According to the press release, the meeting will feature the following sessions:

Please click for the full press release on the KASB website and more information on the meeting on the AOSSG website.

One of the topics discussed was the work of the Task Force on Climate-related Financial Disclosures (TCFD). TCFD Chair Michael Bloomberg and Mary Schapiro, Special Adviser to the Chair, presented an update to the Plenary on the work of the industry-led TCFD. The presentation included a summary of the recommended voluntary disclosures and guidance developed by the TCFD, which will be released for public consultation in December 2016. The final report will be published by June 2017. The FSB welcomed the progress of the TCFD in finalising recommendations, given the importance of effective risk disclosures, and encouraged firms to respond to the TCFD’s forthcoming consultation.

For the full workplan and topics discussed please see the press release on the FSB website.

Monday 14 November

Last month the Board started its detailed discussions of feedback received on its proposed Practice Statement on materiality. The Board continued those discussions, focusing on errors; covenants; stewardship; recognition and measurement, whether it should apply to entities applying the IFRS for SMEs Standard; and the status and form of the guidance.

There was a mixed response to the staff recommendations, with some being supported by the Board while others were not. The staff expect to conclude the main discussions next month.

Tuesday 15 November

The Board continued its discussions on the Conceptual Framework, focusing on the definition of a liability and the effects of the proposed changes to the Conceptual Framework on preparers. The Board supported using the proposal included in the ED in the final version of the Framework.

The Board discussed its project on Primary Financial Statements. The staff have been gathering evidence about perceived problems with the presentation of the primary financial statements and to understand stakeholders’ views on the areas that need improvement. The discussions were exploratory, with the Board not being asked to make any technical decisions.

The Board gave the staff clearance to start balloting process on a proposed annual improvements in relation to IFRS 9 Financial Instruments and IAS 28 Investments in Associates and Joint Ventures on the impairment of long-term interests and a narrow scope amendment to IAS 16 Property, Plant and Equipment in relation to accounting for proceeds from testing an asset.

Wednesday 16 November

The Board continued its discussions on the development of a discussion paper on financial instruments with the characteristics of equity, this week focusing on puttable instruments. The Board agreed that the planned Discussion Paper should propose that, if the so-called Gamma approach is used, the exception to categorise puttable instruments as equity should be retained.

The meeting concluded with a discussion of the Insurance Contract project and the draft of what will become IFRS 17 Insurance Contracts. The staff have been undertaking fieldwork, the results of which were discussed at this meeting. Also, as a result of insights gained from the fieldwork, the staff proposed some changes to the current draft in relation to changes in the carrying amount of the contractual service margin (CSM) for experience adjustments; transition; and the effects of financial risk when an entity applies the variable fee approach (VFA) and mitigates that risk with a derivative. Several other sweep issues will also be discussed.

The Board supported all of the changes proposed, including setting the effective date so that the Standard will apply the annual periods beginning on or after 1 January 2021. That date is predicated on the assumption that IFRS 17 is issued in the first half of 2017.

The draft of IFRS 17 will be revised and undergo a fatal flaw review with selected external parties.

Please click to access the detailed notes taken by Deloitte observers for the entire meeting.

The Commission proposal would amend the Accounting Directive to ensure that large groups publish annually a report disclosing the profit and the tax accrued and paid in each Member State on a country-by-country basis.

In its letter, FEE supports the initiative for more transparency and restoring trust in tax systems as high quality corporate reporting is in the public interest. FEE also notes that the information produced must be useful and meaningful, that the form and date of publication should be clarified, and that clearer guidance on materiality is needed. Overall, FEE sees some of the proposed amendments as "pragmatic first step" and believes that the EU should strive for a global standard.

Like with other tax initiatives in past years, greatest effectiveness would be ensured through international coordinated initiatives. Therefore, the Federation would suggest that the EU improves international coordination in this field with relevant bodies such as the OECD, the UN, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB).

Please click to download the full letter from the FEE website.

The IASB followed the reasoning of the staff that assuming IFRS 17 is issued in the first half of 2017 the 2021 effective date would allow 3.5 to 4 years from the issuance of IFRS 17 to the mandatory effective date. The Board also decided that an entity may apply IFRS 17 before 1 January 2021 but cannot do so unless it also applies IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers.

The 2021 effective date also means that entities applying the deferral approach, which permits an entity to apply IAS 39 rather than IFRS 9 for annual reporting periods beginning before 1 January 2021, can continue to do so right until the new insurance contract becomes mandatorily effective.

As stated in the comment letter, we agree with the IFRS In­ter­pre­ta­tions Committee's analysis of the IAS 12 requirements included in the tentative agenda decision; however, we note that purchases and sales of ‘single-asset’ entities give rise to a number of issues around not only deferred tax accounting, but also fair value measurement and the distinction between asset purchase and business combination accounting. We recommend that the wider accounting issues arising from such transactions be considered by the Board as it develops its agenda for the next three years.

Please click to access the full comment letter.

At the last EFRAG Board meeting on 10 November, the EFRAG Board members agreed that although the amendments do not address all of the concerns voiced they would like to send a positive endorsement signal. Therefore, the draft endorsement advice states:

Without qualifying our advice, we note that the Amendments address many of the concerns raised in our endorsement advice on IFRS 9 but do not address the cost concerns of entities undertaking insurance activities that are not predominant insurers.

Please click to access the press release on the EFRAG website. EFRAG has also updated its endorsement status report, which can be downloaded here.

The report, The Hampton-Alexander Review (“the Review”), builds upon the work of Lord Davies who, in his final report into Women on Boards in October 2015, set a target of 33% representation of women on the Boards of FTSE 350 companies by 2020.

Whilst Lord Davies focused on increasing the representation of females on the Boards of FTSE 350 companies, the review extends the focus beyond the company boardroom to senior women below the company Board.  As well as recommending that 33% of executive pipeline positions (the combined Executive Committee and Direct Reports to the Executive Committee) for FTSE 100 companies are filled by women, the review will also “continue to drive forward” the momentum of the Davies review and seek 33% female representation on the Boards of  FTSE 350 companies by 2020. 

Research has indicates that 25.1% of those currently sitting on FTSE 100 Executive Committees, and their Direct Reports are women.  There was stronger representation of women in the Direct Reports at 26% women, but less strong on the Executive Committees with only 18.7% of women.  Only 20 of the FTSE 100 currently have at least one third of their executive pipeline made up of women so there is “still more work to do” to achieve the targets set in the review.  Significantly, there are 12 FTSE 100 Executive Committees with no women on them.

The review makes a number of recommendations including:

• Women on Boards – FTSE 350 companies should aim for a minimum of 33% women’s representation on their Boards by 2020;
• FTSE Women Leaders:
  • Call to action All CEOs of FTSE 350 companies should take action to improve the under-representation of women on the Executive Committee and in the layer immediately below, the Direct Reports to the Executive Committee.
  • Target representation - There should be 33% of executive pipeline positions for FTSE 100 companies are filled by women.
  • Transparency – FTSE 350 companies should voluntarily publish details on the number of women on the Executive Committee and in the Direct Reports to the Executive Committee on an annual basis. The report recommends that this information is disclosed in the Corporate Governance Section of the Annual Report and Accounts and/or on websites.
• Government reporting requirements:
  • The Financial Reporting Council (FRC) should amend the UK Corporate Governance Code so that all FTSE 350 listed companies disclose in their Annual Report and Accounts the gender balance on the Executive Committee and Direct Reports to the Executive Committee. The FRC indicates (link to FRC website) that it “stand[s] ready to revise the UK Corporate Governance Code” following the Government consultation”.
  • The Department for Business, Energy and Industrial Strategy (BEIS) should look to clarify or support the definition of “senior managers” (for the purposes of disclosure of the gender balance in the Strategic Report) in legislation to allow clearer comparisons on gender diversity to be made by companies.

There are also recommendations for investors and executive search firms.  Although the target for 33% representation is only for the FTSE 100 at this stage, all recommendations of the review are focused on the FTSE 350.

Whilst the focus of the review is on the executive pipeline, it also reports on the progress on the representation of women on Boards of the FTSE 350 at as October 2016.  Findings indicate that “the pace of increase on Women on Boards has slowed in the past 12 months, particularly in the FTSE 100.  Findings indicate that:

• The percentage of female-held directorships on FTSE 100 Boards has marginally increased to 26.6% from 26.1% in Lord Davies’ final report.
• The percentage of female-held directorships on FTSE 250 Boards has increased to 21.1% from 19.6% % in Lord Davies’ final report.

The report indicates that “there may be a degree of complacency with the FTSE 100 having reached the 25% target in 2015 and taking time to gear up to the new 33% target”. 

Click for:

• Press release (link to BEIS website)
• The Hampton-Alexander Review – FTSE Women Leaders (link to government website)
• Our previous UK Accounting Plus story on Women on Boards

The Stewardship Code (link to FRC website) operates on a ‘comply or explain’ basis and is aimed at institutional investors, asset owners and asset managers. It sets out good practice on engagement with investee companies, which includes monitoring companies, entering into dialogue with boards and voting at general meetings.  The aim of the Code is to enhance the quality of engagement between institutional investors and companies to help improve long-term returns to shareholders and the efficient exercise of governance responsibilities.

The signatories have been categorised into tiers based upon the quality of the reporting in their statements based on the seven principles of the Code and the supporting guidance.  The tiering exercise was undertaken in order to “improve the quality of reporting against the Code, encourage greater transparency in the market and maintain the credibility of the Code”.  Asset managers have been categorised into three tiers and asset owner and service provider signatories have been categorised into two tiers as follows:

Tier 1

Signatories provide a good quality and transparent description of their approach to stewardship and explanations of an alternative approach where necessary. 

Tier 2

Signatories meet many of the reporting expectations but report less transparently on their approach to stewardship or do not provide explanations where they depart from provisions of the Code. 

Tier 3

Significant reporting improvements need to be made to ensure the approach is more transparent. Signatories have not engaged with the process of improving their statements and their statements continue to be generic and provide no, or poor, explanations where they depart from provisions of the Code.   

There are nearly 300 signatories to the Code and more than 100 signatories are Tier 1.  The FRC has indicated that “asset managers who have not achieved at least Tier 2 status after six months will be removed from the list of signatories as their reporting does not demonstrate commitment to the objectives of the Code”.  It also welcomes contact from signatories, particularly those in Tier 3, to “discuss improvements in reporting”. 

The FRC has indicated that although it is “pleased” with the response to the tiering exercise, where “many signatories have reaffirmed their commitment to quality, transparent reporting and stewardship”, it will still look for “continuous improvement” from Code signatories.

The press release and list of tiers are available from the FRC website.