International Forvis Mazars newsletters

In mid-September 2023, the European Commission (EC) launched a consultation on a draft delegated act that proposes to increase by 25% the size criteria set out in the Accounting Directive to classify undertakings and groups into different categories (micro, small, medium and large), in order to reflect inflation over the past ten years. This change in the thresholds, presented as part of a plan to increase the competitiveness of EU companies, would reduce the number of undertakings affected by the obligation to present and publish
financial statements and by the requirements on sustainability reporting introduced by the Corporate Sustainability Reporting Directive (CSRD).

Almost seven months after EFRAG submitted the first drafts of the European Sustainability Reporting Standards (ESRS), and two months later than initially announced, the European Commission (EC) published the amended versions of these standards on 9 June 2023 via a draft delegated act. The uncertainties surrounding the nature of the changes introduced by the EC have now been resolved. In this issue, Beyond the GAAP presents the most significant changes to EFRAG's draft standards.

Less than six months after launching the standard-setting project, the International Accounting Standards Board (IASB) seems well on the way to finalising the amendments to IAS 12 – Income Taxes that will introduce a temporary exception to the recognition of deferred taxes resulting from the implementation of the OECD Pillar Two rules. The IASB acknowledged the timely and helpful feedback from stakeholders on its proposed amendments and, at the end of a supplementary meeting dedicated to the project, finally elected to simplify the disclosure requirements compared with its initial proposal. This was arguably the most practical solution to ensure rapid finalisation of the amendments, which was important to all stakeholders.

At its monthly meeting in February 2023, the International Accounting Standards Board (IASB) continued its discussions on the Financial Instruments with Characteristics of Equity project (FICE) and reached a number of tentative decisions, which we discuss in detail in this issue. Readers will recall that this project, based on a discussion paper published in June 2018, is intended to clarify the principles of IAS 32 – Financial Instruments: Presentation, to address the issues of its practical application and to improve disclosures. The exposure draft is expected in the second half of 2023

As 2022 gives way to 2023, the whole editorial team at Beyond the GAAP would like to wish you all the best for the coming year! While there will probably still be much to discuss on the accounting front, there is sure to be even more activity in terms of sustainability reporting, both at European and international level. In particular, the European Commission is expected to endorse the delegated acts on sector-agnostic ESRS by 30 June 2023.