Targeted Standard-Level Review of Disclosures (Disclosure Requirements in IFRS Standards)
- Completed
- Exposure draft consultation
- Hocine Kebli, Juan Jose Gomez de la Calzada, Kathrin Schoene
Description
| EFRAG podcast - Field testing the IASB ED Disclosure Requirements |  |
Background
The Principles of Disclosure Discussion Paper issued by the IASB in 2017 identified three main concerns about information disclosed in general purpose financial statements (collectively termed the 'disclosure problem'). These concerns were:
(a) not enough relevant information;
(b) too much irrelevant information; and
(c) ineffective communication of information.
In response to stakeholders concerns about the quality of disclosures, the IASB launched the Disclosure Initiative project along with other projects aimed at improving the effectiveness of disclosures in financial statements.
Exposure draft
On 25 March 2021, the IASB published the exposure draft Disclosure Requirements in IFRS Standards — A Pilot Approach (the ED). The ED proposed a new approach for the IASB to develop disclosure requirements and test that approach by applying it to IFRS 13 Fair Value Measurement and IAS 19 Employee benefits. The new approach would require entities to comply with:
overall disclosure objectives that describe the overall information needs of users of financial statements; and
specific disclosure objectives that describe the detailed information needs of users of financial statements.
The ED also identifies items of information to meet each specific disclosure objective. However, entities would need to apply judgement to determine the information they should disclose to satisfy the specific disclosure objective.
EFRAG published its DCL on the ED on 11 May 2021.
Outreach events
On
30 June 2021 EFRAG hosted with the IASB an educational joint outreach event in
the form of a webinar with the purpose of stimulate debate on the Disclosure
Initiative project.
EFRAG issued a summary report (here) of the webinar providing a summary of the main views expressed.
Other outreach activities involved two public events: a joint webinar held by EFRAG in cooperation with Confederation of Danish Industry (DI), FSR – Danish Auditors and the IASB (see summary report here) and a joint discussion held by ASCG in collaboration with EFRAG and the IASB.
Field-testing activities
EFRAG, in close coordination with the IASB, conducted field-testing activities which involved a total of 22 entities. In EFRAG's view field test activities are essential for this project to understand the practical implications of the approach and concerns around comparability, auditability and enforceability.
The participants were asked to prepare mock-up disclosures by applying the proposed requirements and complete a questionnaire; or provide input only via the questionnaire or a structured interview. The large majority of participants agreed to prepare mock-up disclosures for one or both of the tested standards.
After collecting the results of the field test, EFRAG and the IASB conducted three workshops with 15 out of the 22 field test participants to discuss the field test result. Based on the field test result workshops with users and auditors were held. The consolidated feedback obtained from the workshop participants as well as the additional input from all the other field test participants are summarised in the feedback statement (here).
As most of the entities participating in the field test activities were large entities, EFRAG also issued a questionnaire aimed at small and medium entities, resulting in 45 participants. 76% of the respondents were small and medium sized entities applying IFRS and the rest were large entities. The result was reported to EFRAG TEG in December.
Outreach event - 10 December
On 10 December 2021 EFRAG hosted with the IASB and BusinessEurope a joint outreach in the form of a webinar with the purpose of sharing the fieldwork experience of the participants as well as the positive aspects and concerns around the approach.
EFRAG issued a summary report (here) of the webinar providing a summary of the main views expressed. A recording of the event is available here.
Final Comment Letter
On 27 Januray 2022 EFRAG issued its final comment letter which can be found here. A summary of the findings from the extensive research conducted by EFRAG is provided in the Annex to the Comment letter. In the letter, EFRAG welcomed the objective of the project, but concluded that the proposed approach in the ED may not achieve its intended objective and suggested an alternative approach. Consistent with the suggestion to apply an alternative approach combining objectives and
mandated disclosure items, EFRAG does not support finalising the amendments to IAS 19 and IFRS 13 as proposed. EFRAG suggest that the IASB first considers the feedback received
in response to its proposed general approach.
On 4 March 2022 EFRAG issued a feedback statement which describes the main comments received and how these comments were considered by EFRAG in finalising its comment letter to the IASB.
Documents
Project news
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04/03/2022 - Efrag's Feedback Statement on Disclosure Requirements in IFRS Standards - A Pilot Approach
The Feedback Statement summarises constituents' feedback on EFRAG's Draft Comment Letter relating to the IASB's Exposure Draft 2021/3 Disclosure Requirements in IFRS Standards – A Pilot Approach (the 'ED') and explains how EFRAG considered this feedback in developing its Final Comment Letter.
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27/01/2022 - EFRAG Comment Letter on ED/2021/3 Disclosure Requirements in IFRS Standards - A Pilot Approach
EFRAG has published its comment letter on ED/2021/3 Disclosure Requirements in IFRS Standards - A Pilot Approach (Proposed Amendments to IFRS 13 and IAS 19) (‘The ED’).
The comment letter can be found here.A summary of the findings from the extensive outreach conducted by EFRAG is provided in the Annex to the Comment Letter. -
17/12/2021 - EFRAG’s feedback statement on the field testing of the IASB’s ED Disclosure Requirements in IFRS Standards - A Pilot Approach
EFRAG has issued a feedback statement that summarises the findings from the field testing conducted with preparers, on the proposals in the IASBs Exposure Draft ("ED") Disclosure Requirements in IFRS Standards& - Pilot Approach (Proposed amendments to IFRS 13 and IAS 19).
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18/11/2021 - NEW DEADLINE | EFRAG questionnaire on objective based disclosure open until 30 November
EFRAG seeks feedback from preparers on a new approach to developing disclosure requirements in individual IFRS Standards by the IASB (which is tested on IFRS 13 Fair Value Measurement and IAS 19 Employee Benefits). To that purpose, EFRAG issued an online questionnaire / invitation for interview. The deadline for submission, in English and other languages, has been extended until 30 November.
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03/11/2021 - Are you ready for disclosure requirements based completely on objectives? – Preparers still have until 20 November to respond
EFRAG seeks feedback from all type of preparers on a new approach to developing disclosure requirements in individual IFRS Standards by the IASB. The proposals is tested on IFRS 13 Fair Value Measurement and IAS 19 Employee Benefits. EFRAG issued an online questionnaire / invitation for an interview to receive feedback specifically (but not exclusively) from small and medium entities. We are ready to receive feedback in languages other than English.
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07/10/2021 - Are you ready for disclosure requirements based completely on objectives? – EFRAG Questionnaire for preparers
EFRAG is issuing an online questionnaire/ invitation for an interview for all types of preparers to get feedback on a new approach to developing disclosure requirements in individual IFRS Standards by the IASB (which is tested on IFRS 13 Fair Value Measurement and IAS 19 Employee Benefits). The questionnaire, which targets specifically small and medium entities, can be completed until 20 November 2021 and takes 20 to 30 minutes to complete.
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27/08/2021 - REMINDER | Invitation to participate in EFRAG's field-test on ED/2021/3 Disclosure Requirements in IFRS Standards (Proposed amendments to IFRS 13 and IAS 19)
EFRAG, in close coordination with EFRAG Member Organisations and other European National Standard Setters and the IASB, is conducting field-testing of the proposals in the IASB's exposure Draft Disclosure Requirements in IFRS Standards (Proposed amendments to IFRS 13 and IAS 19).
Field testing has started and will be carried out until 25 October 2021. Companies can still indicate their interest in participating in the field test by sending an email to Disclosureinitiative-pilot@efrag.org until 10 September 2021.
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23/07/2021 - EFRAG extends the period to participate to its field testing (25 October) and to respond to its draft comment letter (4 January 2022) on the New disclosure approach for IAS 19 and IFRS 13
At its July 2021 meeting, the IASB decided to exceptionally extend the comment period for its Exposure Draft Disclosure Requirements in IFRS Standards—A Pilot Approach (the 'ED') to 290 days until 12 January 2022. Consequently, EFRAG is:
Extending its period to conduct its field-testing with preparers until 25 October 2021. Interested corporates, banks or insurers can register to partake in the field test by emailing disclosureinitiative-pilot@efrag.org by 10 September 2021.
Extending the comment period of its Draft Comment Letter until 4 January 2022. The draft comment letter can be found here.
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29/06/2021 - EFRAG extends the deadline to 20 July to express interest in participating in the field testing: New disclosure approach for IAS 19 and IFRS 13
EFRAG, in close coordination with the IASB, is conducting field-testing of the IASB's proposals included in the ED Disclosure Requirements in IFRS Standards—A Pilot Approach ED/2021/3 issued in March 2021. The purpose of the field testing is to identify potential implementation and application concerns of the proposed disclosures in IFRS 13 Fair Value Measurement and IAS 19 Employee benefits, to determine whether there is a need for additional guidance, and to estimate the effort and cost required to implement and apply the proposals.
Interested corporates, banks or insurers can register to partake in the field test by emailing disclosureinitiative-pilot@efrag.org by 20 July 2021. -
28/05/2021 - EFRAG podcast on field testing the IASB ED Disclosure Requirements
EFRAG has released another podcast, this time on the topic of the field test run by EFRAG in cooperation with the IASB, on the IASB's ED on Disclosure Requirements in IFRS Standards - A Pilot Approach. Listen to the podcast providing insights on the importance and implications to participate in the EFRAG field test.
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20/05/2021 - EFRAG extends the deadline to 20 July 2021 to participate in the field testing: New disclosure approach for IAS 19 and IFRS 13
EFRAG, in close coordination with the IASB, is conducting field-testing of the IASB's proposals included in the ED Disclosure Requirements in IFRS Standards—A Pilot Approach ED/2021/3 issued in March 2021. The purpose of the field testing is to identify potential implementation and application concerns of the proposed disclosures in IFRS 13 Fair Value Measurement and IAS 19 Employee benefits, to determine whether there is a need for additional guidance, and to estimate the effort and cost required to implement and apply the proposals.
Interested corporates, banks or insurers can express interest and register to partake in the field test by emailing disclosureinitiative-pilot@efrag.org by 20 July 2021.
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11/05/2021 - EFRAG’s draft comment letter and invitation to participate in field-test on ED/2021/3 Disclosure Requirements in IFRS Standards (Extended deadlines)
EFRAG’s has published its draft comment letter on ED/2021/3 Disclosure Requirements in IFRS Standards—A Pilot Approach (Proposed amendments to IFRS 13 and IAS 19), seeks constituents' view on and invites preparers to participate in field testing the proposals . EFRAG, in close coordination with with EFRAG Member Organisations and other European National Standard Setters and the IASB, will conduct field-testing of the IASB's proposals.
Companies interested can already indicate their interest : Disclosureinitiative-pilot@efrag.org
At its July 2021 meeting, the IASB decided to exceptionally extend the comment period for its Exposure Draft Disclosure Requirements in IFRS Standards—A Pilot Approach (the 'ED') to 290 days until 12 January 2022. Consequently, EFRAG is:
- Extending its period to conduct its field-testing with preparers until 25 October 2021. Interested corporates, banks or insurers can register to partake in the field test by emailing disclosureinitiative-pilot@efrag.org by 10 September 2021.
- Extending the comment period of its Draft Comment Letter until 4 January 2022. The draft comment letter can be found here.
