The International Accounting Standards Board (IASB) issues various new pronouncements that must be considered annually when entities prepare financial statements and auditors consider compliance requirements with IFRS.
Accounting requirements
Steps to consider for implementation:
- If an accounting policy becomes effective for the first time in a financial year, and it is not applied, no disclosures are included. ONLY include disclosures when the pronouncement is applied and has an effect on the financial statements (1).
- Consider the impact of all new pronouncements on the current transactions and determine whether any changes are required as well as its impact on the entity – if the actual impact cannot be measured, provide narrative disclosures as to what will change (2).
- Provide the required disclosures for all new pronouncements, even when such a change will have no impact, as this is considered part of management’s judgements in determining which accounting policies are applicable per IAS 1, Presentation of Financial Statements.
New Pronouncements
The following pronouncements are applicable for financial statements commencing 1 January 2021 and beyond:
| Standards/Amendments effective 1 January 2021 | ||
| STANDARD | Nature of change | Issued date |
| IFRS 9 – IAS 39 -IFRS 7 – IFRS 4 -IFRS 16 | Amendments regarding replacement issues in the context of the IBOR reform | August 2020 |
In August 2020, IASB issued Interest Rate Benchmark Reform—Phase 2, which amends IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and Measurement, IFRS 7 Financial Instruments: Disclosures, IFRS 4 Insurance Contracts and IFRS 16 Leases. Interbank offered rates (IBORs) are interest reference rates, such as LIBOR, JIBIR, EURIBOR and TIBOR, that represent the cost of obtaining unsecured funding, in a particular combination of currency and maturity and in a particular interbank term lending market.
The following pronouncements are applicable for financial statements commencing 1 January 2022 and beyond:
| Standards/Amendments effective 1 January 2022 | ||
| STANDARD | Nature of change | Issued date |
| IFRS 1 | Amendments resulting from Annual Improvements to IFRS Standards 2018–2020 (subsidiary as a first-time adopter) | May 2020 |
| IAS 37 | Amendments regarding the costs to include when assessing whether a contract is onerous | May 2020 |
| IAS 16 | Amendments prohibiting a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use | May 2020 |
The following pronouncements are applicable for financial statements commencing 1 January 2022 and beyond:
| Standards/Amendments effective 1 January 2023 | ||
| STANDARD | Nature of change | Issued date |
| IAS 1 | Amendments regarding the disclosure of accounting policies | February 2021 |
| IAS 1 | Amendments regarding the classification of liabilities | January 2020 |
| IAS 1 | Amendment to defer the effective date of the January 2020 amendments | July 2020 |
| IAS 8 | Amendments regarding the definition of accounting estimates | February 2021 |
| IAS 12 | Amendments regarding deferred tax on leases and decommissioning obligations | May 2021 |
| IFRS 17 | Insurance contracts | May 2017 |
(1) IAS 8, Accounting Policies, Estimates and Errors, par. 28, IASB, December 2003. (2) IAS 8.30 and .31
Prepared by: Belinda van der Merwe
Email: Belinda.v@nexia-sabt.co.za
