Goodwill
The International Accounting Standards Board (IASB) is to consider allowing the amortisation of goodwill, maintaining some harmony with US GAAP (generally accepted accounting principles). A joint US Financial Accounting Standards Board (FASB)/IASB education meeting discussed FASB plans to allow goodwill amortisation. ‘Most of those respondents commenting said that convergence on this topic with US GAAP was desirable,’ said a meeting note. A September 2021 IASB board meeting will consider ‘an initial decision on whether to reintroduce amortisation of goodwill’, which is not currently allowed under IFRS Standards.
Sustainability reporting
The International Organisation of Securities Commissions (IOSCO) is prepared to endorse future sustainability reporting standards issued by the future IFRS Foundation-linked International Sustainability Standards Board. Recognition would be for crossborder and (potentially) domestic business. With IOSCO identifying an ‘urgent need’ for more ‘consistency, comparability and reliability of sustainability reporting for investors’, such endorsement will require ‘strong governance and decision-useful content’, according to its report on the issue.
Erkki Liikanen, chair of the IFRS Foundation trustees and of Finland’s central bank, has said the foundation is seeking to deliver ‘global comparability for investors in a way that allows jurisdictions to combine the global standards with their own additional requirements’. Success in global sustainability-related disclosure standards will require ‘political will, compromise and flexibility from all parties, including the IFRS Foundation’, according to Liikanen.
The Global Reporting Initiative (GRI) has signed a cooperation agreement with the European Financial Reporting Advisory Group (EFRAG) taskforce on European sustainability reporting standards. The two groups have agreed to share technical expertise on building new European Union (EU) sustainability reporting standards and boosting global convergence on such work.
EFRAG is consulting on the due process requirements to follow as technical adviser to the European Commission when preparing draft EU sustainability reporting standards. These may become mandatory within the EU, should the European parliament and member states approve a corporate sustainability reporting directive proposed in April. An EFRAG taskforce on preparatory work for the elaboration of possible EU non-financial reporting standards has now been staffed. It has set objectives and organised topic clusters, and is assigning tasks.
Meanwhile, the GRI will work with Switzerland’s economic affairs state secretariat in a new four-year €3.8m (US$4.6m) programme to improve sustainability disclosures in Africa, Latin America and South-East Asia.
Natural resources
The International Federation of Accountants (IFAC) has called on the US Securities and Exchange Commission (SEC) to undertake a global approach to rules on climate change disclosure, backing the IFRS Foundation initiative. This follows the May launch of an SEC public consultation on US corporate reporting requirements for climate risk.
The International Public Sector Accounting Standards Board (IPSASB) is to reform the descriptions of natural resources within its standards, with staff told to review definitions clarifying when they are part of nature or a commercial commodity. IPSASB standards will also better reflect whether water is in its natural state or acting as a resource, such as a flow moving electricity turbines.
Quality management
The International Auditing and Assurance Standards Board (IAASB) has released two guides on implementing its quality management standards. Advice is included on providing financial statement audits and reviews, and on handling engagement quality reviews, which assess the performance of reviewers and auditors.
