The Government Financial Reporting Manual (FReM) is the technical accounting guide to the preparation of financial statements. It complements guidance on the handling of public funds published separately by the relevant authorities in England and Wales (HM Treasury and the Welsh Assembly Government respectively), Scotland (the Scottish Government) and Northern Ireland (the Executive Committee of the Northern Ireland Assembly). The FReM is prepared following consultation with the Financial Reporting Advisory Board (FRAB) and is issued by the relevant authorities. 

The FReM applies to “all entities, and to funds, flows of income and expenditure and any other accounts that are prepared on an accruals basis and consolidated within Whole of Government Accounts (with the exception of the accounts of any reportable activities that are not covered by an Accounts Direction)”.  It does not apply to Local Government, those Public Corporations that are not Trading Funds, and NHS Trusts and NHS Foundation Trusts.  

The latest version of the FReM can be accessed on the HM Treasury website, here.

David will be replacing current chair, Richard Fleck, from 1 May 2014.   Richard Fleck will remain Chairman of the Financial Reporting Review Panel (FRRP) until the end of 2014. 

The press release can be found on the FRC website, here.

In its response to the IASB's Discussion Paper, ESMA agrees with many of the underlying proposals, including:

• the purpose of the revised Conceptual Framework (CF) as a single and robust basis for the IASB to develop IFRSs;
• the amended definitions of assets and liabilities;
• the rejection of a single measurement approach; and
• the development of a Disclosure Framework within the CF.

It also does not oppose the reintroduction of prudence into the CF, as long as this does not harm transparency and comparability or lead to the creation of hidden reserves.

However, it has concerns regarding a number of the key details set out in the paper.

Click here for the full comment letter (link to the ESMA website).

Other items on UK Accounting plus:

• Summary of the proposals in the Discussion Paper
• Project page covering the IASB's conceptual framework project
• Conceptual Framework bulletins (hosted on UK Accounting Plus with the kind permission of EFRAG and the national standard setters involved)

Interested listeners have the ability to dial into the conference call.  Please click link for details of the registration on the EFRAG website.  The agenda can be accessed here. 

CRD IV is the EU package of rules and regulations which implements Basel III, the international regulatory framework for banks. The package is binding on all EU member states. It aims to address the problems that caused the financial crisis by increasing the level and quality of capital held by banks, enhancing risk coverage, expanding disclosure requirements and reducing procyclicality. CRD IV provides a basis for EU liquidity standards and introduces leverage disclosure requirements.    

The Capital Requirements Regulation is directly applicable in all member states whilst the Capital Requirements Directive must be incorporated within UK law, by means which would include through the rules and regulations of the PRA and FCA.  The FCA handbook is applicable to nearly all investment firms under the Capital Requirements Directive and the PRA handbook applicable to credit institutions and those investment firms ‘designated’ for prudential supervision by the PRA. 

In August 2013, the PRA and FCA both consulted on a number of proposals for amendments to their respective handbooks as a result of the transposition of CRD IV.  Among other things, the proposals included requirements for UK banks, building societies and large investment firms to set quotas for the number of women on boards.  These proposals have now been incorporated into both the PRA and FCA handbooks which state:

A CRR firm that has a nomination committee must ensure that the nomination committee:

engage a broad set of qualities and competences when recruiting members to the management body and puts in place a policy promoting diversity on the management body;

identifies and recommends for approval, by the management body or by general meeting, candidates to fill management body vacancies, having evaluated the balance of knowledge, skills, diversity and experience of the management body;

prepares a description of the roles and capabilities for a particular appointment, and assesses the time commitment required;

decides on a target for the representation of the underrepresented gender in the management body and prepares a policy on how to increase the underrepresented gender in the management body to meet that target.

The proposals also included other key areas of the CRD such as those in relation to risk management which the PRA and FCA have included in their Handbook amendments. 

In October 2013, the PRA and FCA issued further consultation papers on changes to their Handbooks to incorporate the remuneration provisions arising from CRD IV.  The consultations focused on limits on bonuses (limits between the fixed and variable component of total remuneration), areas of national discretion to set up stricter measures on bonuses and the use of the principle of proportionality in applying the bonus limits according to the ‘type’ of investment firm.    

The PRA and FCA feedback statements for these consultations, published alongside the Handbook changes, indicate support for all of the remuneration proposals and also indicate support for the overall approach proposed for CRD IV transposition. 

The changes to the PRA and FCA Handbooks follow recent guidance and regulations (The Capital Requirements (Country by Country Reporting) Regulations 2013 (SI 2013/3118) issued by HM Treasury.  These regulations transpose the country-by-county reporting requirements in the EU Capital Requirements Directive 4 (“CRD IV”) into UK law.

Click for:

• Press release (link to FCA website).
• PS13/10 - CRD IV for Investment Firms (link to FCA website).
• PS7/13 – Strengthening capital Standards: implementing CRD IV, feedback and final rules (link to Bank of England website).
• Our previous UK Accounting Plus story on the PRA and FCA consultations on CRD IV
• Our previous UK Accounting Plus story on the PRA and FCA consultations on CRD IV - remuneration.
• Our previous UK Accounting Plus story on the HM Treasury final Regulations and final guidance.
• Capital Requirements Regulation (link to European Union website)
• Capital Requirements Directive (link to European Union website).