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Parker Review publishes its 2024 update report

18 Mar, 2024

The Parker Review has published its 2024 update report ("the Review").

The Parker Review was first commissioned in 2015 and set its first targets in 2016, for FTSE 100 companies to have at least one ethnic minority director on the board by December 2021 and for FTSE 250 companies to meet the same target by December 2024.

Last year, the Review announced that it was extending its scope to senior management, asking the FTSE 350 to set targets for 2027, and to the top 50 private companies and partnerships, with information published for the first time in this year’s report.

Key findings in the 2024 Review include:

  • In the FTSE 100 this year, 96 companies met the 2021 target of at least one ethnic minority director on the board, with ethnic minority directors holding 19% of all board positions. (2022: 96 companies, 18%)
  • In respect of senior roles on the board, ethnic minority directors held 12 CEO positions and 7 Chair positions.  
  • In the FTSE 250 this year, 70% of companies met the 2024 target of at least one ethnic minority director on the board, with ethnic minority directors holding 13.5% of all board positions. (2022: 60% of companies, 11%)
  • This was the first year in which the Review looked at the proportion of ethnic minorities in senior management positions, which stood at 13% for the FTSE 100 and 12% for the FTSE 250. Where companies reported to the Review that they had set 2027 targets for the proportion of ethnic minorities in senior management positions, these averaged out at 17% for the FTSE 100 and 15.5% for the FTSE 250. 44 companies out of the FTSE 100 and 50 companies out of the FTSE 250 shared these targets.
  • In respect of the top 50 private companies and partnerships invited to participate in the Review, 61% of those that shared their data had already met the target of having at least one ethnic minority director on the board (the target the private companies have been asked to meet by December 2027). 36 out of the 50 companies that were approached submitted data to the Review.

The report also includes case studies, frequently asked questions, derived from company queries, an article on terminology which explores the benefits of referencing distinct ethnic minorities separately, an article on the evolution of executive search and an article from the Change the Race Ratio initiative.

The full Review is available on the Parker Review website.

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FTSE Women Leaders review publishes 2024 update report

18 Mar, 2024

The FTSE Women Leaders has published its 2024 update report ("the Review").

The Review is the successor of the Hampton-Alexander Review and the Davies Review, all aimed at increasing focus on gender diversity at board and senior leadership level by Government, companies, and investors.

The Review focuses on the FTSE 350 but over the past two years it has also looked beyond the largest listed companies to examine diversity in leadership at 50 of the largest private companies and partnerships in the UK.

The 2024 Review, indicates that women now hold over one third of all leadership roles in FTSE 350 companies and includes the following key findings:

  • FTSE 350 companies met the target of women holding on average 40% of board positions last year, three years earlier than the target of December 2025. Women now hold 42.1% of board roles, with some companies targeting gender parity. There are no all-male boards remaining in the FTSE 350.
  • This means the UK is second globally in terms of percentage of women on boards, behind only France at 44.7% which operates a quota system rather than the voluntary system in the UK.
  • In respect of the four senior board roles, being Chair, Senior Independent Director (SID), CEO and CFO, there has been continued progress in representation in the role of the SID where women now hold 47% of positions in the FTSE 350. Women hold one in six Chair roles.
  • However, the number of women in executive director roles is lagging this, with only 15% across the FTSE 350. Churn in CEO positions has led to no change in the number of women in this role over the past year, at 21.
  • There has been progress in the number of women in the executive committee and their direct reports, which now stands at 34.5% for the FTSE 350, and at 28.2% on the executive committee itself (2022: 33.5% and 27%)
  • In respect of the top 50 private companies and partnerships, board representation for women stayed at 31%, the same as in the 2023 report. However there has been an increase in the number of women in the executive committee and their director reports, to 36%, up from 34% in the previous year. 46 out of the 50 companies that were approached submitted data to the Review.

The Review notes that although the rate of appointing women to senior roles in the largest listed companies is rising, in 2022 more than six out of ten available leadership roles still went to men.

The full Review is available on the FTSE Women Leaders website

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Pre-meeting summaries for the March 2024 IASB meeting

15 Mar, 2024

The IASB will meet in London on 18-21 March 2024. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. We summarised the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

The following topics are on the agenda:

Board work plan update: The staff will provide an overview of the work plan. In particular, the staff will present completed projects, new projects, expected consultation documents and expected project completions.

Post-implementation review (PIR) of IFRS 9—Impairment: The IASB will deliberate the feedback received in response to its request for information Post-implementation Review—IFRS 9 Financial Instruments—Impairment. The staff recommends that the IASB does not take any further action on the matters raised by respondents regarding the use of forward-looking scenarios and post-model adjustments or management overlays in measuring expected credit losses.

Power purchase agreements: The staff will provide recommendations for amendments to propose in an exposure draft and ask for permission to begin the balloting process. In particular, the staff recommends proposed amendments to the own-use requirements and to the hedge accounting requirements. The staff also recommends that the IASB propose a scope for the amendments, and disclosure and transition requirements.

Second comprehensive review of the IFRS for SMEs Standard: The IASB will continue the redeliberations of its proposals in the exposure draft (ED) Third edition of the IFRS for SMEs Accounting Standard. In particular, the IASB will discuss the proposed revised Section 23 Revenue from Contracts with Customers, additional and alternative simplifications, other issues raised by respondents to the ED, proposed revised Section 2 Concepts and Pervasive Principles and updating the paragraph numbers of the IFRS for SMEs standard.

Climate-related and other uncertainties in the financial statements: The staff will explain the approach it has taken to develop examples illustrating how to apply requirements in IFRS Accounting Standards to report the effects of climate-related and other uncertainties in financial statements.

Maintenance and consistent application: The IASB will discuss whether and to what extent the proposed disclosures requirements in the forthcoming exposure draft (ED) Use of a Hyperinflationary Presentation Currency by a Non-hyperinflationary Entity should apply to subsidiaries without public accountability. The staff will also ask for permission to ballot the ED.

PIR of IFRS 15 Revenue from Contracts with Customers: In this session, the IASB will further analyse the feedback specific to determining the transaction price, determining when to recognise revenue and disclosure requirements of IFRS 15. The staff recommends that the IASB take no further action on those items.

Equity method: The staff will ask the IASB to clarify its tentative decision regarding transitional requirements for the proposed amendments to IAS 28 and to agree on the due process steps for the exposure draft.

Management commentary: The IASB will be asked for comments and questions on the discussion about the direction of the management commentary project. The staff has identified the following four broad alternative directions that the IASB could take at a future meeting: finalise the project; retire the project; undertake a broader project; and keep the project on hold.

Catch-up exposure draft of the forthcoming IFRS 19 Subsidiaries without Public Accountability: Disclosures: The staff will ask the IASB to agree on disclosure requirements to propose in the “catch-up exposure draft” following the publication of IFRS 19.

Rate-regulated activities: The IASB will continue to redeliberate the proposals in the exposure draft Regulatory Assets and Regulatory Liabilities, in particular the discount rate and reduced disclosure requirements.

Our pre-meet­ing summaries is available on our March meeting notes page and will be sup­ple­mented with our popular meeting notes after the meeting.

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UKEB publishes 2024 consolidated UK-adopted International Accounting Standards

15 Mar, 2024

The UK Endorsement Board (UKEB) has published the 2024 consolidated UK-adopted International Accounting Standards on behalf of the UK Government.

The UKEB website contains links to the text of each UK-adopted International Accounting Standard that has been brought into UK law by Statutory Instrument 2019/685 International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019.

For further information see the UKEB website.

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UKEB to hold outreach events on the IASB's business combinations ED

15 Mar, 2024

The UK Endorsement Board (UKEB) is to hold outreach events to understand UK stakeholder views on the recently published IASB/ED/2024/1 'Business Combinations — Disclosures, Goodwill and Impairment (Proposed amendments to IFRS 3 and IAS 36)'.

The exposure draft was published by the International Accounting Standards Board (IASB) on 14 March 2024.  The UKEB aims to understand UK stakeholder views and is inviting them to participate in the following:

  • Users of financial statements – a dedicated roundtable on Tuesday 7 May 2024.
  • Preparers of financial statements – one-to-one interviews (around 30 minutes) throughout May 2024.

Further information and details of how to register are available on the UKEB website.

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FRC to hold roundtable events on its review of the UK Stewardship Code

15 Mar, 2024

The Financial Reporting Council (FRC) will hold a series of roundtable events from 26 March to 7 May as part of its review of the UK Stewardship Code 2020 ("the Code").

The FRC launched a review of the Code in February 2024.  The FRC is keen to hear of any areas for potential improvement and the extent to which the Code continues to meet its stated purpose.

The events are designed for asset managers, asset owners, corporates and service providers.

Further detail and in­form­ation on how to re­gister for the events is avail­able on the FRC website.

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GHG Protocol releases draft summaries of Scope 3 Standard feedback

15 Mar, 2024

The Greenhouse Gas (GHG) Protocol secretariat has released a draft summary report providing a detailed overview of stakeholder feedback from a survey it conducted on its Scope 3 Standard. In addition, the secretariat has released a proposal summary giving an overview of proposal submissions related to the Scope 3 Standard.

The inclusion of feedback in the summaries does not indicate that a recommendation will be implemented or reflected in updates to either the Scope 3 Standard or Scope 3 Technical Guidance. Instead, the GHG Protocol secretariat and governance bodies are prioritising which topics to address in the update process, including the scope of work for updates and additional guidance and resources.

According to the draft summary report, the aim of any updates will be to align with best practice approaches to ensure that the GHG Protocol standards for corporate accounting and reporting are effective in providing a rigorous and credible accounting foundation for businesses to measure, plan, and track progress toward science-based and net-zero targets in line with the global 1.5°C goal. Any future updates will seek harmonisation and interoperability with accounting rules under development through major disclosure initiatives.

The review period for the summaries is open until 15 April 2024.  

Please click to access the following on the GHG Protocol website:

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FRAB minutes and sypporting documents for November 2023 meeting made available

14 Mar, 2024

The associated documents and minutes of the Financial Reporting Advisory Board’s (FRAB’s) meeting on 23 November 2023 have been made available on the HM Treasury website.

Key topics dis­cussed during the November 2023 meeting in­cluded:

  • An update on the 2022-23 reporting cycle.
  • A National Audit Office (NAO) update to FRAB.
  • A User Preparer Advisory Group update.
  • An update on the them­atic review of valu­ation of non-in­vest­ment assets.
  • An update from the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Local Authority (Scotland) Accounts Advisory Committee.
  • The treatment of local government pensions within health accounts.
  • An update on the Financial Reporting Manual (FReM) 2023-24 and FReM 2024-25.
  • A sustainability reporting update including the Task Force on Climate-related Financial Disclosure (TCFD) recommendations exposure draft.
  • An update on the Performance Reporting thematic review.
  • An update on FRAB strategy, action plan and risk register.
  • An update on IFRS Interpretations Committee meetings since the last FRAB Board meeting.

The as­so­ci­ated doc­u­ments for the November 2023 meeting are avail­able on the HM Treasury wesbite.

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UKEB announces new Board appointments

14 Mar, 2024

The UK Endorsement Board (UKEB) has announced the appointment of two new Board members, effective from 1 March.

Nine existing Board members have also been reappointed for a second term, effective from 15 March.  One Board member will also step down when the term ends on 14 March.

Further information is available on the UKEB website.

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IASB proposes enhanced information on acquisitions

14 Mar, 2024

The International Accounting Standards Board (IASB) has published an exposure draft IASB/ED/2024/1 'Business Combinations — Disclosures, Goodwill and Impairment (Proposed amendments to IFRS 3 and IAS 36)'. Comments are requested by 15 July 2024.

 

Background

This project results from the post-implementation review of IFRS 3 Business Combinations.

The feedback on the post-implementation review had revealed that impairment of goodwill is not always recognised in a timely fashion and that disclosures required by IFRSs do not provide enough information to understand whether the acquired business is performing as was expected at the time of the acquisition. There were also comments that the impairment test required for goodwill under IAS 36 Impairment of Assets is costly and complex.

The IASB therefore decided to investigate possible improvements to IFRS 3 Business Combinations and IAS 36 and a discussion paper was published on 19 March 2020.

The exposure draft published today considers feedback received on the discussion paper and proposes amendments to IFRS 3 and IAS 36 that aim at providing users with information that would allow them to better assess the performance of an entity’s business combinations and how efficiently and effectively management has used the entity’s economic resources to acquire these businesses.

 

Suggested changes

The proposed amendments in exposure draft IASB/ED/2024/1 Business Combinations — Disclosures, Goodwill and Impairment (Proposed amendments to IFRS 3 and IAS 36) are:

Proposed amendments to IFRS 3

  • For strategic business combinations, which are a subset of material business combinations and are identified using a set of thresholds in IFRS 3, an entity would be required to provide information about its acquisition-date key objectives and related targets for the business combination and whether these key objectives and related targets are being met. An entity would only have to disclose information that is reviewed by its key management personnel.
  • Entities would be exempted from disclosing some of the information if that information is commercially sensitive or would expose the entity to litigation risk.
  • The exposure draft includes several other proposed amendments to the disclosure requirements in IFRS 3, including new disclosure objectives and disclosure requirements around expected synergies the strategic rationale for the business combination.

Proposed amendments to IAS 36

  • The IASB proposes amendments to the impairment test in IAS 36 to reduce shielding by clarifying how to allocate goodwill to cash-generating units.
  • Other proposed amendments regard the disclose in which reportable segment a (group of) cash-generating unit is included and how an entity calculates an asset’s value in use. 

Other proposed amendments

  • The exposure draft also proposes to amend the forthcoming IFRS 19 regarding disclosures about the strategic rationale for a business combination, the expected synergies, the contribution of the acquired business and the discount rate used in calculating the value in use.

    Comments on the proposed changes are requested by 15 July 2024.

     

    Effective date

    The IASB will decide on the effective date for the proposed amendments after exposure. The IASB proposes to require an entity to apply the amendments retrospectively. Earlier application would be permitted.

     

    Additional information

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