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Closing Out 2014

19 Dec 2014

Welcome to our one-stop shop for all the issues which you need to consider as you prepare 2014 accounts and look forward to 2015. This year there are plenty of them!

To mention just a few the new consolidation, joint ventures and disclosure of interests in other entities Standards are now in force and don’t forget the switch to the new UK GAAP for which 2014 is the comparative year – the processes for dealing with this transition all need to be fully thought through now.

There have been changes to the guidance on strategic reporting and the rapidly changing world of integrated reporting should also be on your radar.

Don’t forget to dip into the Deloitte Annual Report Survey for best practice examples of corporate reporting. It is the ideal guide to how to do it better. On that theme, a body that always likes to see things done better is the Financial Reporting Council; this page also gives you a complete guide to their priorities for the current reporting season. These friendly reminders cover everything from their ‘clear and concise’ principles and the need for accounts to be ‘fair, balanced and understandable’ to specific IFRS requirements that have caught their eye and the areas of net debt reconciliations and cash flow disclosures which investors told the Financial Reporting Lab they would like to see.

This page gives you all the resources you need to navigate your way around the increasingly interconnected and complex requirements of corporate reporting.

Click for direct access to:

IFRS 9 included in the EFRAG status report again

19 Dec 2014

The European Financial Reporting Advisory Group (EFRAG) has published a new endorsement status report reflecting (i) the issuance of final amendments resulting from two implementation projects by the IASB yesterday, (ii) the issuance of final endorsement advice on 'Equity Method in Separate Financial Statements (Amendments to IAS 27)' today, and (iii) the fact that endorsement of IFRS 9 'Financial instruments' has been put onto the agenda of the European Union again.

Endorsement of IFRS 9 Financial Instruments had so far been "postponed", however, following the publication of the final version of IFRS 9 in July 2014 the European Commission requested the EFRAG to deliver its opinion on the new standard. A letter to that effect was included in the meeting papers for the 17 December 2014 meeting of the new EFRAG Board as was a timeline for possible IFRS 9 endorsement (please use the 'Download running order' in this EFRAG meeting announcement to access all public papers for the meeting). The new EFRAG status report concludes that endorsement of IFRS 9 for use in the European Union might be expected in the second half of 2015.

EFRAG issues final endorsement advice on allowing the application of the equity method in separate financial statements

19 Dec 2014

The European Financial Reporting Advisory Group (EFRAG) has submitted to the European Commission its endorsement advice letter and effects study report on the amendments to IAS 27 that reinstate the equity method as an accounting option for investments in subsidiaries, joint ventures and associates in an entity's separate financial statements.

EFRAG supports the amendments. The EFRAG's assessment is that benefits for preparers and users implementing the amendments outweigh the costs and therefore EFRAG recommends that the European Commission (EC) endorses the amendments.

Click for the following information on the EFRAG website:

EFRAG has updated its endorsement status report to reflect that the final endorsement advice has been issued.

Web presentation on the IASB's Disclosure initiative

19 Dec 2014

On 29 January 2015, the IASB staff will give a live web presentation update on the IASB's Disclosure initiative and its related projects.

The Disclosure intiative saw the publication of final amendments to IAS 1 and proposed amendments to IAS 7 yesterday. The IASB is expecting to issue a discussion paper in the related project on principles of disclosure in the second quarter of 2015 and a draft practice statement in the materiality project also in the second quarter of 2015. Discussions in the project regarding a general disclosure overview will begin in the first quarter of 2015.

The presentation, including a question and answer session, will begin at 10am London time and will last approximately forty-five minutes. There is no charge to listen to the web presentation, but you need to register. Please click for registration and more information on the IASB website.

IFRS Foundation publishes additional proposal for IFRS Taxonomy 2014

19 Dec 2014

The IFRS Foundation has published 'Proposed Interim Release 3 to the IFRS Taxonomy 2014' for public comment.

The proposed interim release contains additional taxonomy concepts that reflect new IFRSs and improvements to IFRSs published by the IASB and technical updates and corrections. In particular, this proposed interim release includes taxonomy elements for IFRS 9 Financial Instruments, which was issued in July 2014 and for narrow-scope amendments to IFRSs and the IFRS Taxonomy

Comments on the proposed interim release are requested by 17 February 2015.

For more information, see the press release on the IASB’s website.

European Union formally adopts Annual Improvements to IFRS - Cycle 2011-2013

19 Dec 2014

The European Union has published a Commission Regulation endorsing 'Annual Improvements to IFRSs 2011–2013 Cycle'.

Commission Regulation (EC) No 1361/2014 of 18 December 2014 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council published in the Official Journal on 19 December 2014 adopts Annual Improvements to IFRSs 2011–2013 Cycle issued by the IASB in December 2013.

The amendments impacted four standards:

  • IFRS 1 First-time Adoption of International Financial Reporting Standards (changes to the Basis for Conclusions only, so not part of the EU endorsement),
  • IFRS 3 Business Combinations,
  • IFRS 13 Fair Value Measurement, and
  • IAS 40 Investment Property.

The IASB's annual improvements process is intended to enhance the quality of standards, by amending existing IFRSs to clarify guidance and wording, or to correct for relatively minor unintended consequences, conflicts or oversights when such amendments are considered non-urgent but necessary.

The amendments are effective in the EU for annual periods beginning on or after 1 January 2015, however, earlier application is permitted so EU companies can adopt in accordance with the IASB effective date (1 July 2014).

Latest IASB ‘Investor Update’ issued

19 Dec 2014

The IASB has issued the latest edition of its newsletter, "IASB Investor Update," to provide investors with quick access to information on current accounting and financial reporting issues. The newsletter aims to keep investors informed on new and changing guidance.

This issue features:

The IASB Investor Update newsletter is available on the IASB's website.

IASB issues work plan update for December 2014

18 Dec 2014

Following its December meeting and today's issuance of two final amendments and one exposure draft resulting from implementation projects, the International Accounting Standards Board (IASB) has updated its work plan. Changes are slight.

Current status

The revised time table for the major projects is now as follows:

Project Current status Next project step Expected timing

Conceptual Framework — Comprehensive IASB project


Exposure draft

Q1 2015

Financial instruments — Macro hedge accounting

Discussion paper

Comment letter analysis

Q1 2015

Insurance contracts



Q1 2015*



Target IFRS

H2 2015

Disclosure initiative — Principles of disclosure

Board discussion

Target Discussion Paper

Q2 2015

Disclosure initiative — Reconciliation of liabilities from financing activities

Exposure draft

Public consultation

Q1 2015*

IFRS for SMEs — Comprehensive review


Target IFRS

Q1 or Q2 2015*

Rate-regulated activities

Discussion paper

Public consultation

Q1 2015

* Indicates a change since the previous work plan update on 24 November 2014.

In addition, comment letter analysis in the unit of account project has been postponed to the first quarter of 2015, first Board discussions in the disclosure initiative project on disclosure review will begin in the first quarter of 2015, and the disclosure initiative project on materiality is expected to see a draft practice statement in the second quarter of 2015.

Click for the IASB work plan dated 18 December 2014 (link to IASB website). We have updated our project pages to reflect the updated work plan and other known developments.

FRC draft plan and budget highlights key areas of focus for 2015/2016

18 Dec 2014

The Financial Reporting Council (FRC) has published its Draft Plan & Budget and Proposed Levies for 2015/16, which represents the final year of its current three year strategic programme.

During 2015/16 the FRC intends to focus on four primary areas:

  • Investor stewardship: supporting better quality engagement between boards and shareholders and ensure that those that have signed up to the Stewardship Code deliver on the commitments they have given.        
  • Corporate reporting: promoting reports that are clear and concise as well as being fair, balanced and understandable. 
  • Audit: supporting the Department for Business Innovation and Skills (BIS) in implementing the amended EU Audit Directive and Regulation, and continue the programme of work to promote audit that is of a consistently high standard and meets investor needs.
  • Conduct activities: enhancing the impact and overall effectiveness of its conduct activities, including the pace and effectiveness of independent disciplinary arrangements.

Key projects will include:

  • Corporate governance: Continuing their work on best pratice in board succession planning, considering further corporate culture and embedding of good corporate behaviour and determining what changes might be made to the UK Corporate Governance Code to align with the Competition and Market Authority’s (CMA’s) Order on audit tendering. The FRC will also assess how audit committees are applying, on a voluntary basis, the CMA’s recommendations on Audit Quality Review transparency.
  • Investor stewardship: Looking at the evidence base for engagement practice, encouraging asset managers and owners to provide better accounts of their engagement policy and practice.
  • Corporate reporting: work with BIS on the implementation of the EU Accounting Directive, including making consequential amendments to standards, and EU Directive on non-financial reporting. They will also report on progress to date and consult on future actions to help smaller listed and AIM companies improve their reporting. The Financial Reporting Lab expects to publish reports on Corporate Reporting in a Digital World and on disclosure of dividend policy and capacity.
  • Audit: Follow up on the thematic review on the quality of auditing of banks and building societies, as well as undertaking thematic studies on quality control monitoring procedures, Engagement Quality Control Review and sampling. Major work will be undertaken to implement the EU Audit Regulation and Audit Directive and to consult on and finalise their review of the ethical framework.
  • Actuarial work: Finalisation of the standards framework, possible reviews to four specific Technical Actuarial Standards (insurance, pensions, funeral plans and transformations) and preparation for Solvency II.

Priority sectors for both the Corporate Reporting Review and Audit Quality Review will be:

  • insurance;
  • food, drink and consumer goods manufacturers and retailers;
  • companies servicing the extractive industries; and
  • business services.

Key areas for these reviews will be revenue recognition, the reporting of complex supplier arrangements, business combinations and the implementation of new accounting standards. The FRC expects to review around 250 corporate reports and 140 individual audits.

In respect of its budget, the FRC proposes an overall expenditure of £33.3m in 2015/16 compared to the £31.2m estimated spend in 2014/15. The most significant increase in expenditure, £1.2m, will be in the cost of audit quality reviews, an increase of 12.5%, which results from the CMA’s recommendations that FTSE 350 audits should be inspected on average every five years.

During 2015/16, the FRC explains that it will be developing its next three-year strategy for 2016/19 and will be consulting stakeholders on its proposed areas of focus and regulatory approach. 

Commenting on the draft plan, budget and levy proposals, Stephen Haddrill, FRC Chief Executive said,

As we complete our current three year strategic programme we will promote Clear & Concise reporting and begin the implementation of the EU Audit Directive. We will at all stages continue to work with stakeholders in the UK and beyond.

In July 2015 it will be three years since the FRC’s reforms of 2012. We will take stock of how effective those reforms have been. We will continue to enhance the effectiveness, efficiency and coherence of our monitoring and disciplinary roles. Our aim overall is to avoid large numbers of new initiatives so we can concentrate on ensuring the recent reforms are effectively established and deliver the outcomes sought. 

The consultation will be open until 16 February 2015.

Click for the consultation issued by the FRC (link to FRC website).

ICAEW webinar on financial instruments under FRS 102

18 Dec 2014

The Institute of Chartered Accountants in England and Wales (ICAEW) will be hosting a webinar on 20 January 2015 on the accounting for financial instruments under Financial Reporting Standard (FRS) 102.

Under FRS 102 a financial instrument is classified either classified as “basic” or “non-basic” with significant implications as to how such financial instruments are measured and accounted for.  This approach is very different to that under old UK GAAP whether a company applies Financial Reporting Standard (FRS) 26 or not.

The webinar will cover how to determine whether a debt instrument qualifies as basic or non-basic under FRS 102, measurement at amortised cost versus measurement as at fair value through profit or loss, accounting for intercompany loans, impairment of financial assets and transition to the new requirements.

Registration details for the webinar can be found on the ICAEW website.

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