In November, HM Treasury invited comments on draft Regulations and draft guidance.  Following a short period of consultation HM Treasury has indicated that the “responses to the final consultation were broadly positive”.  However, as a result of the consultation, HM Treasury has made some amendments to the draft guidance to provide some further clarification in certain areas. 

The key aspects of the Regulations are:

• All institutions (as defined in Article 4(1)(3) of the CRR) should publish annually, on a consolidated basis, by country where they have an establishment:

a)      their name, nature of activities and geographic location;

b)      number of employees;

c)      their turnover;

d)     pre-tax profit or loss;

e)     corporation tax paid; and

f)     any public subsidies received.

• Institutions will be required to publicly disclose the information from 1 January 2015 and from 1 July 2014 they must disclose (a)-(c) above. 
• Certain “global systematically important institutions” will be required to disclose additional information such as their pre-tax profit or loss, their taxes paid and any public subsidies received by 1 July 2014.  Should this disclosure not be deemed to be prejudicial all credit institutions and investment firms will have to disclose this information from 1 January 2015. 
• This information is to be published “in accordance with accepted accounting standards on a consolidated basis for each country in which the institution has a subsidiary, branch or both”.  The final guidance states that “in practice this will require institutions to use an accounting approach to consolidation either in accordance with International Financial Reporting Standards (IFRSs) or Generally Accepted Accounting Principles (GAAP)".  The final guidance explains that aggregation of disclosure may be allowed where more than one institution within the group is within the scope of the Regulations.  The final guidance also elaborates on how institutions which are part of a wider group may meet their disclosure obligations.
• The disclosures are required to be audited and the final guidance explains that this could be part of the statutory audit or part of an additional external assurance engagement. 

The Regulations will be enforced by the Prudential Regulation Authority (PRA) for PRA-regulated institutions and by the Financial Conduct Authority (FCA) for all other institutions.  They will come into force on 1 January 2014. 

Click for:

• Press release (link to HM Treasury website).
• ‘Capital Requirements (Country by Country Reporting) Regulations 2013: guidance’ (link to HM Treasury website).
• Approved Regulations (link to approved Regulations).
• Capital Requirements Regulation (link to European Union website)
• Capital Requirements Directive (link to European Union website).
• Our previous UK Accounting Plus story on the draft Regulations and draft guidance.