The 2015 taxonomy is con­sis­tent with IFRSs as issued by the IASB at 1 January 2015 and IFRS for Small and Medium-sized Entities as issued on 9 July 2009. The IFRS Taxonomy 2015 includes IFRS Taxonomy Interim Release 1 (issued May 2014) and Interim Release 2 (issued November 2014). In addition, the final changes in proposed Interim Release 3 (issued December 2014) have been incorporated into the 2015 taxonomy.

For more information, see the press release and the IFRS Taxonomy 2015 page on the IASB's website.

Statistics released by the Professional Boards Forums’ BoardWatch highlight that women made up 23 per-cent of FTSE 100 directors (as of December 2014), up from 22.8 per-cent as of October 2014 and 12.5 per-cent as of February 2011 when Lord Davies reported.  The figures also highlight that 31.3 per-cent of all board appointments since 1 March 2014 have been women.  To achieve the target set by Lord Davies, 63 FTSE 100 companies are required to appoint one woman or more.   

FTSE 250 companies are also reporting an increase with 17.7 percent of women directors on their boards (as of December 2014), up from 17.4 percent as of October 2014 and 7.8 percent as of February 2011.  The figures indicate that 31.9 per cent of all board appointments to FTSE 250 companies since March 2014 have been women. 

There are now no all-male boards in the FTSE 100, while the number of all-male boards for FTSE 250 companies has decreased from 28 in October 2014 to 24 in December 2014.

The government has indicated that this represents “excellent progress” and notes that updated statistics will be published in March 2015.

Click for:

• Latest women on boards statistics (Link to Professional Boards Forum BoardWatch 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

The supplementary information mostly concerns the framework for auditor tendering and rotation in the Audit Regulation which form part of the December consultation.  It provides answers to questions raised following the launch of the Discussion Paper and has been prepared in collaboration with the Competition and Markets Authority (CMA) (which published its final Order to increase competition within the provision of statutory audit services to FTSE 350 companies in the UK in September 2014) and the Financial Reporting Council (FRC).  The supplementary information indicates that BIS, the CMA and the FRC have agreed “that, in so far as possible, the CMA Order and the requirements of the Regulation should be applied consistently with one another”.

The supplementary information is intended:

to assist those preparing responses to the discussion document to do so on an informed basis; and,

to assist those preparing for application of the requirements of the new Audit Regulation as from the application date on 17 June 2016.

Decisions as to the legislative provision to be made for the application of the Regulation will be taken in the light of responses to the discussion document.

The closing date for responses to the December Discussion Paper is 19 March 2015.  The government has indicated that there will be a formal consultation on draft regulations in the summer of 2015.

*The supplementary information was further updated on 12 March 2015*

Click for:

• Press release (link to BIS website)
• Auditor Regulation – supplementary information (link to BIS website)
• Our previous UK Accounting Plus news item on the BIS Discussion Paper on audit reform
• Deloitte's Governance in brief publication on the BIS supplementary information

The survey covers financial statements of 132 top IFIs from 31 jurisdictions around the world. In addition to identifying the financial reporting standards that the IFIs are legally required to comply with and the extent of compliance, the survey also noted the accounting treatment of selected Islamic financial transactions where past experience has shown that there are significant differences between the requirements under IFRS and the accounting standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Areas of focus were:

• Lessor accounting for ijarah with an arrangement to transfer ownership;
• Classification of customer investment accounts; and
• Recognition and measurement of finance income.

Of the sampled IFIs, more IFIs apply IFRSs than AAOIFI standards: 46% stated compliance with IFRSs or IFRS as adopted for their jurisdiction (for example, IFRSs as adopted for the use in the EU), while only 18% stated compliance with the standards issued by AAOIFI. A large portion of IFIs (34% of the sample) complied with a local reporting framework.

However, regardless of the standards complied with, the study noted differing treatments in three main areas: ijarah, customer investment accounts and recognition and measurement of finance income. Reasons behind this were differing interpretation of the requirements and/or a market regulator or central bank may over-riding a requirement determined by an accounting standard-setter.

The study's overall conclusion is that the AOSSG may need to engage with regulators and central banks to promote the use of IFRS by IFIs.

Please click for access to the study on the AOSSG website. It offers a general survey of the standards applied and the treatment of the three areas of focus for the whole sample as well as findings listed by jurisdiction. Jurisdictions covered are Albania, Australia, Bahrain, Bangladesh, Bosnia, Brunei, Egypt, India, Indonesia, Iran, Jordan, Kazakhstan, Kuwait, Lebanon, Malaysia, Mauritius, Oman, Pakistan, Philippines, Qatar, Saudi Arabia, South Africa, Sri Lanka, Sudan, Switzerland, Thailand, Turkey, United Arab Emirates, United Kingdom, United States of America, and Yemen.

Part 17

The Companies Act 2006 (Amendment of Part 17) Regulations 2015 (SI 2015/472) (link to the statutory instrument) were made on 3 March 2015 and came into force on the following day.  They prohibit a company from reducing its share capital as part of a scheme of arrangement where the purpose of the scheme is to acquire all the shares of the company.  There is an exception when the acquisition amounts to a restructuring that inserts a new holding company into the group structure.

There is a transitional provision to ensure that the prohibition does not affect takeovers where an announcement concerning a firm intention to make an offer has been made before the Regulations came into force, or in the case of a company that is not subject to the City Code on Takeovers and Mergers, the terms of the offer have been agreed.

The amendment inserts new sub-sections into section 641 of the Act which is concerned with the circumstances in which a company may reduce its share capital. The purpose of the amendment is to close what the Government regarded as a stamp duty loophole.  A takeover can be affected either through a contractual transfer of shares or through a scheme of arrangement under Part 26 of the Act.  Such a scheme may be structured as either a “transfer scheme” or a “cancellation scheme”.  An advantage of using a cancellation scheme was that stamp duty was not payable because shares were cancelled and then reissued to the new owner rather than transferred. Following the amendment, this is no longer possible.

Part 18

The Companies Act 2006 (Amendment of Part 18) Regulations 2015 (SI 2015/532) (link to the statutory instrument) were made on 2 March 2015 and come into force on 6 April 2015. They amend Part 18 to clarify the operation of certain provisions of the Act which were amended in 2013 by the Companies Act (Amendment of Part 18) Regulations 2013 (SI 2013/999).

Section 692 of the Act was amended in 2013 to permit private companies to repurchase their own shares for cash otherwise than out of distributable reserves, up to a value of the lower of £15,000 and 5 per cent of the share capital of the company each financial year.  This was part of a Government initiative to promote employee share ownership.  The 2013 amendments contained a drafting error which led to uncertainty about whether the complex rules applicable to purchases of own shares out of capital applied in this case, although it clearly was the Government’s intention that they should not.  The 2015 amendments clarify that the option to repurchase a private company’s own shares for cash within the de minimis limits is not subject to the general requirements for a purchase of own shares out of capital.  They also clarify that the limit of 5 per cent of share capital is by reference to the nominal value of the company’s fully paid share capital as at the beginning of the financial year.

The 2015 amendments also bring repurchases under the new section 692(1ZA) de minimis provision within the scope of section 734 which addresses the accounting consequences of a repurchase out of capital.  For example, if the cash paid is less than the nominal amount of the shares repurchased, the difference must be transferred to capital redemption reserve.  If the cash paid is greater than the nominal value of the shares repurchased, section 734 specifies which reserves may be reduced by the difference.  The amendments also prevent shares repurchased under section 692(1ZA) from being held as treasury shares.

The Department for Business, Innovation and Skills (BIS) has revised its guidance on share buy-backs.  The guidance Employee Ownership and Share Buy Backs: Simple guide to the Companies Act 2006 (Amendment of Part 18) Regulations 2013 & 2015 is available on the BIS website.

Some other clarifying amendments have also been made in connection with the timing of repurchases of own shares in connection with employee share schemes and to avoid possible duplication of the requirement to deliver a statement of capital to Companies House.

The regulations, which were approved in August 2013 and apply to quoted companies, changed the requirements for the contents of the directors’ remuneration report, adding some significant new disclosures, particularly a ‘single figure’ for the remuneration of each director. They are effective for periods ending on or after 30 September 2013.

BIS examined the level of compliance with the Regulations for a randomly selected sample of UK incorporated companies listed on the London Stock Exchange.  The random sample was drawn from the full population of all UK incorporated companies main listed in London (ex-investment trusts) for which the most recent Annual General Meeting (AGM) vote results had been disclosed in respect of meetings held since the 1 October 2013.  A total of 93 companies was selected; 38 companies with more than 20,000 employees (group 1), 38 companies with fewer than 20,000 employees (group 2), and 17 companies meeting the EU definition of small or medium-sized enterprises (SME’s) (group 3). 

The remuneration reports and remuneration policy sections of the companies’ Directors’ Remuneration Reports, published ahead of their Annual General Meetings were examined against 19 questions and compliance assessed on a pass/fail basis.  In addition to the pass/fail assessment of compliance, the paper also provides a qualitative assessment of compliance with aspects of the regulations which require companies to set out:

• how pay and employment conditions of employees were taken into account when setting the policy for directors’ remuneration and whether, and if so how, employees were consulted; and
• whether, and if so how, the views of shareholders were taken into account when setting the policy for directors’ remuneration.

The report found that “most companies in the sample complied with the majority of the requirements in the regulations” with 11 instances of non-compliance.  The sample of group 3 companies produced the “majority of compliance issues with the Regulations in the pass/fail section”.

Key other findings include:

• “Notable levels of non-compliance" regarding the requirements to provide details of pension entitlements, information on payments to past directors, information on payments for loss of office and future salary policy.  However, as the first three of these disclosures are subject to audit, BIS comments that “it is likely that the lack of explicit disclosure means that the company has no relevant information to disclose”.  In this respect, BIS would recommend that the guidance on these three areas be adjusted to promote that companies should “provide positive confirmation that no information can be disclosed” as this would “enhance transparency and promote trust”.
• A “significant level of non-compliance” with the requirement to specify clearly, in monetary terms or otherwise, the maximum future salary that may be paid under the remuneration policy.  The report highlights that there may have been “confusion” between the guidance that invites companies to ”describe the considerations the remuneration committee will take into account for increasing salaries during the remuneration policy period” and the requirement that “the maximum must be explained”.  Again, BIS suggest that the guidance in this area might be adjusted “to ensure that the maximum amount must be explained irrespective of additional disclosure of any considerations the remuneration committee takes into account in determining proposed increases during the policy period”.
• The “vast majority” of companies had complied with the requirement to explain how workforce pay is considered in setting directors’ pay.  Only 9 companies did not have a statement to this effect or did not mention the consideration of workforce pay in setting directors’ pay.  However, findings indicate that “there is some variety in the quality” of reporting; some mentioned making a consideration and others how this consideration worked in practice.  The former represented “nearly a third” of the population.  Similar results were found regarding compliance with the requirement to contain a statement as to whether and if so and how shareholders views have been taken into account when setting directors’ remuneration.
• The “majority” of companies complied with the requirement to disclose comparisons of changes in CEO pay with those of employees.  Most companies in the sample either compared CEO pay with all employees in the company, all employees in the UK or all employees in the UK and other main markets of operations. 

The report also examines shareholder voting results of the remuneration policy and remuneration report votes from the 2014 AGM season, in the context of the four previous years’ votes, with a particular focus on turnout and dissent levels.  Additionally, analysis is provided of recent developments in the structure and levels of directors’ remuneration more generally.

The press release and the full report are available on the BIS website.

The guides have been developed by the A4S Chief Financial Officer Leadership Network, which was launched in December 2013. The Network brings together a select group of leading CFOs from large European businesses seeking to embed the management of environmental and social issues into business processes and strategy. Therefore, each guide is supported by case studies from Network members to demonstrate practical applications of the approaches and techniques set out in the guides. The guides are:

• Natural and social capital accounting. This guide explains the key terms of natural and social capital accounting, the benefits of broadening accounting frameworks, and the challenges of converting natural and social capital impacts and dependencies into financial figures.
• Enhancing investor engagement. This guide is intended to assist with investor relations and covers ideas such as moving away from quarterly reporting of financial results and instead incorporating sustainability information into investor presentations.
• Managing future uncertainty. This guide offers an introduction to integrating risks resulting from macro sustainability trends into business decision making and explains how to overcome some of the uncertainty associated with the impact of these risks.
• CAPEX. This guide outlines how businesses can adapt their existing capital investment appraisal processes to integrate social and environmental issues and shows how traditional investment decisions can be broadened and made more cost-effective and resilient.

The four guides can be downloaded from the A4S website. The CFO Network plans to publish further case studies and to develop additional guidance, including on integrated management reporting and on embedding sustainability into budgeting and forecasting.

The overview offers information for 44 jurisdictions and includes developments from as early as the eighties and nineties until 2014 and 2015. Examples of newest developments covered are the European Union Directive on disclosure of non-financial and diversity information, the Sustainable and Responsible Investment (SRI) Sukuk framework of the Malaysian Securities Commission, and the Corporate Governance Rating System of the Nigerian Stock Exchange that will rank NSE-listed companies based on their corporate governance practices and anti-corruption policies.

The IRI, located at the Hauser Institute for Civil Society at Harvard Kennedy School, was founded to provide institutional support for catalytic activity for responsible investment with a strong focus on creating a foundation of research activity around the field. To do this, it conducts research and releases publications on the metrics, theory and evolving practices of responsible investors.

Please click to access the overview on the IRI website. It builds on a working paper that offers more detailed descriptions of the various initiatives, a comprehensive resource section as well as a brief list of some important developments that are expected to materialize in the near future.

The full agenda for the meeting, dated 6 March 2015, can be found here.  We will post any updates to the agenda, and our Deloitte observer notes from the meeting, on this page as they are available.

Retraction of a previous editorial correction affects the following standard:

• IFRS 7 Financial Instruments: Disclosures

Editorial cor­rec­tions to con­se­quen­tial amend­ments affect the following standards:

• IFRS 9 Financial In­stru­ments
• Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39)
• IFRS 13 Fair Value Measurement

Editorial cor­rec­tions affect the following in­di­vid­ual pro­nounce­ments:

• IFRS 9 Financial In­stru­ments
• IFRS 15 Revenue from Contracts With Customers
• Defined Benefits Plans: Employee Contributions (Amendments to IAS 19)

Editorial cor­rec­tions to the 2014 IFRS (Red Book), A Guide through IFRS 2014 and 2015 IFRS (Blue Book) affect the following standards:

• IFRS 7 Financial Instruments: Disclosures
• IFRIC 9 Reassessment of Embedded Derivatives

Editorial cor­rec­tions do not change the meaning or ap­pli­ca­tion of pro­nounce­ments, but instead correct in­ad­ver­tent errors. Full details of the editorial cor­rec­tions are available on the IASB website.