16. The IASB also reconfigured its work plan to allow for the extra demands that have been put on the stakeholders.

Regarding other important Board developments in 2020, Ms Lloyd pointed out that the IASB finalised amendments to IFRS 17, completed important changes to several standards in response to the IBOR reform, and launched two important consultations — on primary financial statements and on goodwill and impairment.

As an example of important developments to be expected next year, Ms Lloyd noted the agenda consultation the IASB will launch in early 2021. She especially encouraged responding to the consultation as this is an important opportunity for the stakeholders to tell the IASB which standard-setting projects they think are important for the IASB to consider and how the IASB should prioritise its work.

Lastly, Ms Lloyd discussed developments in sustainability reporting and pointed at the Trustees' consultation paper published to assess demand for global sustainability standards and, if demand is strong, to assess whether and to what extent the IFRS Foundation might contribute to the development of such standards.

The full text of the speech is available on the IASB website.

The AICPA conference ran from 7 to 9 December and featured speeches by — as well as panel discussions and question-and-answer sessions with — members of the SEC, PCAOB, FASB, and IASB and professionals from various industries. Our US colleagues have prepared a Heads Up newsletter with highlights from all days of the conference.

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New CMAC members

08 Dec 2020

The IASB's Capital Markets Advisory Committee (CMAC) announces that three new members have been appointed.

Oliver Gottlieb, Matthias Meitner, and Larissa van Deventer will join the CMAC for a three-year term beginning 1 January 2021, renewable once for an additional three-year term.

Additional information, including information on the backgrounds of the new members, is available on the IASB website.

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ESMA integrates latest IFRS updates in its ESEF taxonomy

08 Dec 2020

The European Securities and Markets Authority (ESMA) has published amendments to the European Single Electronic format (ESEF) to update the core taxonomy to the latest updates to IFRSs.

The amendments replace the 2019 IFRS Taxonomy with the most recent one published by the IFRS Foundation in March 2020 as core taxonomy. The ESEF is amended on a yearly basis to reflect updates to the IFRS Taxonomy published by the IFRS Foundation.

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

Note: A corresponding delegated regulation was published in the Offical Journal of the European Union on 18 December 2020.

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EFRAG is looking for new Board members

07 Dec 2020

The European Financial Reporting Advisory Group (EFRAG) has published a call for candidates for new Board members.

By the end of April 2021, several of the EFRAG Board members will have served their maximum term of six years and will rotate off the Board. Other members for which the term expires are eligible for reappointment. European stakeholder organisations and national standard setters in countries that are part of EFRAG’s membership and new organisations that are joining the EFRAG membership are invited to nominate candidates.

Please click for more information on the EFRAG website.

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Deloitte IFRS Masterclass 2020

07 Dec 2020

On 8-10 December 2020, Deloitte Middle East offers the IFRS Masterclass 2020 as an online event. There is no charge for attending, however, prior registration is required.

Each day of the event offers a keynote address by a member of the Deloitte Global IFRS Leadership Team (addressing IFRS 9, IFRS 15, and IFRS 16, respectively), which is then followed by a roundtable on industry perspectives or on technical and implementation questions, followed again each day by a Q&A session. Spanning all three days of the event, there is a three-part series on the impact of COVID-19 on financial reporting.

Please click for more information and registration for the event.

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December 2020 IASB meeting agenda posted

07 Dec 2020

The IASB has posted the agenda for its next meeting, which will be held via video conference on 14–16 December 2020.

During the meeting, the IASB will discuss the following:

  • Maintenance and consistent application
  • Comprehensive review of the IFRS for SMEs
  • Disclosure initiative — Accounting policies
  • Primary financial statements
  • Post-implementation review of IFRS 9
  • Disclosure initiative — Subsidiaries that are SMEs
  • Financial instruments with characteristics of equity
  • Pension benefits that depend on asset returns

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.

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IFRS Interpretations Committee holds December 2020 meeting

04 Dec 2020

The IFRS Interpretations Committee met via video conference on 1 and 2 December 2020. We have posted Deloitte observer notes for the technical issues discussed during this meeting.

The committee discussed the feedback on one tentative agenda decision and four new issues:

Agenda decision to finalise

Supply Chain Financing Arrangements—Reverse Factoring: In June 2020, the Committee published a tentative agenda decision which analyses the presentation of liabilities arising from reverse financing arrangement in the statement of financial position, statement of cash flows and the related disclosure. The Committee decided to finalise the agenda decision with some suggested amendments in the wording.

New issues

IAS 1 Presentation of Financial Statements—Classification of debt with covenants as current or non-current: The Committee members generally agree with the analysis how an entity determine whether it has "the right to defer settlement" when a long-term liability is subject to a condition and its compliance with the condition is tested at dates after the reporting date, applying the amended IAS 1, in the three cases described.

IAS 19 Employee Benefits—Attributing benefit to periods of service: The Committee members agreed the conclusion of the periods of service an entity attributes benefit for a defined benefit plan in a scenario where the amount of the retirement benefit an employee is entitled to depends on the length of services before retirement but raised concerns it deviates from the general views in practice.

IAS 38 Intangible Assets—Configuration or customisation of costs in a cloud computing arrangement: The Committee members agreed with the analysis of the accounting for costs of configuring and customising the suppliers' application software to which it receives access in future and the reference to IFRS 15 for the identification and timing of the services provided by the supplier.

IFRS 9 Financial Instruments—Hedging variability in cash flows due to real interest rates: The Committee members agreed with the conclusion that a hedge of the variability in cash flows arising from the changes in real interest rate based on inflation index cannot be accounted for as a cash flow hedge.

For all of the new issues, the Committee members agreed that the principles and requirements in the relevant Standards provide an adequate basis to determine the appropriate accounting for the issue and that the Committee should publish a tentative agenda decision stating that no further action is required.

More In­for­ma­tion

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

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First discussion of seventh round of academic research contributions to the IASB's work

04 Dec 2020

Five teams of researchers have presented their accounting research projects to members and technical staff of the IASB. The research projects are independent but are all directly relevant to projects on the Board’s work plan. The involvement with the research programme helps the Board to ensure its standard-setting is evidence-based.

The evidence the IASB is looking for includes responses to consultative documents, fieldwork such as assessing systems changes or the hypothetical application of a proposed new financial reporting requirement, empirical analysis from studies of reported accounting data, share price relationships and analysts’ forecasts, the results of experimental studies, analytical modelling, and collecting and analysing views from surveys.

The papers in this round address the following topics (all links to the IASB website):

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