Response 1 - KPMG

KPMG LLP Audit 15 Canada Square London E14 5GL United Kingdom

Tel +44 (0) 20 7311 1000

Pauline Wallace Chair UK Endorsement Board 8th Floor 125 London Wall London EC2Y 5AS

Your ref

Our ref JG/SC

By email to: [email protected]

13 January 2023

Dear Pauline

Response to Invitation to Comment on the Draft Endorsement Criteria Assessment of narrow-scope amendments to IFRS 16 (with an effective date of 1 January 2024)

We welcome the opportunity to respond to the UK Endorsement Board's (UKEB) invitation to comment on its draft endorsement criteria assessment of the narrow-scope amendments to IFRS 16 in determining a Lease Liability in a Sale and Leaseback transaction that were published by the IASB in 2022.

We believe in a single set of globally consistent financial reporting standards, and so support the adoption of these narrow-scope amendments in the UK.

Yours sincerely

KPMG LLP

KPMG LLP, a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. Registered in England No OC301540 Registered office: 15 Canada Square, London, E14 5GL For full details of our professional regulation please refer to 'Regulatory information' under 'About' at www.kpmg.com/uk

Introduction

The objective of this Invitation to Comment is to obtain input from stakeholders on the endorsement and adoption of Lease Liability in a Sale and Leaseback—Amendments to IFRS 16 (the Amendments), published by the International Accounting Standards Board (IASB) in September 2022. The Amendments have an effective date of 1 January 2024, with earlier application permitted.

UK endorsement and adoption process

The requirements for UK adoption are set out in the Statutory Instrument 2019/685¹.

The delegation of the powers to formally adopt international accounting standards for use in the UK was delegated to the UK Endorsement Board in May 2021².

The information collected from this Invitation to Comment is intended to help with the endorsement assessment. This will form part of the work necessary for potential UK endorsement and adoption of the Amendments.

Who should respond to this Invitation to Comment?

Stakeholders with an interest in the quality of accounts prepared in accordance with IFRS Accounting Standards.

How to respond to this Invitation to Comment

Please download this document, answer any questions on which you would like to provide views, and return it to [email protected] by close of business on Wednesday, 5 April 2023.

Brief responses providing views on individual questions are welcome, as well as comprehensive responses to all questions.

Privacy and other policies

The data collected through submitting this document will be stored and processed by the UKEB. By submitting this document, you consent to the UKEB processing your data for the purposes of influencing the development of and adopting IFRS for use in the UK. For further information, please see our Privacy Statements and Notices and other Policies (e.g. Consultation Responses Policy and Data Protection Policy)³.

The UKEB's policy is to publish on its website all responses to formal consultations issued by the UKEB unless the respondent explicitly requests otherwise. A standard confidentiality statement in an e-mail message will not be regarded as a request for non-disclosure. If you do not wish your signature to be published, please provide UKEB with an unsigned version of your submission. The UKEB prefers to publish responses that do not include a personal signature. Other than the name of the organisation/individual responding, information contained in the “Your Details” document will not be published. The UKEB does not edit personal information (such as telephone numbers, postal or e-mail addresses) from any other response document submitted; therefore, only information that you wish to be published should be submitted in such responses.

Assessment against endorsement criteria

Our draft assessment concludes that:

• the Amendments meet the criteria of relevance, reliability, understandability and comparability required of the financial information needed for making economic decisions and assessing the stewardship of management, as required by SI 2019/685 (see Regulation 7(1)(c));
• application of the Amendments is not contrary to the principle that an entity's accounts must give a true and fair view as required by SI 2019/685 (see Regulation 7(1)(a)); and
• that the Amendments are likely to be conducive to the long term public good in the UK as required by SI 2019/685 (see Regulation 7(1)(b)), having considered:
• whether they will generally improve the quality of financial reporting;
• the costs and benefits that are likely to result from their use; and
• whether they are likely to have an adverse effect on the economy of the UK, including on economic growth.

Our assessment of the Amendments is set out in Section 2 of the DECA in the pages indicated below:

Questions

Technical criteria assessment

1. Do you agree with the draft assessment of the Amendments against the technical criteria? (please select one option) - Yes - No
2. Please include any comments you may have in response to question 1: Click or tap here to enter text.

True and fair view

1. Do you agree with the draft assessment that the Amendments are not contrary to the true and fair view requirement? (please select one option) - Yes - No
2. Please include any comments you may have in response to question 3: Click or tap here to enter text.

UK long term public good

1. Do you agree with the draft assessment that sale and leaseback transactions affected by the Amendments are rare in the UK? - Yes - No
2. Do you agree with the initial assessment of costs and benefits for preparers and for users of the Amendments? (please select one option) - Yes - No
3. Please include any comments you may have in response to questions 5 or 6, including if any costs have been missed out: Click or tap here to enter text.
4. Do you agree with the draft assessment that the Amendments are likely to be conducive to the long term public good in the UK? (please select one option) - Yes - No
5. Please include any comments you may have in response to question 8: Click or tap here to enter text.

Thank you for completing this Invitation to Comment

Please submit this document by close of business on Wednesday 5 April 2023 to: [email protected]

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