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News

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Pre-meeting summaries for the December 2020 IFRS Interpretations Committee meeting

30 Nov 2020

The Committee meets on Tuesday 1 and Wednesday 2 December 2020, via video conference. The committee will discuss 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 staff recommend that the Committee finalise the tentative agenda decision with some editorial changes.

New issues

IAS 1 Presentation of Financial Statements — Classification of debt with covenants as current or non-current: How does 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?

IAS 19 Employee Benefits — Attributing benefit to periods of service: To which periods of service should an entity attribute 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?

IAS 38 Intangible Assets — Configuration or customisation of costs in a cloud computing arrangement: How should a customer account for the upfront costs of configuring and customising the suppliers' application software to which it receives access in future?

IFRS 9 Financial Instruments — Hedging variability in cash flows due to real interest rates: Could a hedge of the variability in cash flows arising from the changes in real interest rate based on inflation index be accounted for as a cash flows hedge?

For all of the new issues, the staff have concluded 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 saying that no further action is required.

Work in progress: The staff are analysing requests related to the accounting of warrants that are initially classified as liabilities, costs necessary to sell inventories and preparation of financial statements when an entity is no longer a going concern.

The full agenda for the meeting and our comprehensive pre-meeting summaries can be found here.

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IASB publishes proposed amendment to IFRS 16

27 Nov 2020

The International Accounting Standards Board (IASB) has published an exposure draft 'Lease Liability in a Sale and Leaseback (Proposed amendment to IFRS 16)' that aims at clarifying how a seller-lessee should apply the subsequent measurement requirements in IFRS 16 to the lease liability that arises in a sale and leaseback transaction. Comments are requested by 29 March 2021.

 

Background

The IFRS Interpretations Committee received a submission about IFRS 16 Leases and a sale and leaseback transaction with variable payments that do not depend on an index or rate and came to the conclusion (and the IASB agreed) that it would be beneficial to amend IFRS 16 to specify how a seller-lessee should apply the subsequent measurement requirements in IFRS 16 to the lease liability that arises in the sale and leaseback transaction.

The IASB has now published an exposure draft (ED) of a proposed clarifying amendment.

 

Suggested changes

The IASB proposes in ED/2020/4 Lease Liability in a Sale and Leaseback (Proposed amendment to IFRS 16) to improve the sale and leaseback requirements in IFRS 16 by specifying how to apply paragraphs 36–38 of IFRS 16 in subsequently measuring the lease liability that arises in a sale and leaseback transaction. Specifically, the ED proposes that a seller-lessee

  • when applying the IFRS 16 requirements for measuring the right-of-use asset and lease liability arising from the leaseback, determines the proportion of the asset sold that relates to the right of use retained by comparing the discounted present value of the expected payments for the lease to the fair value of the asset sold and
  • subsequently measures the lease liability by reducing the carrying amount to reflect the expected payments for the lease.

A seller-lessee would apply the proposed amendment retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, except when such application to sale and leaseback transactions with variable lease payments would be possible only with the use of hindsight.

The amendment would also add two illustrative examples to IFRS 16

Comments on the proposed changes are requested by 29 March 2021.

 

Effective date

The exposure draft does not contain a proposed effective date as the IASB intends to decide on this after exposure. Early application would be permitted.

 

Additional information

Please click for:

 

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Report on the autumn 2020 IFASS meeting

27 Nov 2020

A report has been issued summarising the discussions at the meeting of the International Forum of Accounting Standard Setters (IFASS) held by remote participation on 30 September and 1 October 2020.

As reported earlier, among the topics discussed at the meeting were intangibles and the going concern assumption.

The full list of topics discussed at the meeting was:

  • Issues surrounding separate financial statements
    • Presentations by Brazil, Italy, and Korea
  • Primary financial statements
    • Presentations by EFRAG and Korea on the IASB exposure draft
  • Cryptoassets
    • EFRAG discussion paper on the accounting for cryptoassets
  • Intangibles
    • Joint paper by Canada, Germany, Japan, UK and US
  • Going Concern
    • Presentations by Australia and New Zealand
  • International financial reporting for non-profit organisations
  • IPSASB update
  • Fintech application and accounting standards
    • Presentation by Taiwan
  • Impact of COVID-19 in Sri Lanka
    • Presentation by Sri Lanka

The next meeting is to be held on 8-9 March 2021; it will also be held by remote participation.

Please click for the full report from the meeting.

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Agenda for the upcoming Emerging Economies Group meeting

26 Nov 2020

The IASB Emerging Economies Group (EEG) will meet via video conference on 30 November and 1 December 2020. An agenda for the meeting is now available.

The agenda for the meeting is summarised below:

Monday 30 November 2020 (11:00-15:45)

  • Welcome
  • Disclosure initiative — Accounting policies
    • Overview of the forthcoming amendments
  • Disclosure initiative — Subsidiaries that are SMEs
    • Update on the project
  • Disclosure initiative – Targeted standards-level review of disclosures
    • Overview of forthcoming proposals
  • Applying IFRSs in 2020
    • Discussion on the impact of Covid-19
  • Lack of exchangeability
    • Overview of forthcoming proposals

Tuesday 1 December 2020 (11:00-15:30)

  • Goodwill and impairment
    • Feedback from the EEG members on the discussion paper
  • Update on IASB projects
  • Post-implementation review of IFRS 10-12
    • Overview of the forthcoming request for information

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

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    SASB (Sustainability Accounting Standards Board) (green) Image

    IIRC and SASB intend to merge

    25 Nov 2020

    The International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) have announced their intention to merge into the Value Reporting Foundation, a unified organisation intended to provide investors and corporates with a comprehensive corporate reporting framework across the full range of enterprise value drivers and standards.

    The merger is aimed at advancing the work of CDP, CDSB, GRI, IIRC and SASB who in September 2020 released a statement of intent to work together towards comprehensive corporate reporting in a comprehensive corporate reporting system.

    The press release notes that Value Reporting Foundation will maintain the IIRC integrated reporting framework that describes all relevant value creation topics and the approach to integrating them in corporate reporting while the SASB standards provide the precise definitions of the data that should be reported for these topics in each industry. The framework and the standards will remain complementary tools with the Value Reporting Foundation facilitating the use of both together.

    The merger responds to the ever increasing calls from global investors and corporates to simplify the corporate reporting landscape by having a globally aligned reporting system. The press release stresses that the Value Reporting Foundation, which will be formed by mid-2021, stands ready to work with the IFRS Foundation, IOSCO, EFRAG, CDP, CDSB, and GRI, and others to work towards a set of global and globally accepted standards.

    Please click to access the full press release on the SASB website (an identical press release is available on the IIRC website).

    GRI and CDSB have posted congratulatory notes to their websites.

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    IASB issues podcast on latest Board developments (November 2020)

    24 Nov 2020

    The IASB has released a podcast featuring IASB Chair Hans Hoogervorst and IASB Vice-Chair Sue Lloyd discussing deliberations at the November 2020 IASB meeting.

    The podcast discusses:

    • the joint education session with the FASB;
    • Post-implementation review of IFRS 10-12;
    • Management commentary;
    • Subsidiaries that are SMEs; and
    • Maintenance and consistent application.

    The podcast (12 minutes) can be accessed through the press release on the IASB website.

    The detailed notes taken by Deloitte observers at the meeting are available here.

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    XBRL (eXtensible Business Reporting Language) (mid blue) Image

    IFRS Foundation publishes proposed IFRS Taxonomy update

    24 Nov 2020

    The IASB has published PTU/2020/5 'IFRS Taxonomy 2020 — 'General Improvements and Common Practice — IAS 19 'Employee Benefits'''.

    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 26 January 2021.

    Deloitte document (mid gray) Image

    We comment on the tentative agenda decision on sale and leaseback in a corporate wrapper

    24 Nov 2020

    We have commented on the IFRS Interpretations Committee's publication in the September 2020 'IFRIC Update' of the tentative decision not to take onto the Committee’s agenda the request for clarification on the applicability of the sale and leaseback requirements in IFRS 16 to a transaction in which an entity sells its equity interest in a subsidiary that holds one asset and leases that asset back.

    We agree that the Committee’s conclusions as laid out in the agenda decision reflect the requirements of IFRS 10 and IFRS 16 in relation to the specific fact pattern presented therein. However, we strongly suggest that in addition to this decision the Board takes on a broader project to address the treatment of the sale of corporate wrappers, in particular when, if ever, these should be accounted for as sales of assets rather than subsidiaries.

    Please click to download the full comment letter here.

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    GPF meeting (mid blue) Image

    Summary of the October 2020 joint CMAC-GPF meeting

    24 Nov 2020

    Representatives from the International Accounting Standards Board (IASB) met with both the Capital Markets Advisory Council (CMAC) and Global Preparers Forum (GPF) by video conference on 8 October 2020. Notes and recordings from the joint meeting have now been released.

    The topics discussed at the meeting included:

    • Business combinations — Disclosures, goodwill and impairment
    • Primary financial statements

    There was also an update session on COVID-19 related matters.

    The meeting summary on the IASB website only covers the first two topics, however, the meeting page offers recordings of all three topics.

    The next CMAC meeting will be held on 11 March 2021 .The next GPF meeting is proposed to be held on 12 March 2021.

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    December 2020 IFRS Interpretations Committee meeting agenda posted

    20 Nov 2020

    The IFRS Interpretations Committee has posted the agenda for its next meeting, which will be held by video conference on 1-2 December 2020.

    The Committee will discuss the following:

    • Administrative matters
    • IAS 1 — Classification of debt with covenants as current or non-current
    • IAS 19 — Attributing benefit to periods of service
    • Supply chain financing arrangements — reverse factoring
    • IAS 38 — Configuration or customisation costs in a cloud computing arrangement
    • IFRS 9 — Hedging variability in cash flows due to real interest rates
    • Work in progress

    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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