The International Accounting Standards Board (IASB) has issued COVID-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16), an extension to the practical expedient period in the amendments to IFRS 16 Leases made last year.

This extension is for one year, so the application period now extends until June 30, 2022.

In May 2020, the IASB published an amendment COVID-19-Related Rent Concessions (amendment to IFRS 16) (the 2020 amendment). The 2020 amendment added a practical expedient to IFRS 16 which provides relief for lessees in assessing whether specific COVID-19 rent concessions are considered to be lease modifications. Instead, if this practical expedient is applied, these rent concessions are treated as if they are not lease modifications.

In light of the impact the COVID-19 pandemic has had on business activity across the world, and response from feedback received from stakeholders, the IASB decided to extend this relief for one year to provide relief for recent concessions in relation to COVID-19 that reduce payments up until June 30, 2022.

The extension is effective for annual reporting periods beginning on or after April 1, 2021.

Our thoughts

We welcome this latest amendment to extend the scope and application date of the relief for another year. The COVID-19 pandemic is still very prevalent around the world and it is, therefore, reasonable that lessors would still be providing rent concessions to lessees for lease payments beyond June 30, 2021.

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Sound governance is essential for your business’ sustainability and growth. What principles should guide you?

Good governance is key to the success of any organization, regardless of its size, industry or service offer. Since effective oversight affects all corporate processes, practices and structures, it can help you meet your financial, strategic and operational goals.

Taking a proactive approach

You may need to review your governance periodically to make sure it’s properly aligned with your business’ current reality. Because of the pandemic and the pending economic recovery, this need has become more critical than ever. Business models have changed and your objectives probably aren’t the same as they were before the pandemic.

“This isn’t optional. Businesses that remain static in the current context will fall behind their competitors and find themselves out of step with the expectations of their customers and employees,” said Emilio B. Imbriglio, President and CEO at Raymond Chabot Grant Thornton.

By proactively reviewing your corporate governance, you can:

  • Manage risks and reduce blind spots;
  • Establish a healthy balance sheet and get financing if you need it;
  • Anticipate future developments and prepare to respond quickly;
  • Innovate and develop your business;
  • Retain workers and attract new talent.

Applying the principles of good governance

To be effective, your governance structures need to reflect your organization’s strategic plan as well as its values, mission, vision and succession plan. Here are some key principles to follow:

  • Review your game plan regularly;
  • Put the right people in the right positions;
  • Assign responsibilities wisely;
  • Get an outside perspective;
  • Increase diversity on your board;
  • Embrace human leadership.

Review your game plan regularly

It’s important to review your company’s action plan, business strategies and priorities on a regular basis.

“Your organization needs to turn a critical eye on itself. Questioning your practices is the only way to evolve and adapt to new market realities,” explained Éric Dufour, Vice-President and Partner, Management Consulting at the firm.

Put the right people in the right positions

Make sure each position is filled by the right person and then make changes as needed to reach your strategic targets.

Assign responsibilities wisely

Be judicious when assigning duties to the various members of your management team. The head of the company shouldn’t be left stranded, shouldering all the responsibility.

“You definitely need to have good chemistry between the board chair and the CEO,” stressed Mr. Imbriglio.

Get an outside perspective

Even the smallest companies should look for external board members who bring complementary skills to the table, especially in the area of technology. With fresh ideas and an outsider’s perspective, they can shake things up and spur innovation.

Increase diversity on your board

Boards should be more inclusive. “Aim for diversity in age, gender, experience, and cultural and social background,” advised Mr. Dufour. “Diversity is important because it leads to productive discussions and can help organizations meet their environmental, social and governance (ESG) criteria.”

Embrace human leadership

“Tomorrow’s leaders will need to be more approachable, people-centric and able to communicate more effectively with stakeholders, especially employees,” advises Mr. Dufour.

With this in mind, you want people with strong interpersonal skills and emotional intelligence to sit on your board. Directors with these qualities will be better able to anticipate the impact of key decisions.

Get help with your governance review

Our firm has developed a comprehensive approach called the ABCDs of Good Governance to help you establish or review your governance structure.

The government offers a number of financial assistance programs to support organizational change and procedural reviews. Up to 50% of the associated costs are covered.

Remember, investing in your corporate governance isn’t just profitable, it’s essential for your business’ survival and growth.

Contact our experts today for advice on setting up a sound governance structure.

We invite you to watch the highlights of the governance discussion that took place on April 1, 2021 between Emilio B. Imbriglio and Eric Dufour.

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Katy Langlais
Manager | CRHA, MBA | Human resources consulting

After more than a year of pandemic, what have we learned? Here are some insights that could help you to prepare for what comes next.

Despite an unstable economy that hinges on government decisions, some businesses have managed to survive. Some are even thriving. How have they done it? Here are the main elements that emerged from our observations.

1. Be flexible and creative

Successful companies focused squarely on innovation in a bid to seize the opportunities that surfaced during the pandemic. This involved:

  • Reviewing their offer to meet emerging needs;
  • Adjusting their distribution or service provision model to make sure they could continue serving customers despite constraints;
  • Adjusting their work methods to keep people safe.

What successful companies have in common is their agility and ability to evolve. For example, some manufacturers modified their production lines to make the products that were suddenly in high demand, like sanitizer, personal protective equipment and plexiglass panels.

In the services industry, some restaurants adjusted their menus and made meals to go. Bookstores changed their sales and delivery processes to capitalize on the shift to online shopping. Beauty and hair salons updated their practices to comply with new public health measures, while also rethinking the customer experience.

Finally, event organizers completely revamped their business model by shifting to virtual events and making use of online creativity platforms (like Murale and Miro) to host group work sessions.

2. Communicate with your employees regularly

Successful businesses seem to have kind, reassuring leaders whose emotional intelligence allowed them to:

  • Show they care about employee wellbeing and want to stay connected to them;
  • Strengthen mutual trust by providing information and listening to their workers;
  • Seeking employee input on potential solutions;
  • Promote a sense of belonging by holding online activities and developing interpersonal relationships.

The crisis led to uncertainty, which left a lot of workers feeling uneasy and wondering about the future. In addition, many companies were forced to send their teams to work from home, a situation that comes with its fair share of inconveniences and risks. The shift to remote work was a radical change for many, and the fact that it was introduced virtually overnight had a major emotional impact on employees. In these circumstances, having approachable leaders made a big difference and making teams wellbeing a top priority proved helpful for staff retention and engagement.

The companies that successfully weathered the storm made a clear effort to maintain and strengthen trust with their employees. In addition to communicating with teams regularly and being transparent about the latest developments, they encouraged discussion and paid attention to the feedback they received. They also equipped workers with effective tools and measures to control deliverables in a way that was realistic and suitable for the context.

To create a better sense of belonging and capitalize on their entire talent pool, these companies facilitated dialogue and implemented new work methods. This strategy allowed everyone to suggest ideas and get involved. Successful companies promoted a collaborative work culture that went all the way up to the management and executive levels.

They also got creative to organize socially distant group activities, like informal discussions and virtual after-work drinks. When combined, these initiatives helped maintain a certain degree of balance.

3. Take a step back before moving forward

All too often, companies react to situations before properly analyzing their options. In doing so, they don’t give themselves the time to find better ideas or discover opportunities to capitalize on the changing circumstances. To give your company the best chances, you should:

  • Set up a designated committee with representatives from all areas to make sure the right questions get asked and solutions are found together;
  • Find external partners and seek insights from a broad circle of contacts;
  • Provide direction, even if it means making difficult decisions.

When it comes to crisis management, you should always start by setting up a crisis response unit. You want to involve people from all your teams so that you can get differing perspectives. By taking the time to reflect on issues in a structured setting, and examining problems from all angles, you’ll find the best ways to get past obstacles and survive the crisis.

Taking a step back allows you to assess the direct and collateral damage the crisis is having on your company. It also gives you the chance to check in with each of your business units and stakeholders to see how they’re being affected and what can be done to help. Crisis units usually include senior managers from each division and department so that you can get a 360-degree appreciation of the situation.

Leaders play a critical role during crises. They need to demonstrate courage by making tough decisions, taking calculated risks and thinking outside the box. This involves getting input from all available resources, even those who aren’t usually part of the decision-making team, like field personnel. You need to clearly lay out the road ahead and rally your teams to get onboard and move in that direction.

4. Recognize your company’s full potential and consider new opportunities

Even once they’re over the worst, successful companies continue to pursue development. They give themselves the time and means to:

  • Analyze their organization’s strengths, weaknesses, opportunities and threats;
  • Improve their market position;
  • Adjust their business model.

By assessing the different aspects of their operations and examining both their internal and external environments, companies can gain insights on how to position themselves more advantageously and develop a realistic strategic plan.

It can be hard to think about this when you’re in the thick of a crisis—especially since you need to make quick and effective decisions to get through it—but it’s important to be ready once the acute phase is over. What will things look like for your company in a few weeks or months? How will you be faring compared to your competitors? What comes next? Consumer habits are changing in all industries. So are employee behaviours.

Technology is now omnipresent, affecting service delivery models and work processes. New work environments and setups are emerging. Workers and clients are more mobile than ever. These are just some of the factors that will have a lasting impact on supply and demand.

Successful companies take time to reflect on where they are and where they want to be. Then they create a strategic plan to make sure they stay ahead of the curve, rather than being left behind. Action plans can include things like gradually implementing innovative technologies, introducing new products or services, or even making radical changes to your business model. The important thing is for the plan to be well thought out. You want to avoid pitfalls and be ready to shift into high gear once things get back to normal.

There isn’t a one-size-fits-all solution for getting your company back on its feet. You’ve got to find the right strategy for your business. Quebec abounds with business success stories. If you’re looking for the recipe for success, our teams can help you find the right ingredients.

05 Apr 2021  |  Written by :

Katy Langlais is a recruiting and human resources consulting at Raymond Chabot Grant Thornton.

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The Grant Thornton International IFRS team has published three Insights into IFRS 3:

  • Identifying a business combination within the scope of IFRS 3;
  • Identifying the acquirer;
  • Identifying the acquisition date.

Mergers and acquisitions (business combinations) can have a fundamental impact on the acquirer’s operations, resources and strategies. For most entities, such transactions are infrequent and each is unique. IFRS 3 Business Combinations contains the requirements for these transactions, which are challenging in practice. The standard itself has been in place for more than ten years now and has undergone a post-implementation review by the IASB. It is one of the most referred to standards currently issued.

The Insights into IFRS 3 series summarizes the key areas of the standard, highlighting aspects that are more difficult to interpret and revisiting the most relevant features that could impact your business.

After issuing Insights into IFRS 3 – The acquisition method at a glance, the Grant Thornton International IFRS team released three Insights into IFRS 3 which set out the steps when identifying whether business combinations are within the scope of IFRS 3, identifying the acquirer and identifying the date of the business combination in accordance with IFRS 3.