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2017

Free download of Sharia'a standards, new exposure draft on risk reserves

27 Dec 2017

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) announces that the Arabic and English online versions of AAOIFI’s Sharia’a Standards have been made freely available on the AAOIFI website. In addition, the AAOIFI has published an exposure draft of a Financial Accounting Standard “Risk Reserves” and invites opinion from the Islamic finance industry.

The Saudi-British Bank (SABB) in Riyadh has signed an agreement with the AAOIFI whereby the content of all Sharia’a standards in issue at November 2017 in both, Arabic and English, will be accessible and downloadable for personal use through AAOIFI’s website and social media portals. The SABB sponsorship also includes any yet to-be issued, reviewed or updated Sharia’a standards, in both languages, up to 1 January 2020. Please click for more information and access to the standards on the AAOIFI website.

The proposed AAOIFI accounting standard on risk reserves intends to define the accounting principles for risk reserves maintained for the benefit of participatory stakeholders such as investment account holders and Sukuk-holders. It is intended to encourage a financial reporting environment that is risk averse and transparent but that also ensures better safeguarding of the interest of such stakeholders and providing better stability to the Islamic finance industry. Please click for more information and access to the exposure draft on the AAOIFI website.

Season's greetings

22 Dec 2017

We wish all our readers a peaceful holiday and all the best for the New Year.

We look forward to seeing you again after the holidays and to continue to be your preferred accounting website in 2018.

IASB issues podcast on latest Board developments

22 Dec 2017

The IASB has released a podcast featuring Chair Hans Hoogervorst, Board member Amaro Gomes, and education director Matt Tilling to discuss the deliberations at the December 2017 IASB meeting and take a brief look back at the year as a whole.

The 20 minute podcast features discussions of the following topics:

  • Primary financial statements
  • Rate-regulated activities
  • Business combinations under common control
  • Goodwill and impairment
  • IFRS implementation issues
  • Disclosure initiative: Principles of disclosure
  • Highlights of 2017

The podcast can be accessed through the press release on the IASB website. More information on the topics discussed is available through our comprehensive notes taken by Deloitte observers of the December 2017 Meeting.

Recent sustainability and integrated reporting developments

22 Dec 2017

A summary of recent developments at WBCSD, GRI and TCFD/CDSB.

The World Business Council for Sustainable Development (WBCSD) released the CEO Guide to climate-related financial disclosures. The new guide, written in partnership with the CEOs of 25 WBCSD member-companies, sets out clear actions that CEOs can take to align their organisations with the recommendations of the Taskforce for Climate-related Financial Disclosure (TCFD). The guide can be accessed through the press release on the WBCSD website.

​The Global Reporting Initiative (GRI) has published a short series of articles that looks back at GRI’s efforts in 2017 and at what 2018 has in store. The articles are (all links to the GRI website):

The Climate Disclosure Standards Board (CDSB) is working with the TCFD to develop a knowledge hub to better support companies interested in implementing the TCFD recommendations. The Hub will go live in the first quarter of 2018 and will be available via www.tcfdhub.org. Please see the press release on the CDSB website announcing the cooperation.

HM Treasury issues new financial reporting manual (FReM)

21 Dec 2017

HM Treasury has issued a revised version of the government financial reporting manual (FReM) (2018-19).

The Government Financial Reporting Manual (FReM) is the technical accounting guide to the preparation of financial statements. It complements guidance on the handling of public funds published separately by the relevant authorities in England and Wales (HM Treasury and the Welsh Government respectively), Scotland (the Scottish Government) and Northern Ireland (the Executive Committee of the Northern Ireland Assembly). The FReM is prepared following consultation with the Financial Reporting Advisory Board (FRAB) and is issued by the relevant authorities.

The FReM applies to “all entities, and to funds, flows of income and expenditure and any other accounts that are prepared on an accruals basis and consolidated within Whole of Government Accounts (with the exception of the accounts of any reportable activities that are not covered by an Accounts Direction)”. It does not apply to Local Government, those Public Corporations that are not Trading Funds, and NHS Trusts, NHS Foundation Trusts and Clinical Commissioning Groups.

The press release and latest version of the FReM can be accessed on the HM Treasury website, here.

EFRAG publishes December 2017 issue of 'EFRAG Update'

21 Dec 2017

The European Financial Reporting Advisory Group (EFRAG) has published an 'EFRAG Update' summarising public technical discussions held and decisions made during December 2017.

The Update reports on the EFRAG Board meeting on 14 December and the EFRAG TEG meeting on 18-19 December.

The Update also lists EFRAG publications issued in December which just included EFRAG's draft endorsement advice on the IASB's publication Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28).

Please click to download the December EFRAG Update from the EFRAG website.

FRC publishes an Audit and Assurance Lab project report into Audit Committee Reporting

20 Dec 2017

The Financial Reporting Council (FRC) has published a report by its Audit and Assurance Lab on Audit Committee Reporting.

In July 2017, the FRC announced a project to be undertaken by its newly-formed Audit and Assurance Lab which looked into the role of Audit Committee reporting in promoting audit quality.

The report on Audit Committee reporting is the first phase of this project and explores how investors’ confidence in audit is enhanced by, and audit quality promoted through, external reporting by audit committees in the annual report and accounts. The report focuses on good practice elements of existing audit committee reporting and encourages audit committees to consider adopting these good practices.

Areas of the audit committee report that this report explores, including “best practice examples” in each case, include:

  • disclosure regarding the external auditor:
    • appointment and tendering – where investors seek confirmation in the audit committee report that quality is paramount, and want to understand the audit committee’s plans for tendering; and
    • independence and objectivity, effectiveness – where investors expect audit committees to provide insight into its assessment of the effectiveness of the external audit process;
  • reporting on significant issues – where investors want disclosures to provide context and quantification; a description of the actions the audit committee has taken during the year; the audit committee’s conclusion and the underlying reasons for that, plus relevant cross-references to elsewhere in the audit committee report; and
  • internal control, risk management systems, and internal audit – where investors seek clarity on the role the audit committee takes, plus helpful cross-referencing to elsewhere in the annual report where these issues are covered.

The report also discusses the quality of engagement between investors and audit committees and how this can be improved, both within the audit committee report and through other means, such as meeting the audit committee chair at governance roadshows.

The second phase of the project will focus on the reporting provided to audit committees by external auditors, including how auditors can help audit committees with their own public reporting. It is expected to report in the first half of 2018.

A press release and the full report, Audit Committee Reporting, are available on the FRC website.

The Investment Association launches a public register of listed companies which have had significant shareholder rebellions

20 Dec 2017

The Investment Association has launched a public register of FTSE listed companies which have had significant shareholder rebellions.

The Public Register, part of the government’s corporate governance reforms, includes FTSE All-Share companies which have received votes of 20% or more against any resolution or withdrew a resolution prior to their Annual General Meeting (AGM) in 2017.

A key aim of the public register is to highlight how companies have dealt with concerns of their investors. It will highlight the public statements made by the companies on the Register, on how they have addressed shareholders’ concerns. The public register will be periodically updated and will include:

  • a description of the resolution;
  • the result of the shareholder vote;
  • a link to the AGM results announcement; and
  • a link to any further statement the company has made on the actions they have taken since the vote

By publishing this information for the first time in one central location, the Register aims to increase transparency, accountability and scrutiny of listed companies by shareholders, media and the wider public.

A press release with further information is available on the Investment Association website.

FRC publishes Strategy for 2018/21

19 Dec 2017

The Financial Reporting Council (FRC) has published its three year strategy for 2018/21 and its draft budget and levy proposals for the 2018/19 financial year.

The FRC’s strategy is “to deliver increased confidence and public trust in UK companies in line with its mission to promote transparency and integrity in business”.

During 2018/21 the FRC’s strategic priorities include:

  • Promoting corporate governance and investor stewardship with a long-term focus. Key activities include:
    • Closely monitoring reporting on the new UK Corporate Governance Code including the way in which companies have reported meaningfully on how they have applied the Principles. The FRC will also seek to develop a set of corporate governance principles to enhance confidence that large companies are acting appropriately.
    • A review of the Stewardship Code; a consultation on which is expected in late 2018.
    • An assessment, later in the strategy period, of the impact of the FRC initiatives on the effectiveness of the board’s role in promoting the long-term success of companies, and the impact of the changing nature of equity ownership on the role of stewardship.
  • Promoting true and fair reporting. The FRC indicates that it aims to “drive continuous improvement in corporate reporting” and will do so through its monitoring of annual reports and accounts, the use of targeted thematic reviews and through the work of its Financial Reporting Lab.
    • Standards of corporate reporting. The FRC indicates that “although generally good there are areas of reporting where quality is not as high as it could be” and it will use its powers to address deficiencies identified. Particular focus will be on how companies are implementing IFRS 15 Revenue from Contracts with Customers, IFRS 9 Financial Instruments and IFRS 16 Leases.
    • Future developments. The FRC will also respond to developments in wider corporate reporting such as the Strategic Report and will ensure that “corporate reporting in the UK retains its relevance in the face of shifting shareholder and stakeholder expectations, capital structures and other market developments”. The FRC will also increase focus on companies’ reporting under s172 of the Companies Act 2006 and the actions the directors have taken to promote the success including impact on wider society. Additionally the FRC will consider how technology can enhance corporate reporting and will support the government as it explores options for the UK’s accounting framework following its departure from the EU.
    • Promoting high quality audit and assurance. The FRC’s strategic priority is to “promote justifiable confidence in UK audit”.
      • Monitoring audit quality. The FRC will publish its annual report on Developments in Audit in 2019 which will indicate whether its target that, by 2019, at least 90% of FTSE 350 audits require no more than limited improvements, has been achieved. The FRC indicates that over the three year strategy period it will consider increasing this target percentage and broaden its application paying particular attention to financial services audits. Additionally the FRC will publish the results in 2018 of a thematic review of audit firm culture in the UK and will engage with leadership to ensure that they benefit from good practices identified from that review.
      • Monitoring and supervisory approach. The FRC will implement a new approach to the monitoring and supervision of the largest audit firms in 2018/19.
      • The audit of the future. The FRC will look at the current statutory audit model and determine whether it can be made more effective and improve
      • Standard setting. The FRC will continue its contribution to the development of international auditing standards and their governance framework. It will also consider how auditing standards can evolve to adapt to the opportunities offered by digital technology.
    • Promoting high quality actuarial work.
    • Effective enforcement.

    The FRC also sets out its proposed budget for 2017/18 for expenditure and funding. Overall the funding requirement is expected to increase by 1% in 2018/19. This is principally as a result of an additional funding requirement from the accountancy profession to cover additional work as competent authority for audit and its new role in monitoring local public audit.

    Comments on the document including strategic priorities for 2018/21 and budget and funding for 2018/19 are requested by 28 February 2018. The FRC aims to finalise its strategy for 2018/21, budget and levies by April 2018.

    The press release and full document are available on the FRC website.

    ESMA publishes guidance setting out the new European Single Electronic Format

    19 Dec 2017

    One of the requirements of the amended European Transparency Directive is that issuers listed on regulated markets in the EU must prepare their annual financial reports in a European Single Electronic Format (ESEF) from 1 January 2020. The European Securities and Markets Authority (ESMA) has now published the final regulatory technical standards (RTS) on the ESEF together with some other helpful guidance.

    To allow for structured electronic reporting using XBRL, ESEF uses an extension of the IFRS Taxonomy, issued by the IFRS Foundation. Where the annual financial report of an entity contains IFRS consolidated financial statements, these shall be labelled with XBRL tags which make the labelled disclosures structured and machine-readable. This allows for instance the analysis of large amounts of financial information without extensive and burdensome manual processing. Furthermore, as XBRL taxonomies can contain labels in several languages, users can compare numeric information in the financial statements across issuers even though the issuers prepare their financial statements in different languages.

    Please click for the following items on the ESMA website:

    The publication of the RTS is accompanied by the launch of a new webpage on the ESEF.

    Correction list for hyphenation

    These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.