IASB proposes narrow-scope amendments to IFRS 9This week’s roundup examines the recent developments in corporate reporting, including guidance for audit firms from the UK Financial Reporting Council.
The IASB published an exposure draft proposing amendments to the classification and measurement requirements in IFRS 9, Financial Instruments, a news release said. The proposed amendments respond to feedback received last year, which indicated that most stakeholders believed those requirements achieved their intended purpose, whilst identifying specific areas for further enhancement or clarification.
The exposure draft responds to these points and includes the following updates:
- Clarifying the classification of financial assets with environmental, social, and corporate governance (ESG) and similar features: ESG-linked features in loans could affect whether the loans are measured at amortised cost or fair value, and stakeholders asked how to determine whether such loans have cash flows that are solely payments of principal and interest. To resolve any potential diversity in practice, the proposed amendments clarify how the contractual cash flows on such loans should be assessed. They also look to ensure that investors are provided with useful information about the timing, amount, and uncertainty of future cash flows.
- Settlement of liabilities through electronic payment systems: Stakeholders highlighted challenges about potential outcomes of applying the derecognition requirements in IFRS 9 to the settlement of a financial asset or a financial liability via electronic cash transfers. The exposure draft proposes clarifications to how this should be accounted for. The IASB also decided to develop an accounting policy option to allow a company to derecognise a financial liability before it delivers cash on the settlement date when specified criteria are met.
The comment deadline is 19 July. A snapshot has also been published, which gives an overview of the proposals. Comments can be submitted online or by email to firstname.lastname@example.org.
In another news release, the IFRS Foundation announced the publication of IFRS Accounting Taxonomy 2023. This update includes changes to reflect the amendments made to IFRS 16, Leases, and IAS 1, Presentation of Financial Statements.
FRC releases audit firm guidance
The UK Financial Reporting Council (FRC) issued guidance for audit firms on eligibility criteria, a news release said, in the context of the firm's system of quality management and the performance of engagements. International Standard on Quality Management (UK) 1 (ISQM (UK) 1) and ISQM (UK) 2 have been reissued with updated footnotes to reflect this guidance.
FCA: 'Improvements are needed' in ESG benchmarks
The UK Financial Conduct Authority (FCA) sent a portfolio letter to benchmark administrators that highlights the risk of poor disclosures for ESG benchmarks, a news release said. "High-quality ESG benchmarks are important to support trust in the market for ESG products and the transition to a net-zero economy," the FCA said.
UKEB publishes report on accounting for intangibles
The UK Endorsement Board (UKEB) published a report, Accounting for Intangibles: UK Stakeholders' Views. It sets out stakeholder views on the accounting for intangibles under international accounting standards within the context of the wider economic impact of intangibles in the UK, a news release said, and provides an important foundation for future work the UKEB will undertake in response to the IASB's proposed project on accounting for intangibles.
"UK stakeholders involved in the production and use of general-purpose financial statements were interviewed for the report and highlighted concerns about current IFRS accounting standards," according to the release. "The report also identifies a range of possible enhancements … suggested by stakeholders."
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