Sustainability standards
The International Federation of Accountants (IFAC) has released detailed proposals to create a new International Sustainability Standards Board (ISSB), working alongside the International Accounting Standards Board (IASB) but operationally independent under the IFRS Foundation.
The goal would be to integrate standards created by a wide range of existing sustainability initiatives, such as those from the CDP, the Climate Disclosure Standards Board (CDSB), the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB). The ISSB would promote sustainability standards to non-IFRS jurisdictions and companies, while ensuring its standards do not contradict IFRS Standards.
The initiative would build on new joint plans released by the IIRC, CDP, CDSB, GRI and SASB to develop a comprehensive, globally accepted, corporate reporting system with financial accounting and sustainability disclosures connected via integrated reporting. An IIRC paper includes a model for joint assessment of standards, approved collaboratively by these partners.
IFAC has also released technical advice to the IIRC on its revision of its international integrated reporting framework, stressing the need to clarify the business impact of environmental and sustainability issues. The framework should ensure integrated reports incorporate all factors that materially affect future cashflows and therefore market and intrinsic value, according to IFAC.
Fraud and going concern
The International Auditing and Assurance Standards Board (IAASB) has launched a consultation on whether International Standards on Auditing (ISAs) on fraud and going concern should be updated. The IAASB is, for instance, considering whether non-material losses to fraud, such as stolen confidential information, should be better reflected in audits. Recent corporate failures, such as Carillion in the UK, have also prompted concern about whether audit guidance should better identify companies at risk.
IFAC is also holding virtual roundtables on the ‘expectation gap’ in fraud and going concern (on 28 September), and on the unique aspects of fraud in audits of less complex entities (on 7 October).
IFRS for SMEs
The IASB is encouraging accountants to participate in a review of the IFRS for SMEs Standard and has made an accompanying webinar presentation available on YouTube. The IASB is considering whether the standard should be more closely aligned with full IFRS Standards. Other issues include whether IFRS for SMEs should integrate guidance on cryptocurrencies and hedge accounting. The deadline for comments is 27 October.
IBOR changes
The IASB has released new guidance on interest rate benchmark changes (replacing the interbank offered rate – IBOR – system). The guidance amends IFRS 4, IFRS 7, IFRS 9 and IAS 39, and includes revisions to assessing hedge accounting and liability impacts. KPMG has published an insight article on the guidance, and EY has issued a summary.
Rent help
A timely update has been released to the IFRS Taxonomy 2020 for Covid-related rent concessions, amending IFRS 16, Leases. The goal is to secure solid information about how much business loss can be assigned to the pandemic, triggering government-mandated rent assistance. A PwC podcast (episode 87) on the update is also available.
Profit subtotals
The IASB has proposed improvements in how information is communicated in financial statements. Suggestions include adding three new profit subtotals, including on operating profit, which is not defined by IFRS Standards. The board also wants companies to disclose management performance measures in subtotals of income and expenses – likewise currently unspecified in IFRS Standards – in a single financial statement note. The consultation runs until 30 September. KPMG’s illustrative financial statements offer preparers help.
Goodwill
The IASB is seeking comments on how to improve the information that companies report about the acquisitions of businesses to help investors assess the success of these deals in subsequent years. The board is developing changes to IFRS Standards that will require companies to disclose information on acquisition objectives and in later years how their goals have been met.
Gender parity
The 18-strong International Public Sector Accounting Standards Board (IPSASB) will consist of equal numbers of men and women for the first time from 1 January. This follows the appointment of Mari Kobayashi (Japan), Renée Pichard (Canada) and Hervé-Adrien Metzger (France) as board members. Lindy Bodewig (South Africa) will be IPSASB deputy chair for 2021.
