The European Financial Reporting Advisory Group (EFRAG) has published its eXtensible Business Reporting Language (XBRL) Taxonomy for the European Sustainability Reporting Standards (ESRS) Set 1, which enables the digital tagging of ESRS statements. In addition, EFRAG has published the XBRL Taxonomy for Article 8 disclosures. This taxonomy will be the basis for the European Securities and Market Authority to develop Regulatory Technical Standards for tagging the ESRS sustainability statement. Read more here.
On 11 October 2023, the European Parliament (EP) published a motion for a resolution on the delegated act (DA) on the European Sustainability Reporting Standards (ESRS). This comes after the ESRS DA’s adoption by the European Commission (EC) on 31 July 2023 and subsequent submission to the EP and European Council (the Council) for scrutiny. Through this motion, which will be subject to a vote at the next EP Plenary, the EP calls on the EC to submit a new delegated act based on a number of recommendations. The full motion may be accessed here.  ISSB Sustainability StandardsOn 26th June 2023, the International Sustainability Standards Board (ISSB) issued its inaugural standards:
Read more here.
Adoption of ESRS by the European CommissionOn 31st July 2023, the European Commission adopted the European Sustainability Reporting Standards (ESRS) for use by all companies subject to the CSRD. Read more here, including questions and answers on the adoption of European Sustainability Reporting Standards.
IAASB: Guidance on Citing IFRS Accounting StandardsNew guidance has just been issued by the International Auditing and Assurance Standards Board (IAASB) to help stakeholders understand how to reference IFRS Accounting Standards to follow recent updates to the IFRS Foundation Trademark Guidelines. The Guidance aims to clarify how auditors or practitioners should refer to the IFRS Accounting Standards in their reports, while also delving into the changes IAASB will adopt for future editions of the IAASB handbook to highlight existing references to the IASs and IFRSs. More information is available here.
IFRS: Summaries of reports on materialityThe IFRS Foundation published a summary of evidence gathered by national standard-setters on the effects of guidance on materiality judgements in IFRS Accounting Standards and other materials.
European Council and European Parliament Reach Provisional Deal on CSDDDThe Council and the European Parliament have reached a provisional deal on the Corporate Sustainability Due Diligence Directive (CSDDD). This Directive aims to enhance the protection of the environment and human rights in the EU and globally. The CSDDD will set obligations for large companies regarding actual and potential adverse impacts on human rights and the environment, with respect to their own operations, those of their subsidiaries, and those carried out by their business partners. More information is available here.
IFRS Sustainability Knowledge HubThe IFRS Foundation has launched the IFRS Sustainability knowledge hub to support use of the ISSB Standards from 2024. The hub went live at COP28’s Climate Action Day and is a key component of the IFRS Foundation’s capacity building programme. The hub hosts content developed by the IFRS Foundation, and more than 100 resources developed by third-party organisations. Materials will be added over time in response to market needs and emerging practices. While the hub has been designed to help companies preparing their ISSB disclosures, it will also be a useful repository for auditors, investors, regulators, and other stakeholders seeking to advance their understanding of the ISSB Standards. Resources on the hub include an introduction to the ISSB Standards, a guide for transitioning from TCFD recommendations to ISSB Standards and a set of Frequently Asked Questions (FAQs).
EFRAG releases first set of explanations on ESRS questions and answer platformIn the fourth quarter of 2023, EFRAG launched its ESRS Q&A Platform to collect and answer technical questions, supporting preparers and other stakeholders with the implementation of the European Sustainability Reporting Standards (ESRS) issued as Delegated Act.
EFRAG Online survey on the effects of IFRS 16FRS 16 Leases was issued by the IASB on 13 January 2016 and had a mandatory effective date of 1 January 2019. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases. The objective of this survey is to help the EFRAG Secretariat to better understand whether IFRS 16 works overall as intended. In particular, the purpose of this survey is to collect your input about issues you may have encountered arising from the application of IFRS 16 including its interaction with other IFRS Accounting Standards, whether they are common and widespread, and how the IASB should address them in the context of a PIR. This survey is aimed at preparers of financial statements, auditors, national standard-setters and regulators.
IESBA staff releases high-level summary of prohibitions in the IESBA code for audits of public interest entitiesThe Staff of the International Ethics Standards Board for Accountants (IESBA) released a high-level summary of prohibitions in the International Code of Ethics for Professional Accountants, (including International Independence Standards), especially in relation to independence for audits of public interest entities (PIEs). The high-level summary is not a substitute for reading the Code. It is designed to highlight non-assurance services, relationships, interests or circumstances that are prohibited for PIE audits.
Overview of the IESBA’s proposed Ethics Standards for Sustainability Reporting and AssuranceThe International Ethics Standards Board for Accountants (IESBA) has released an executive summary of the proposed International Ethics Standards for Sustainability Assurance (IESSA), including International Independence Standards, and ethics standards for sustainability reporting.
EFRAG Feedback Statement on Accounting for Variable Considerations - From a purchaser's perspectiveOn 18th April 2024, EFRAG has issued its Feedback Statement summarising the main comments received in response to its Discussion Paper (DP) Accounting for Variable Consideration—From a purchaser's perspective issued in September 2022. The DP assessed different approaches for when to recognise a liability for variable consideration that depends on the purchaser's future actions and whether, and if so when, subsequent changes in (the estimate of) variable consideration should be reflected in the cost of the acquired asset. |
EFRAG update - April 2024
The April 2024 EFRAG Update is now available and tackles the latest developments in financial and sustainability reporting standards, among other topics.
EFRAG finalises three ESRS IG documents
The European Financial Reporting Advisory Group (EFRAG) announces the finalisation of its first three ESRS Implementation Guidance documents which reflect the outcome of the public feedback: EFRAG IG Materiality Assessment, EFRAG IG 2 Value Chain and EFRAG IG 3 ESRS Datapoints. Feedback statements prepared by the EFRAG Secretariat have also been released, illustrating how the public feedback is reflected in the final IGs.
EFRAG Endorsement Status Report: Amendments to IFRS 9 and IFRS 7
The International Accounting Standards Board (IASB) issued Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7), following which the European Financial Reporting Advisory Group (EFRAG) has updated the EFRAG Endorsement Status Report to reflect the above change.
EFRAG issues draft comment letter on the IASB ED contracts for renewable electricity
In May 2024 the International Accounting Standards Board (IASB) published its Exposure Draft Contracts for Renewable Electricity, proposing narrow-scope amendments to ensure that financial statements more faithfully reflect the effects that renewable electricity contracts have on a company. The proposals amend IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures.In its draft comment letter ('DCL'), EFRAG welcomes IASB's efforts and approach addressing both own-use exception requirements as well as hedge accounting requirements.
Read more.
TNFD and EFRAG Publish Correspondence Mapping
The Taskforce on Nature-related Financial Disclosures (TNFD) and the European Financial Reporting Advisory Group (EFRAG) have jointly published a mapping of the correspondence between the European Sustainability Reporting Standards (ESRS) and the TNFD's recommended disclosures and metrics, illustrating the high level of commonality achieved. This assessment highlights that all 14 TNFD recommended disclosures are reflected in the ESRS.Read more.
EFRAG publishes feedback statement and results of online survey on the IASB's exposure draft FICE
The Survey Results document provides an overview of European constituents’ views on the IASB’s Exposure Draft Financial Instruments with Characteristics of Equity (FICE). These results were considered when finalising the European Financial Reporting Advisory Group’s (EFRAG) Final Comment Letter.
The Feedback Statement summarises constituents' feedback to EFRAG with respect to the IASB’s Exposure Draft and explains how this feedback was considered in developing EFRAG’s Final Comment Letter.
EFRAG publishes paper addressing interplay of connectivity and Annual Report boundaries
As part of its proactive research workplan, The European Financial Reporting Advisory Group (EFRAG) has published a paper "Connectivity considerations and boundaries of different Annual Report sections" laying out the conceptual foundations, categories and benefits of connectivity, which is a relatively new concept within authoritative reporting that also links to sustainability. The paper also analyses reporting boundaries and points to several grey areas on the location of information. It suggests steps to enhance connectivity and lessen the expectation gaps around reporting boundaries. A short version is also available.
Takeaways from EFRAG's paper on connectivity and reporting boundaries
The European Financial Reporting Advisory Group (EFRAG) has released a video with the EFRAG Connectivity Advisory Panel leaders sharing the main takeaways from the recently published EFRAG connectivity project initial paper, “Connectivity considerations and boundaries of different Annual Report sections”.
EFRAG Draft Endorsement Advice on the Amendments to the Classification and Measurement of Financial Instruments (IFRS 9 and IFRS 7)
The European Financial Reporting Advisory Group (EFRAG) is consulting on its assessment of the Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7) against the technical criteria for endorsement in the European Union, and on its assessment on whether the Amendments are conducive to the European public good.
EFRAG's draft endorsement advice letter is available here.
MIA would like to invite its members to contribute to this consultation process by sending their feedback to technical@miamalta.org by 23rd August 2024.
New ESRS Q&A Explanations Covering the January-July 2024 Period
EFRAG has released 23 new Explanations to be added to its Compilation of Technical Explanations to assist stakeholders in the implementation of the ESRS via the EFRAG ESRS Q&A Platform. The Compilation of Explanations now includes a total of 93 explanations released between January and July 2024.
EFRAG July 2024 Update
The European Financial Reporting Advisory Group (EFRSG) has released its July 2024 Update.
The report summarises the public technical discussions and decisions taken at EFRAG in the past month, including open consultations and future events.
EFRAG issues final comment letter on the IASB ED Contracts for Renewable Electricity
The European Financial Reporting Advisory Group (EFRAG) has published its final comment letter on the International Accounting Standards Board’s (IASB) Exposure Draft IASB/ED/2024/3 Contracts for Renewable Electricity, Proposed amendments to IFRS 9 and IFRS 7.
EU Commission FAQs on CSRD implementation
The European (EU) Commission has released a set of Frequently Asked Questions (FAQs) that clarifies the interpretation of certain provisions on sustainability reporting introduced by the Corporate Sustainability Reporting Directive (CSRD) (Directive (EU) 2022/2464) into the Accounting Directive (Directive 2013/34/EU), the Audit Directive (Directive 2006/43/EC), the Audit Regulation (Regulation (EU) No 537/2014), and the Transparency Directive (Directive 2004/109/EC) with the aim of facilitating their implementation by undertakings. It also clarifies certain provisions of the Sustainable Finance Disclosures Regulation (SFDR) (Regulation (EU) 2019/2088).
This set of FAQs also includes a limited number of clarifications concerning the interpretation of certain provisions of the first set of European Sustainability Reporting Standards (ESRS) (Commission Delegated Regulation (EU) 2023/2772), where legal interpretation from the EU Commission has been deemed to be necessary.
Through this set of FAQs, the EU Commission intends to facilitate the compliance of stakeholders with the regulatory requirements in a cost-effective way and to ensure the usability and comparability of the reported information on sustainability.
EFRAG August 2024 Update
The European Financial Reporting Advisory Group (EFRAG) has released its August 2024 Update.
The report summarises the public technical discussions and decisions taken at EFRAG in the past month, including open consultations and future events.
EFRAG issues draft comment letter on the IASB ED Translation to a Hyperinflationary Presentation Currency - Proposed amendments to IAS 21
The European Financial Reporting Advisory Group (EFRAG) has published its draft comment letter on the International Accounting Standards Board’s (IASB) Exposure Draft IASB/ED/2024/4 Translation to a Hyperinflationary Presentation Currency - Proposed amendments to IAS 21.
The IFRS Interpretations Committee (Committee) discussed the application of the requirements in IAS 21 The Effects of Changes in Foreign Exchange Rates to translate amounts from a functional currency that is the currency of a non-hyperinflationary economy to a presentation currency that is the currency of a hyperinflationary economy.
The Committee’s research confirmed that the matter is pervasive in many (although not all) jurisdictions and could have a material effect on those entities affected.
The Committee discussed and recommended to the IASB a proposed solution that it considered would improve the usefulness of the resulting information in a simple and cost-effective manner and remove existing diversity.
MIA would like to invite its members to contribute to this consultation process by sending their feedback to technical@miamalta.org by 20th October 2024.
EFRAG publishes Exposure Draft Due Process Procedures for Financial Reporting Activities
The European Financial Reporting Advisory Group (EFRAG) has published the Exposure Draft (ED) Due Process Procedures for the Financial Reporting Activities (DPP) with the aim of formalising the existing due process applied for its financial reporting activities. As EFRAG's due process is based on interaction with and input from its stakeholders, their acceptance of this DPP is essential. This is why this ED on DPP for the EFRAG financial reporting activities has been developed and issued for public consultation.
The ED sets out the due process requirements to be followed by EFRAG in its role as technical advisor to the European Commission, in its contribution to the International Accounting Standards Board's standard-setting process by providing European views including through proactive research activities and technical advice to the European Commission on the endorsement of IFRS Accounting Standards. It details the requirements for the due process for the preparation of the documents as laid down in the EFRAG Statutes (Article 7.3.4 (b)) and EFRAG Internal Rules (Article 17). The DPP should be read in the context of these EFRAG Statutes and EFRAG Internal Rules (here).
A summary of the EFRAG Exposure Draft is made available here.
EFRAG September 2024 update
The European Financial Reporting Advisory Group (EFRAG) has released its September 2024 update. The report summarises the public technical discussions and decisions taken at EFRAG in the past month, open consultations, future events and vacancies.
The IAASB's New Technology Position: Actions to Embrace Technology and Innovation
The International Audit and Assurance Standards Board (IAASB) has released a Technology Position Statement outlining how the IAASB will integrate technological advancements into its standard-setting activities to ensure that its standards remain relevant, effective, and aligned with the public interest. It also clarifies the IAASB’s new position, which includes embracing innovation in audit and assurance while ensuring that its standards evolve with the changing environment, removing barriers in existing standards that may prevent using advanced technologies, and introducing new requirements and guidance to help practitioners apply technology-enabled procedures effectively.
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