At the beginning of each year I try to take some time to gather my thoughts and plan for the year ahead. One of the areas I always look at and I’m sure many preparers do too is to look at what accounting standards will need to be applied in the current year.
The IFRS standards also require you to provide details of the standards and interpretations that have been issued but are not yet effective, so while you are looking at the standard you might as well get a feel for what you’re going to be disclosing there too… it also helps in deciding if you’re going to early adopt any of these.
To make your lives a little easier this year, we have done the research for you.
Standards and interpretations effective for current year
What is important to remember in disclosing the application of a new standard and interpretation, or amendment thereof, is that the disclosures required are guided by paragraph 28 of International Accounting Standard 8 Accounting Policies, Changes in Accounting Estimates and Errors (IAS 8). This paragraph requires disclosures where the initial application of an IFRS had an effect on the current or prior periods presented or might have an effect on future periods. This means that if there is no effect or expected effect, the disclosures should not be made. Very often I see pages and pages of detail included for the application of a standard, this is also not required, the readers of the financial statements don’t need or want a whole history of the standard. We recommend that the details be provided as required, including the name of the standard, the explanation of the change in the accounting policy, if applicable, and a description of any applicable transitional provisions and practical expedients applied, after that the number impacts must be disclosed.
High level details of the standards and interpretations issued and effective for the current year (years beginning on or after 1 January 2020), as well as those effective immediately, are included in the table below.
1 The changes to the Conceptual Framework may affect the application of IFRS in situations where no standard applies to a particular transaction or event, otherwise it is not expected to impact preparers.
Standards and interpretations issued and not yet effective
Paragraph 30 of IAS 8 requires preparers to disclose information about new IFRSs that are issued and not yet effective, detailing this fact, together with information that explains the expected impact that future application. Once again, if the amendment is not relevant to the entity, for example an entity does not have agriculture and would therefore not expect an amendment to IAS 41 to impact it, then the details of this amendment would not be included in the financial statements.
As mentioned above, the full details and history of the new IFRS is not required, paragraph 31 of IAS 8 requires disclosure of the title of the new IFRS, the nature of expected changes to the accounting policies, the date that the application is required and is expected to apply together with a discussion on the expected impact thereof.
Below is a high-level summary of the IFRSs issued but not effective before 31 December 2021.
2 Annual Improvements to IFRS Standards 2018 - 2020
3 Annual Improvements to IFRS Standards 2018 - 2020
4 Annual Improvements to IFRS Standards 2018 - 2020
Standards and Interpretations, as well as the amendments thereto, are effective retrospectively, with early application permitted, for annual periods beginning from this date unless otherwise indicated.
Another change that will impact companies listed on the JSE is the CEO and FD responsibility statement which became effective for issuers with years ending on or after 31 December 2020. This has not been detailed in here but has been detailed in other articles.
It is important to stay on track with what is new and what is coming, the IFRSs not yet effective must be presented as at the date that the financial statements are released, so this is only applicable until the International Accounting Standards Board releases a new standard, interpretation or amendment thereto. Make sure you follow the changes throughout the year.
5 Annual Improvements to IFRS Standards 2018 - 2020