The paper helps to clarify some of the issues that banks have raised when preparing integrated reports and provides insights into current practice of banks’ reporting on outcomes, the reporting of which is a requirement of the International Integrated Reporting Framework.  It also outlines leading reporting practice and articulates the benefits for banks in reporting on outcomes.

The paper explores how banks communicate their effects on social and relationship capital.  It is intended as a brief practical guide to the industry rather than a conceptual analysis.

Please click to access the paper on the IIRC website.

The report, prepared by Chair of the IFRS Advisory Council Joanna Perry, notes the following dis­cus­sions:

• IASB ac­tiv­i­ties — Members received a report of recent ac­tiv­i­ties and were congratulatory of the IASB bringing together implementation and education into one unit.
• Trustee ac­tiv­i­ties — Members received an updated on the January Trustees meeting and were presented with the IFRS Foundation Strategy approved by the Trustees.
• Post-implementation reviews strategy — Members discussed the primary objective of PIR and when a PIR would be necessary.
• Review of the structure and ef­fec­tive­ness of the IFRS Foun­da­tion — Members discussed governance aspects of the review, which included:
  • Cautious approach to expanding the scope to include not-for-profit entities;
  • Appointments should remain flexible and a clear criteria should be developed to find the best person for the job;
  • Geographical diversity is important;
  • Little support to increase the size of the Board.
• IFRS Foundation funding — The Council believed it is useful for members to have access to an Aide-Meoire and that there may be opportunities for additional funding from the public.
• Corporate reporting — Members discussed consultation documents from the Federation of European Accountants and the Financial Stability Board and the Carbon Tracker Initiative on the implications of climate change in financial and corporate reporting, which included:
  • Wide support in this area;
  • Agreement with the FEE’s consultation on the ‘core and more’ approach;
  • Uncertainty on how to progress in a co-ordinary way;
  • Although not an urgent action, the Board should monitor developments.
• Conceptual framework — Members provided advice related to the conceptual framework exposure draft.

The full report on the council’s February meeting is available on the IASB's website.

Speaking at the conference, Sir Win Bischoff indicated that “embedding a healthy corporate culture, through improving behaviour, is [therefore] vital to the success of any business”.  Sir Win Bischoff highlighted the work of the FRC in promoting good corporate behaviour through its Culture Coalition; a group of organisations containing the Chartered Institute of Internal Auditors (IIA), the Chartered Institute of Personnel and Development (CIPD), the Chartered Institute of Management Accountants (CIMA), the Institute of Business Ethics (IBE) and City Values Forum specifically focused on culture.

He indicated that improving corporate behaviour through promoting a healthy corporate culture is “high on the FRC’s agenda”.  Sir Win Bischoff commented:

For the UK economy to prosper, business needs to have a corporate culture which creates trust in business, reduces company failings and serves the needs of wider society.

He further stated that it is the leaders, namely the Board, within the business that are required to set an appropriate company culture.  This will require them to “define the purposes of the company and what type of behaviours it wishes to promote in order to deliver its business strategy”.  He also stated that culture should be company specific and that “there is no one-size-fits-all” approach. 

Concluding he commented:

Values, behaviours and corporate culture are central to the way an organisation achieves its objectives.  When these are integrated into its business model, good and sometimes great things will follow, financially as well as reputationally.

The full text of the speech can be obtained from the FRC's website.  Melanie McLaren, Executive Director, Codes and Standards, gave a similar speech at the Internal Audit Leaders' Conference that can be accessed on the FRC website here.

TECH 05/16 BL will, when finalised, replace TECH 02/10 Guidance on the determination of realised profits and losses in the context of distributions under the Companies Act 2006 (link to ICAEW website) which requires updating as a result of changes to International Financial Reporting Standards (IFRSs) and UK Accounting Standards (notably the introduction of Financial Reporting Standard (FRS) 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland) and the need to provide additional guidance on a number of areas that have arisen in practice. 

Substantive changes have been made to the guidance on accounting for intragroup off-market loans and the guidance on retirement benefit schemes.  Other changes are in the nature of updating references to the revised standards and removing obsolete material.

Investors are demanding greater disclosure around distributable reserves.  Whilst not proposing changes to disclosure, the guidance will assist companies to meet investor expectations in this respect.  It will also help to avoid the potentially serious consequences for companies and their directors of making an unlawful distribution.

Comments on the proposals are requested by 9 June 2016.

The exposure draft of TECH 05/16 BL is available on the ICAEW website here.  Our Need to know publication is available here.

In its comment letter on the proposed guidance, EFRAG expresses the view that the proposed guidance could be helpful, in particular in the context of disclosures, in order to provide a common ground for applying judgement in deciding which information is relevant for users and fostering thinking on how materiality is applied.

However, EFRAG also believes that the practice statement should assist in promoting a common understanding of the role and application of materiality in IFRSs, beyond being used solely by preparers.  EFRAG believes that this should be clarified in the objectives of the guidance.

Additionally, EFRAG considers that the draft practice statement should be drafted in a more concise and practical way and focus on areas where it is most difficult to exercise judgement on the application of materiality.

The press release, comment letter and feedback statement are available on the EFRAG website.

The research report discovered that:

• “The objective of investors (valuation or stewardship) does matter.
• Investors are strongly anchored on the income statement.
• Investors have strong reservations about the representational faithfulness of bottom line figures.
• Regardless of its shortcomings, financial accounting information is a key input factor for investors' decision making.
• The quality of corporate governance, including audit, influences investors' assessment of the representational faithfulness.”

In addition, the research report noted that (1) different objectives for financial reporting need to be prioritised by standard setters; (2) income statements were considered more useful than the balance sheet; (3) standardised performance measures for the income statement need to be enhanced; and (4) "investors' perceptions of corporate governance significantly affect their views of representational faithfulness."

For more information, see the press release and report on the EFRAG’s website.

Please click to access all interviews published so far on the IPSASB website. They are:

• What are IPSAS?
• Why is IPSAS Adoption Important?
• What are the IPSASB's Key Achievements?
• What are the IPSASB's Current Areas of Focus?

The Federation of European Accountants (Fédération des Experts-comptables Européens, FEE) has issued a position paper highlighting the requirements of the new Directive and setting out what the Directive means in practice by discussing the key issues around implementing the requirements and providing some real-world examples of how the requirements can be met.

In February 2016, the Department for Business, Innovation and Skills (BIS) issued a consultation on the UK implementation of the Directive.

Please click to access the position paper and an appendix with additional examples of good practice in sustainability reporting on the FEE website.