![Justine Combrink](https://www.forvismazars.com/var/mazars/storage/images/_aliases/user_block/media/global-contents/group-data-base/contact-photos/panoramic/justine-combrink/58202548-1-eng-GB/4059f092d491-Justine-Combrink.jpg.webp)
Looking forward - IFRS Standards and interpretations effective for 2021
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.
Standard | Details of Standard or amendment | Annual periods beginning on or after# |
The Conceptual Framework for Financial Reporting 1
| The revised Conceptual Framework is not a standard, and none of the concepts override those in any standard or any requirements in a standard. The purpose of the Conceptual Framework is to:
| 1 January 2020 |
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.
Standard | Details of Standard or amendment | Annual periods beginning on or after# |
IFRS 3 Business Combinations
| Amendments: Definition of a Business Appendix A, Appendix B and Illustrative Examples:
| 1 January 2020 (Applicable for business combinations and asset acquisitions with acquisition dates on or after the first annual reporting period beginning on or after this date.)
|
Interest Rate Benchmark reform – Phase 1 – Amendments to IFRS 9, IAS 39 and IFRS 7 | Amendments: provide relief from the potential effects on hedge accounting due to the uncertainties caused by interest rate benchmark reform (the phasing out of interest-rate benchmarks such as the interbank offered rates (IBOR)). Amendments include exceptions to be applied to all hedging relationships that are directly affected by the interest rate benchmark reform. The amendments:
| 1 January 2020, (Previously de-designated hedging relationships cannot be reinstated, and hedge relationships cannot be designated using hindsight.) |
IFRS 16 Leases | Amendment (lessee only) IFRS 16 and Covid-19: to make it easier to account for Covid-19-related rent concessions e.g. rent holidays and temporary rent reductions.
The amendment does not affect lessors. | 1 June 2020 (can be applied immediately in financial statements - interim or annual - not yet authorised for issue)
|
Amendment to Illustrative Example 132: Lease incentives
| No effective date as it is an illustrative example | |
IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
| Disclosure Initiative relating to the Definition of Material that:
| 1 January 2020 |
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.
Standard | Details of Standard or amendment | Annual periods beginning on or after# |
IFRS 1 First-time Adoption of International Financial Reporting Standards | Amendment: Subsidiary as a first-time adopter 3
| 1 January 2022 |
2 Annual Improvements to IFRS Standards 2018 - 2020
3 Annual Improvements to IFRS Standards 2018 - 2020
Standard | Details of Standard or amendment | Annual periods beginning on or after# |
IFRS 3 Business Combinations
| Amendment: Reference to the Conceptual Framework:
| 1 January 2022 |
Interest Rate Benchmark reform – Phase 2 – Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 | Amendments provide temporary relief to address financial reporting effects when an interbank offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR) (‘IBOR reform’) including:
| 1 January 2021 (Restatement of prior periods not required & only permitted if possible without the use of hindsight)
|
IFRS 9 Financial Instruments | Amendment: Fees in the ‘10 per cent’ test for derecognition of financial liabilities 4
| 1 January 2022 |
IFRS 17 Insurance Contracts and Amendments | New standard establishing the principles for the recognition, measurement, presentation and disclosure of insurance contracts. The single accounting model makes use of current estimates. The amendments are aimed at helping companies implement the Standard and making it easier to explain their financial performance, are designed to:
| 1 January 2023 (earlier application is permitted if IFRS 9 and IFRS 15 have been applied) |
4 Annual Improvements to IFRS Standards 2018 - 2020
Standard | Details of Standard or amendment | Annual periods beginning on or after# |
IAS 1 Presentation of Financial Statements | Amendment: Classification of Liabilities as Current or Non-current:
| 1 January 2023 |
IAS 16 Property, Plant and Equipment | Amendment: Proceeds Before Intended Use
| 1 January 2022 (retrospectively applied only to items of PPE that are bought in the location and condition necessary to operate as intended by management on or after the beginning of the earliest period presented in the financial statements in which the entity first applies the amendments) |
IAS 37 Provisions, Contingent Liabilities and Contingent Assets | Amendment: Onerous Contracts — Cost of Fulfilling a Contract
| 1 January 2022 |
Standard | Details of Standard or amendment | Annual periods beginning on or after# |
IAS 41 Agriculture | Clarification: Taxation in Fair Value Measurements 5
| 1 January 2022 |
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
Our Experts
![Justine Combrink](https://www.forvismazars.com/var/mazars/storage/images/_aliases/user_block/media/global-contents/group-data-base/contact-photos/panoramic/justine-combrink/58202548-1-eng-GB/4059f092d491-Justine-Combrink.jpg.webp)