IASB Plans to Propose Amendments to the IFRS for SMEs Standard

The International Accounting Standards Board (IASB) has plans to amend the IFRS for SMEs Standard on June 1, 2023 through publication of its Exposure Draft International Tax Reform—Pillar Two Model Rules—Proposed Amendments to the IFRS for SMEs Standard, which will be available through the Amendments to the IFRS for SMEs Accounting Standard—International Tax Reform—Pillar Two Model Rules project page and its Open for comment section.

“The IASB tentatively decided to propose amendments to the IFRS for SMEs Standard:

  • to introduce a temporary exception to the requirements in Section 29 of the Standard for an entity to recognise and disclose information about deferred tax assets and liabilities related to Pillar Two income taxes;
  • to make the temporary exception mandatory;
  • not to specify how long the temporary exception will be in place;
  • to require an entity to disclose that it has applied the temporary exception;
  • to require an entity to apply these amendments immediately upon their issuance and retrospectively in accordance with Section 10 of the Standard (‘Accounting Policies, Estimates and Errors’);
  • to require an entity to disclose separately its current tax expense (income) related to Pillar Two income taxes; and
  • to require an entity to apply this disclosure requirement for annual reporting periods beginning on or after 1 January 2023.”

More information on the IASB proposed amendment to the IFRS for SMEs Standard for OECD tax reform is available here.


IASB to Undertake Project on Climate-Related Risks in Financial Statements

The International Accounting Standards Board (IASB) met in March to initiate its project to examine how to improve companies’ disclosures on climate-related risks. In March 2021, the IASB published a request for information on its Third Agenda Consultation, and received feedback that:

  • “climate-related risks are often perceived as remote, long-term risks and may not be appropriately considered in the financial statements; and
  • investors need better qualitative and quantitative information about the effect of climate-related risks on the carrying amounts of assets and liabilities reported in the financial statements.”

Some of the questions the IASB received from the open consultation included, “why companies that are expected to be affected by climate-related risks do not provide information about these effects in their financial statements; why companies that have made net zero commitments do not recognize liabilities or impair the value of their assets as a result of those commitments; and how companies should factor long-term uncertainties into the measurement of amounts in the financial statements.” The project expects to address these questions and consider any additional amendments, guidance, and educational materials that may be effective to address stakeholder concerns. The project will align with the ISSB’s (International Sustainability Standards Board) standards and will use the ISSB’s final deliberations on its initial set of standards as a guide.


More information on the IASB’s project on climate-related risks in financial statements is available here.


IASB Publishes Its Priorities for the Next Five Years

The International Accounting Standards Board (IASB) released its Third Agenda Consultation Snapshot and Feedback Statement, outlining its priorities from 2022 to 2026. The Feedback Statement summarized feedback received from a 2021 public consultation, contributing, in large part, to shaping its priorities and work plan. The IASBs key strategic priorities include:

  • Maintaining the strategic direction and balance of the IASB’s activities. These will remain largely the same, but in response to stakeholder feedback, they will increase “efforts in developing digital financial reporting and on improving the understandability and accessibility of IFRS Accounting Standards”.
  • Completing current projects. This will include deliberations on current projects such as Primary Financial Statements, Goodwill and Impairment, as well others that will likely continue for the rest of 2022 and into 2023.
  • Adding intangibles and cash flows to work plan. This will involve a comprehensive review of accounting requirements for intangible assets and review of the accounting requirements for the statement of cash flows and related matters.The IASB also identified areas where they can work in tandem with the International Sustainability Standards Board (ISSB) to create a “connected financial reporting package”.
Included in the IASB’s workplan for 2022-2026 for credit unions, is its work on the IFRS for SMEs Accounting Standard. After analyzing feedback, the IFRS decided to maintain its current levels of focus on this activity. With the help of the SME Implementation Group (SMEIG), the IASB will set requirements under the Second Comprehensive Review of the IFRS for SMEs Accounting Standard and develop educational materials for preparers within SMEs (small-to-medium enterprises) to help them apply the accounting standard. This will hopefully aid credit unions in calculating their expected loss calculations and provide for a lighter touch in the implementation of IFRS 9 (CECL in the United States).


IFRS, International Accounting Standards Board

IFRS Establishes International Sustainability Standards Board with Basel Committee’s Support

Yesterday the International Financial Reporting Standards (IFRS) Foundation announced that it is establishing the International Sustainability Standards Board (ISSB). The purpose of the ISSB is “to develop global standards to improve the consistency, comparability and reliability of sustainability reporting.” The Basel Committee on Banking Supervision (Basel Committee) declared its endorsement for the ISSB; stated support for “the development of a consistent approach across sectors and minimising regulatory fragmentation”; and promised to “work on the Pillar 3 framework to promote a common disclosure baseline for climate-related financial risks across internationally active banks”.

The Basel Committee believes the ISSB’s mission coincides with its Pillar 3 goals related to climate-related financial risks and plans to analyze Pillar 3 to bolster these risks for a common disclosure baseline traversing all internationally active banks. In coordination with the IFRS Foundation, the Basel Committee intends on advance their analogous objectives by working with other international forums such as the Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS), “to ensure the prerequisites for a high-quality and globally consistent disclosure framework for climate-related financial risks are in place”.

More information on the Basel Committee’s collaboration with the ISSB can be found here.

IFRS, Basel

IFRS Foundation Trustees Meet to Address Questions on Sustainability Reporting

In December of 2020, the IFRS requested comment on their Consultation Paper on Sustainability Reporting. The Trustees met on February 1, 2021 to review the responses to the first three questions in the consultation paper:

  1. Is there a need for a global set of internationally recognised sustainability reporting standards? (a) If yes, should the IFRS Foundation play a role in setting these standards and expand its standard-setting activities into this area?
  2. Is the development of a sustainability standards board (SSB) to operate under the governance structure of the IFRS Foundation an appropriate approach to achieving further consistency and global comparability in sustainability reporting?
  3. Do you have any comment or suggested additions on the requirements for success as listed in paragraph 31 (including on the requirements for achieving a sufficient level of funding and achieving the appropriate level of technical expertise)?

Upon review of the feedback it was clear that there is a “growing and urgent demand to improve the global consistency and comparability in sustainability reporting, as well as strong recognition that urgent steps need to be taken and broad demand for the IFRS Foundation to play a role in this.“ As a response, the Trustees have committed to forming a Trustee Steering Committee, as well as continued analysis of the consultation responses to determine whether to establish a new board. It is expected that the Trustees will draft a proposal including a roadmap and timeline by the end of September 2021, with a possible announcement of a sustainability standards board at the United Nations Climate Change Conference in November 2021.

More information on the Trustee's meeting and sustainability efforts can be found here.

World Council's response to the IFRS' Consultation Paper on Sustainability Reporting can be found here.