FRC publishes a new Assurance Standard over client assets

09 Nov, 2015

The FRC has today published a new Assurance Standard over Client Assets.

The Financial Conduct Authority (FCA) regulates entities that hold client assets and rules around their safeguarding are contained in the FCA’s Client Assets Sourcebook (CASS). The CASS requires those firms that hold client assets to hold them separately from their own to minimise the risks of loss to their clients in the event of insolvency.

Where an entity holds client assets the FCA’s Supervisory Manual (SUP rules) require the CASS auditor, annually, to provide a Reasonable Assurance Client Assets Report and to report, among other things, on whether the entity has adequate systems in place to safeguard their client assets. Where an investment business claims not to hold client assets, a Limited Assurance Report is required.

The Standard Providing Assurance on Client Assets to the Financial Conduct Authority aims to improve the quality of CASS audits and other CASS assurance engagements and to support auditors when undertaking these type of engagements. It is also intended to support the effective training of CASS auditors by both the accounting bodies and other training organisations in line with the FCA’s recent strengthening of its client asset regime.

The new Standard establishes requirements in respect to:

  • The process for forming, and the expression of, reasonable assurance opinions; 
  • The process for forming, and the expression of, limited assurance opinions;
  • The provision of reasonable assurance to the FCA with respect to a firm’s proposed adoption of the alternative approach to client money segregation and a non-standard method of client money reconciliation; and
  • CASS auditor confirmations in respect of non-statutory client money trusts.

The new Standard will be effective for reports to the FCA with respect to client assets covering periods commencing on or after 1 January 2016, with early adoption permitted.

The press release and Standard are available on the FRC website.

EFRAG finalises consultation document on the IASB Exposure Draft of a new Conceptual Framework

09 Nov, 2015

In July 2015, the European Financial Reporting Advisory Group (EFRAG) published a 'consultation paper' rather than a 'draft comment letter' on the proposed new Conceptual Framework for Financial Reporting as EFRAG had not fully concluded on its preliminary views. The consultation document with preliminary views has now been finalised.

The finalised perliminary views only differ slightly from the position published in July. These changes concern the position on stewardship and on users of general purpose financial statements. EFRAG has published a document explaning the changed position, which can be downloaded from the EFRAG website.

Given it took EFRAG four months to finilase its preliminary views after publishing the first consultation document, the deadline for submitting comments on EFRAG's final preliminary position is now very short. Comments are requested by 18 November 2015. Please click for the press release on the EFRAG website.

November 2015 IASB meeting agenda posted

06 Nov, 2015

The IASB has posted the agenda for its next meeting, which will be held at its offices in London on 18–19 November 2015.

The most sig­nif­i­cant items on the agenda include:

  • Insurance contracts — Similarities and differences between the general measurement model and the variable fee approach for insurance contracts as well as three narrow issues arising from the variable fee approach will be considered.
  • Goodwill and impairment — Identification and measurement of intangible assets in a business combination will be discussed.

In addition, the IASB will discuss fair value measurements, post-employment benefits, IFRS implementation issues, and the research project on share-based payment.

The full agenda for the meeting can be found here. We will post any updates to the agenda, as well as our Deloitte observer notes from the meeting, on this page as they become available.

Joint IASB and ICAS event on the future of financial reporting

06 Nov, 2015

The IASB and the Institute of Chartered Accountants of Scotland (ICAS) will be hosting an outreach event on the future of financial reporting on 1 December 2015.

Speakers from the IASB will present on the agenda consultation and on the conceptual framework project; speakers from ICAS will then give their views on these projects and will present the results of new research, jointly funded by ICAS and EFRAG, on professional investors’ views of the decision-usefulness of financial reporting.

Topics to be discussed include:

  • Has the IASB correctly identified the right issues for the future?
  • Is there anything missing from the agenda?
  • Have the IASB struck the right balance between fundamental improvements to IFRS versus fine tuning the standards to keep them fit for purpose?
  • Can financial reporting be considered in isolation from wider corporate reporting initiatives?
  • How will the revised Conceptual Framework drive changes in future?
  • How can research help to shape the future of financial reporting?

Please click for more information and registration on the ICAS website.

EFRAG final comment letter on the IASB's Exposure Draft of amendments to IAS 19 and IFRIC 14

06 Nov, 2015

The European Financial Reporting Advisory Group (EFRAG) has published its comment letter on the IASB exposure draft (ED) 2015/5, which proposed amendments to IAS 19 and IFRIC 14.

The IASB issued ED/2015/5 Remeasurement on a Plan Amendment, Curtailment or Settlement/Availability of a Refund from a Defined Benefit Plan (Proposed amendments to IAS 19 and IFRIC 14) on 18 June 2015.  This exposure draft proposes amending these pronouncements to clarify:

  • the calculation of current service cost and net interest when an entity remeasures the net defined benefit liability (asset) when a plan amendment, curtailment or settlement occurs; and
  • whether a trustee's power to augment benefits or to wind up a plan affects the employer's unconditional right to a refund and thus, in accordance with IFRIC 14, restricts recognition of an asset.

In its final comment letter, EFRAG supports the IASB's proposals. 

The press release and full comment letter are available on the EFRAG website.

EFRAG Board to discuss letter to the EC on IFRS 9 endorsement

06 Nov, 2015

On Monday 9th November the European Financial Reporting Advisory Group (EFRAG) Board will be holding a conference call to discuss their draft letter to the European Commission (EC) concerning the endorsement of IFRS 9 for use in the EU.

In particular, the Board will be discussion the issue of the application of IFRS 9 by insurance companies and the IASB's proposed deferral of the Standard's effective date for such entities.

The call will take place from 16.30 to 18.00 Central European Time and will be open for duly registered observers.

Further details about the event, including how to register, can be found on the EFRAG website.

Recent sustainability reporting developments

06 Nov, 2015

A summary of recent developments at the WBCSD, the GRI/GSSB and the WFE.

The World Business Council for Sustainable Development (WBCSD) has released the 2015 edition of Reporting matters. The 2015 research shows that 62% of the leading companies have improved their disclosures on non-financial information since the first WBCSD baseline report in 2013, with materiality disclosures in particular showing the greatest signs of improvement. In addition, an increasing number of companies are reporting on impacts beyond their direct operations. The report also shows that GRI (Global Reporting Initiative) guidelines remain the most widely used. Please click to access a press release and the full report on the WBCSD website.

The Global Sustainability Standards Board (GSSB), founded to strengthen GRI’s role and credibility as a public standard-setter, has held its inaugural public meeting on 4 November 2015 and has approved plans to transition the GRI G4 Guidelines to GRI Sustainability Reporting Standards (GRI Standards). The plans focus on a new modular structure and on transitioning the existing G4 content into this new format. In future, the GSSB will no longer issue generations of Guidelines as it has done historically. Instead, GRI Standards will be updated on an ongoing basis following public input into the GSSB work programme. The GSSB aims to issue the initial set of GRI Standards during the third quarter of 2016. Please click for the press release detailing the planned development phases on the GRI website.

The World Federation of Exchanges (WFE) has issued guidelines for its member exchanges on how to implement its sustainability policies. The guidelines identify key environmental, social, and governance (ESG) metrics that exchanges can include in their disclosure guidance for listed companies. For more information, see the press release, guidelines, and ESG metrics on the WFE website.

Speeches and presentations at the 32nd ISAR session

05 Nov, 2015

The thirty-second session of the United Nations Conference on Trade and Development (UNCTAD) Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) is currently being held in Geneva. The keynote address was given by FASB Chairman Russell Golden; among the presentations was also one by IASB Vice-Chairman Ian Mackintosh.

In his speech, Mr Golden discussed the important role high-quality financial reporting has within capital markets around the world and noted that high-quality accounting standards should “promote truth-telling in financial reporting”.

Mr Mackintosh presented on major trends and challenges towards high-quality corporate reporting and focused on the IASB's mission and the future agenda of the IASB.

Michael Stewart, Director of Implementation Activities at the IASB, explained how principle-based standards support consistent application across diverse facts and circumstances and how the IASB Education Initiative promotes IFRS judgement capacity-building by developing cohesive IFRS understanding and capacity to make, audit, regulate, and analyse IFRS judgements.

Please click for direct access to these speeches on the UNCTAD website:

All presentations given at the meeting (including presentations from representatives of the PIOB, IFAC, IAASB, Basel Committee, FSB, World Bank, IIRC, CDSB) can be accessed through this website.

FRC proposes limited amendments to the FRS 102 fair value hierarchy disclosure for financial instruments required for financial institutions and retirement benefit plans

04 Nov, 2015

The Financial Reporting Council (FRC) has today published Financial Reporting Exposure Draft (FRED) 62 'Draft amendments to FRS 102 – Fair value hierarchy disclosures'. The FRC has received feedback that amending the fair value disclosure requirements applicable to financial institutions and retirement benefit plans will reduce the costs of complying with Financial Reporting Standard (FRS) 102 and allow these entities to provide information to users that is more consistent with EU-adopted IFRS. This should also make it easier for users to make comparisons between the financial statements of these entities and those applying EU-adopted IFRS.

FRED 62 proposes to amend paragraphs 34.22 and 34.42 of FRS 102 to require disclosure of financial instruments held at fair value on the basis of a fair value hierarchy consistent with EU-adopted IFRS as follows:

A fair value measurement is categorised in its entirety on the basis of the lowest level input that is significant to the fair value measurement in its entirety.

Level 1: The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability, either directly or indirectly.

Level 3: Inputs are unobservable (ie for which market data is unavailable) for the asset or liability.

When finalised, these amendments are proposed to apply for accounting periods beginning on or after 1 January 2017. Early application will be permitted. Comments on FRED 62 are invited by 31 January 2016.

The press release and FRED 62 are available on the FRC website.

Agenda posted for the December ITG meeting

04 Nov, 2015

The IASB has released the agenda for the upcoming meeting of Transition Resource Group for Impairment of Financial Instruments (ITG), which is being held at the IASB's office in London on 11 December 2015.

The ITG was created to keep the IASB informed on issues occurring during implementation of the new impairment requirements in IFRS 9 Financial Instruments, to assist in determining what action may be needed to resolve diversity in practice and to provide a public forum for stakeholders to learn about the new impairment requirements from others involved with implementation.

The agenda for the meeting is as follows:

Friday, 11 December 2015

  • In­tro­duc­tory remarks
  • Meaning of current effective interest rate
  • Collateral and other credit enhancements and the measurement of expected credit losses
  • Inclusion of cash flows expected from the sale of a defaulted loan in the measurement of expected credit losses
  • Scope of paragraph 5.5.20 of IFRS 9
  • Measurement of expected credit losses for charge cards
  • Period over which to measure expected credit losses for revolving credit facilities
  • Incorporation of forward looking scenarios
  • Assessing for significant increases in credit risk for financial assets with a maturity of less than 12 months
  • Measurement of the loss allowance for credit impaired financial assets
  • Presentation of the loss allowance for financial assets measured at amortised cost

Agenda papers are available on the ITG December meeting page on the IASB's website.

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