Statistics released by the Professional Boards Forums’ BoardWatch highlight that women made up 20.4 per-cent of FTSE 100 directors (as of 9 January 2014), up from 19 per-cent as of October 2013 and 12.5 per-cent as of February 2011 when Lord Davies reported.  The figures also highlight that 27 per-cent of all board appointments since 1 March 2013 have been women.  To achieve the target set by Lord Davies, 51 more board seats on FTSE 100 companies are required to be held by women.  This figure has reduced from 66 as of October 2013. 

FTSE 250 companies are also reporting an increase with 15.1 percent of women directors on their boards, up from 14.9 percent as of October 2013 and 7.8 percent as of February 2011.  Thirty-one per cent of all board appointments to FTSE 250 companies since March 2013 have been women.  To achieve the target set by Lord Davies, 197 more board seats on FTSE 250 companies are required to be held by women.  This figure has reduced from 202 as of October 2013. 

There has been a decrease in the number of all-male boards in the FTSE 100 which has fallen from six in October 2013 to two in January 2014.  The number of all-male boards for FTSE 250 companies has decreased from 51 in October 2013 to 50 in January 2014. 

The government has challenged companies to “seize the opportunity and increase the number of women in their boardrooms”.  The government has asked FTSE 350 Chairs to:

aim to appoint one additional female director in the year ahead

consider giving two female candidates from senior management the opportunity to serve as a non-executive director at another company

state clear targets for the number of women at senior management and board level and what steps they are taking to achieve those targets

The latest Women on Boards update report is expected in March 2014.

Click for:

• Department for Business, Innovation and Skills (BIS) press release (link to BIS website)
• Latest women on boards statistics (Link to Professional Boards Forum BoardWatch website)
• Latest annual progress report (April 2013) from Lord Davies into Women on Boards (Link to BIS website)
• The original Lord Davies Women on Boards report from 2011 (Link to BIS website)
• Our previous UK Accounting Plus story on women on boards

In October 2013, the Competition Commission announced a final package of remedies to increase competition within the provision of statutory audit services to FTSE 350 companies in the UK.  Among other things, the proposals required that all FTSE 350 companies put their statutory audit engagement out to tender at least every ten years.  A timetable (link to Competition Commission website) published by the Competition Commission had indicated that these remedies would be effective from 1 October 2014 after Orders had been finalised. 

Subsequent to the release of the Competition Commission proposals, a preliminary agreement was reached in December 2013 between the Lithuanian EU Council Presidency and the European Parliament on EU audit reform.  These reforms proposed mandatory audit rotation with companies required to retender every ten years and change auditor every 20 years.  They are likely to be finalised and come into force in the second quarter of 2014. 

The Competition Commission are keen to ensure that their “Orders do not contradict or duplicate EU regulation”.  They further comment: 

in light of these developments we have extended our administrative timetable to enable us to consider fully the implications of the EU proposals on our own Orders. 

The revised timetable indicates that after the release of the EU audit reforms, there will be a period of informal consultation on the effect of the EU proposals.  The Competition Commission Orders will be redrafted in light of the results of these consultations and will then be subject to a further period of consultation.  The new Orders are now expected to commence in Q4 2014. 

Click for:

• Competition Commission explanatory note accompanying revised timetable (link to Competition Commission website).
• Revised timetable (link to Competition Commission website).
• Our previous story on the Competition Commission provision proposals
• Our previous story on the preliminary agreement on EU audit reform.

Both will take up their position from 1 March 2014.

Please click for the corresponding press release on the FRC website.

The material was developed to support those teaching IFRS, helping them to progressively develop students' abilities to make the necessary estimates and judgements when applying IFRS and IFRS for SMEs. The material is presented in three stages, to accommodate students at different levels in their learning process:

• Stage 1 — A student’s first financial reporting course.
• Stage 2 — A financial reporting course midway to qualifying as a CA or CPA.
• Stage 3 — A course immediately before qualifying as a CA or CPA.

The additional educational material is presented as follows:

• Stage 3 material covering the IAS 8 hierarchy.
• Multimedia presentations introducing IFRS teachers to Framework based teaching and other material.
• Updates to non-financial assets (2014 edition) material in Stages 1 through 3.

For more information, see (links to IASB website):

• Press release on the IASB website with links to the teaching material.
• Upcoming IFRS teaching sessions being held worldwide.

The IASB’s Conceptual Framework sets out the concepts that underlie the preparation and presentation of financial statements.  The Conceptual Framework identifies the principles for the IASB to use when it develops and revises International Financial Reporting standards (IFRSs).  The DP was published in July 2013 and contained proposals for topical areas where it considered that amendments to the existing Conceptual Framework were necessary. Included in the DP were proposals to revise the definitions of an asset and a liability, to introduce guidance on derecognition, to clarify the objective and purpose of other comprehensive income and to set a framework for presentation and disclosure.   

The following extract from the IMA comment letter highlights the main areas of the DP which they are in support of: 

The mixed attribute model. We support the mixed attribute model and two measurement bases of amortised cost and fair value where the latter, mark to market or mark to model, is applied to financial instruments that are not held for the long-term. A single measurement basis would not necessarily provide relevant information.

A sub-total for profit or loss. We welcome a sub-total for profit and loss being retained. This should give a clear indication to investors of the return management has made on the economic resources entrusted to it in the period.

The current definition of equity. We support the current definition of equity as this is consistent with a proprietary perspective. As set out below, we believe the primary users of financial statements are the equity shareholders. Thus as opposed to the “entity perspective” which looks top-down at the entity, we believe accounting should be based on the “parent entity perspective”. The latter is where the assets and liabilities of an entity, even if that entity is not fully owned, are consolidated in full, and noncontrolling interests are separately identified such that the financial statements reflect what the shareholders of the consolidated parent company own. 

However, there are other areas of the proposals where they consider that further work is required.  In particular: 

• Ensuring that the concept of accountability or stewardship is given sufficient prominence within the Conceptual Framework chapter on objectives of financial reporting.  The IMA also comment that reliability should also be introduced as a separate qualitative characteristic.
• Defining profit or loss.  The IMA comment that “it is important that the IASB develops a robust definition of profit or loss” and especially provides clarity as to when to present items within profit or loss and other comprehensive income.
• Ensuring that the concept of prudence is “specifically written” into the Conceptual Framework.  They comment that “prudence should be a fundamental qualitative characteristic for guiding preparers (and auditors) when recognition involves estimates” and highlight that IFRSs already require prudence.
• The Conceptual Framework should give equal prominence to the primary financial statements.  The IMA view that the statement of financial position is given too much prominence in the DP.
• The Conceptual Framework should continue to reflect the concept of going concern as this is “one of the fundamental concepts that underlie financial reporting”.
• The discussion of measurement bases.  The IMA comment that this discussion is “cursory and incomplete” in the DP. 

Many of these comments are consistent with those of the European Insurance and Occupational Pensions Authority (EIOPA) and also those of the Financial Reporting Council (FRC), The Association of Chartered Certified Accountants (ACCA) and the Institute of Chartered Accountants in England and Wales (ICAEW). 

The full comment letter can be accessed from the IMA website below.   

Click for:

• IMA Comment letter (link to IMA website).
• EIOPA comment letter (link to EIPOA website).
• Our previous UK Accounting Plus story on the IASB Discussion Paper: DP/2013/1: ‘A Review of the Conceptual Framework for Financial Reporting’.
• Our UK Accounting Plus project page in the Conceptual Framework.

After the IASB had published its revised Exposure Draft Insurance Contracts on 20 June 2013 EFRAG and the National Standard Setters from France, Germany, Italy and the UK, in coordination with the IASB staff, carried out a field-test on the proposed new requirements from July to October 2013.

The focus of the field test was the practical application of the new requirements and was intended to gather solely facts and objective data, rather than views and opinions.

The most commonly stated areas of concern related to: 

Applying the 'mirroring approach' to contracts that specify a link to the returns on underlying items.

Applying the revenue proposals to life insurance contracts.

The mandatory requirement to use other comprehensive income for presenting the effects of changes in the discount rate on insurance.

More information on the results of the field test are available on the EFRAG website.

SORPS issued by the AIC and their SORP Working Party apply to investment companies preparing accounts under UK GAAP to present a ‘true and fair view’ and are intended to supplement accounting standards and other legal and regulatory requirements to reflect transactions or circumstances that are unique to the sector in which they operate. 

The ED updates the previous SORP (which was issued in January 2009) to include the requirements of FRS 100 ‘Application of Financial Reporting Requirements’, FRS 101 ‘Reduced Disclosure Framework’ and FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'; the three main standards that were introduced as a package to replace UK GAAP.  Many paragraphs of the SORP have also been re-drafted to incorporate recent legislative changes which allow investment companies to distribute capital profits by way of a dividend.

Some of the most significant changes are:

• A recommendation that investment companies present the changes in their equity in a separate statement of changes in equity.
• No requirement for investment companies to provide a cash flow statement, subject to certain conditions.
• Investments to be measured at fair value with changes in fair value recognised in profit or loss.
• Investments held as part of an investment portfolio are excluded from consolidation.

It is expected that the final SORP will be effective for accounting periods beginning on or after 1 January 2015, consistent with the effective date for FRS 100, FRS 101 and FRS 102.  Early application is permitted.

Comments are invited until 19 March 2014.

The ED can be obtained from the AIC website, here.

The new Advisory Council members are:

• Olav Jones — Insurance Europe.
• Anne Simpson — Council of Institutional Investors.
• Surya Subramanian — Emirates NBD.

This is the second wave of appointments for 2014 (see previous article), which leaves two remaining appointments to be made.

The press release is available on the IASB’s website.

Some key suggestions made in the comment letter include:

To serve its intended purpose, the Board should treat the Framework as a living document to be updated as necessary to keep pace with changes in thinking on conceptual matters. There should be an established process for reviewing the Framework on a recurring basis. Unless the Framework is kept up to date, there is a risk of tension and conflicts between the Framework and conclusions that the Board reaches in individual projects. As the IASB develops new standards, it should have such a process to evaluate whether decisions it makes are consistent with the Framework. Departures should be identified and justified.

The IASB should have a plan for identifying and addressing any conflicts between the concepts and guidance in a revised Framework and existing IFRSs. It should identify any existing requirements that are contrary to the revised Framework and an action plan for resolving such conflicts. It would be unhelpful and potentially confusing to permit conflicts to exist for an extended period of time, in particular since those who apply and interpret existing IFRS requirements do so in the context of the Framework as it exists at any given time (see, for example, IAS 8.11).

The IASB should not amend the Framework to include new ideas and concepts that have not been fully deliberated and tested. This is another reason that the Framework should be a living document and amended only as work in different areas is completed.

The IASB should provide an appropriate level of detail in the Framework. The Framework should provide sufficient detail in its discussion of concepts such that it is clear how they are intended to be applied. However, the Framework should not to go into excessive detail about the accounting for particular transactions or events (e.g., how to measure or present particular transactions or when to derecognise elements of the financial statements). The IASB should not ‘hardwire’ views on accounting issues that would more suitably be resolved in individual standard-setting projects. In some areas, the discussion paper is too general and does not go into sufficient detail to be helpful (e.g., in Section 9 related to unit of account). In other areas, the discussion paper goes into more detail than seems suitable for a framework document (e.g., in Section 5 on distinguishing between liabilities and equity).

Click for access to the full comment letter.