The full agenda for the meeting is sum­marised below:

Agenda papers for this meeting are available on the IASB's website.

The roundtable will start with an overview of the latest trends (e.g. integrated reporting) in public sector reporting. Afterwards, the focus will be on the challenges in auditing accrual based accounts. Different stakeholders will share their experiences and best practices concerning audit during a panel discussion.

The roundtable is free of charge but the number of participants is limited. Please click for more information and registration for the event on the Accountancy Europe website.

Three years after publication of the International Integrated Reporting Framework, the International Integrated Reporting Council (IIRC) has announced a two-month consultation to gauge businesses' views on the implementation of the framework, to inform on further development. Feedback is being sought from those involved with preparing integrated reports, providers of financial capital and other users of integrated reports, as well as policy makers, regulators, standard-setters, assurance providers and academics. More information is available on the IIRC website.

The Financial Reporting Council (FRC) has responded to the consultation document of the Task Force on Climate-related Financial Disclosures (TCFD) with recommendations on climate-related disclosures. The FRC supports the publication of the proposed disclosures as a stimulus to develop thinking and practice in this area, and as a tool to help companies identify the most appropriate disclosures for them to make. However, it believes that a list of suggested disclosures may risk companies adopting a checklist mentality and boilerplate approach. The FRC is also concerned that the size, complexity and detail of the recommendations may impair their usefulness. More information is available through the press release on the FRC's website.

The Sustainability Accounting Standards Board (SASB) has also responded to the TCFD's consultation document. The SASB supports the general climate risk framework and makes several recommendations to streamline and strengthen it. It supports the four core elements of disclosure, but has recommendations to reduce redundancies and improve usefulness. On implementation, the SASB requests that the TCFD provide more guidance related to its vision of the implementation of its recommendations. Furthermore, the SASB believes that clarification on the materiality basis for the disclosures is needed. The response also provides a summary of actions the SASB plans to take to determine how to align SASB’s standards with the TCFD recommendations. Please click for access to the response on the SASB website.

The IFRS Interpretations Committee will deliberate comment letters received on issues regarding IAS 19 and IFRS 11, finalise agenda decisions on IAS 2, IAS 12, IAS 28, and IFRS 10, and consider new issues on IAS 12, IAS 19, IAS 32, IAS 33, IAS 41, IFRS 1, and IFRS 9.

The full agenda for the meeting can be found here. We will update this page for any changes to the agenda and our Deloitte pre-meeting summaries and observer notes from the meeting as they become available.

The full list of recommendations runs to 26 items, the last of which is a call for government support and action if opportunities have not improved for ethnic minorities in twelve months.  Baroness McGregor-Smith values the full utilisation of BME talent as a £24 billion annual benefit to the UK economy (1.3% of GDP).

Baroness McGregor-Smith’s recommendations include: 

• Publish five-year aspirational targets and report against these annually – for listed companies and all businesses and public bodies with more than 50 employees.
• Publish a breakdown of employees by race and pay band – for listed companies and all businesses and public bodies with more than 50 employees.
• For all employers, take positive action to improve reporting rates amongst the workforce, explaining why supplying data will improve diversity and the business as a whole – for those impacted by the first two recommendations, this would be expected to improve the quality of data published.
• Introducing a board-level sponsor for all diversity issues, including race, to be held to account for the overall delivery of aspirational targets. In order to ensure this happens, Chairs, CEOs and CFOs should reference what steps they are taking to improve diversity in their statements in the annual report.
• Including a diversity objective in all leaders’ annual appraisals to ensure they take positive action seriously.
• Using contracts and supply chains to promote diversity and seek bidders who show a real commitment to diversity and inclusion. 

There are also recommendations around mentoring, workshops or training on unconscious bias, recruitment and interview, reward and recognition and transparency around career pathways, achieving success and diversity policies. 

The government has responded to the report.  In the government’s response, it supports a business-led, voluntary approach to transparent disclosure and does not intend to legislate to ensure that workforce data is published in the first instance. It states: “The case you have made in your report is compelling and [we] expect businesses will want to comply… but will monitor progress and stand ready to act if sufficient progress is not delivered.” 

The Government has also announced (link to BEIS website) that a Business Diversity and Inclusion Group will be set up and chaired by Business Minister Margot James. It will bring together business leaders and organisations to coordinate action to remove barriers in the workplace and monitor employers’ progress. 

The press release, full report and government response are available on the BEIS website.

*Update 31 March 2017 - Business Minister Margot James has written to the chief executives of all FTSE 350 companies urging them to improve diversity and inclusion in the workplace and take up the recommendations in the McGregor-Smith review.  Following the publication of the McGregor-Smith Review, a Business Diversity and Inclusion Group was set up and the first meeting, chaired by Margot James, will be held in the coming months.*

Under old UK GAAP, FRS 17 Retirement Benefits, participants to the SHPS qualified for the multi-employer exemption in FRS 17.9 (employer is unable to identify its share of the assets and liabilities on a consistent and reasonable basis), which facilitated defined contribution accounting in their separate financial statements. 

On transitioning to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland a similar exemption in FRS 102.28.11 is available if sufficient information is not available to use defined benefit accounting for a multi-employer plan that is a defined benefit plan. 

Despite this exemption in FRS 102 a number of housing associations are considering approaching professional actuaries to estimate their proportionate share of the SHPS plan assets, obligations and costs.  Where there is sufficient information to use defined benefit accounting, FRS 102 requires each entity in the multi-employer plan to account for its proportionate share of the plan assets, obligations and costs, and provide disclosures in the same way as for any other defined benefit plan. 

The SORP Working Party understands that such housing associations are confident that, as a result of this process, they will have sufficient information to account for the SHPS as a defined benefit scheme for the financial year ending 31 March 2018 and beyond.  It has been suggested that if some housing associations are able to achieve defined benefit accounting for the SHPS then there might be sufficient information to enable other employers to do so. 

As a result of these developments, the SORP Working party has started work on developing a methodology to understand if necessary information could be determined that will enable all housing associations that are members of SHPS to account for their portion of the SHPS deficit as a defined benefit scheme. 

The press release and further information are available on the NHF website.

The FRC’s Audit Quality Review team reviewed the six largest audit firms to consider their audit quality control policies and procedures.  The review focused on three aspects of the firms’ quality control systems to support the audit team in delivering a quality audit - leadership responsibilities for quality within the firm, human resources and engagement performance (e.g. technical reviews of financial statements, internal reviews of audit work, use of specialists on audit).

The FRC indicates that there are a range of audit quality control procedures established at audit firms, both during and after the audit, which need to work together effectively in order to contribute to a quality audit.  Based upon its review, the FRC highlights that, in some cases, “there is opportunity for these procedures to be more effective to achieve further improvements in audit quality”.  Key findings of the thematic review include:

• All firms have in place audit quality policies and procedures and all have resources at a leadership and management level dedicated to various aspects of audit quality.
• Whilst all firms have in place policies for review of audit work by someone more senior, 31% of the sample of audits reviewed were assessed by the FRC as “requiring more than limited improvement”. The FRC highlights that this suggests that “firms’ quality control procedures are not yet sufficiently robust”. 
• All audit firms included specialists within the audit teams for the audits reviewed. The most frequently used were taxation, valuations and IT.  The FRC comments that “where reference was made to specialists’ work in the audit report there were a few cases where their involvement was not accurately described”.
• All audit teams appropriately used the firms’ consultation procedures with appropriate documentation of the conclusions reached in line with methodology.
• Of firms using service delivery centres (SDC), the percentage of overall audit work in hours performed by the SDC increased by 70% year on year between 2013 and 2016. The FRC highlights that “audit firms should consider how audit quality can be maintained or improved as the trend for outsourcing sections of audit work increases”.

A number of other findings are included within the full report.  The FRC indicates that “all firms are recommended to consider these findings, in conjunction with any insights arising from their root cause analysis, to consider whether and how their quality control procedures could be enhanced to improve audit quality where appropriate”.

During their review, the FRC’s Audit Quality Review team also identified a number of good practices in firm’s audit quality control procedures that contributed to audit quality which it considered merited sharing more widely and which firms might wish to consider including:

• Half of the firms have a dedicated board or committee that oversees all matters relating to audit quality, bringing all the elements together and ensuring audit quality has specific prominence and focus in the firm’s leadership agenda.
• Two firms have set out their audit quality procedures in a ‘three lines of defence’ model, helping to understand how these audit quality procedures interact together to achieve audit quality and minimise the risk of inconsistency.
• Initiatives to achieve consistent audit quality, identify areas for improvements and monitor the effectiveness of training in specific areas requiring improvement. These include establishing an audit quality forum where audit staff would discuss audit quality improvements and their suggestions would then feed back to the firm’s audit quality board.
• Audits with a higher level of partner and director involvement had a greater likelihood of achieving a high quality outcome prior to issue of the audit report.

The FRC has indicated that it will continue to monitor the firms’ progress in improving audit quality and will continue to focus on the firms’ leadership, the use of service delivery centres and the use of specialists on audits.  In 2017/18 it will be conducting a thematic review into audit firm governance and culture at eight firms adopting the Audit Firm Governance Code.

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

The topic was introduced by the IFASS Chair Liesel Knorr. She focused on the work of the IFRS Interpretations Committee (as pars pro toto of the IASB's work) and its role within consistent application. She noted that according to the Due Process Handbook the role of the Committee was to address issues that have widespread and/or material effect. As examples she mentioned negative agenda decisions from the November 2016 IFRIC Update. For the strategy discussion Ms Knorr pointed out that "widespread" as well as "material" could have a local meaning as well as an international one and brought up the question of what the role of the standard-setters should be in case of negative agenda decisions even though the issue was widespread or material at least in some jurisdictions. In the context of consistency, should they conclude that the IFRS IC accepted diversity in practice? Also, should they enforce the opinions reflected in negative agenda decisions? Overarching the whole discussion was the question of what constitutes consistency - identical treatment or comparable results?

The issue was discussed in small groups and afterwards the results were presented and discussed in the plenum. The main messages that emerged from the discussion were:

• General results:
  IFRS are principles-based, therefore consistent does not mean identical, rather, identical treatment is a significant feature of a rules-based system;
• Users have a tolerance for different readings of the same principles as long as there are sufficient disclosures, however, application of the same principle with different results that leads to different investor decisions might point at a problem and should be raised;
• Within an entity consistency should come with the meaning of "identical treatment";
• Consistency cannot be achieved by the IASB and/or the national standard-setters alone, it is the result of the IASB, the national standard-setters, the regulators, the auditors, and the preparers interacting;
• It is important to draw clear lines between education, implementation, and interpretation.

National standard-setters:

• National standard-setters can raise gaps or inconsistencies within standards with the IASB;
• Local interpretation should be kept to an utmost minimum, however, it would be better to work with the national regulators than letting them issue interpretations on their own;
• Field testing is an important role of standard-setters and can help identify possible jurisdictional issues;
• Raising awareness is an important role of standard-setters, especially for entities that don't have the resources for following developments closely;
• National standard-setters should be the gate keepers for submitting issues to IFRS IC.

IASB:

• The IASB and the IFRIC should come out more quickly with results, keeping a balance between timeliness and quality;
• The practice of moving issues back and forth between the IASB and IFRS IC should be discontinued;
• The IFRS IC should meet more frequently;
• If the Committee thinks that a problem is not widespread it should publish the data supporting this assessment;
• Agenda rejections should be clearer, sometimes just limiting options can already be helpful;
• As agenda decisions do not contain transition guidance, they can be difficult to apply.

IFASS

• IFASS is not an interpretative body;
• IFASS meetings will continue to offer a slot for discussing issues identified by individual standard-setters;
• In addition to the meetings, IFASS should find ways to communicate more often, maybe by teleconference or by written exchange.

The two major unanimous conclusions that "consistent" does not mean "identical" and that local interpretations are not desirable led to the question of how to take the topic further. In addition to communicating the results and the recommendations regarding the IASB's work to the IASB (that was represented at the meeting by Vice IASB Chair and IFRS Interpretation Committee Chair Sue Lloyd), the IFASS agreed to set up structures for collecting issues identified by the standard-setters, possibly by means of a database, if possible joined with or related to the IASB's inquiry database, so that standard-setters can see whether issues they identify have already been encountered in other jurisdictions and/or raised with the IASB. The group will also look into possibilities of communicating between meetings. A small working group will develop possible solutions and introduce them to IFASS at the fall meeting.

At a later point during the meeting, the IASB representative replied by acknowledging that the discussion had provided valuable insights and that the IASB would definitely try to take them on board in its work. She also noted that there seemed to be the perception that the IFRS IC was not very active, therefore she presented statistics that showed that in 2016 the Committee had discussed 33 issues, 25 of which had been addressed (addressed issues include negative agenda decisions). The IASB also outlined intended improvements to existing processes especially in the area of communication and noted that it encourages the discussion of practice issues among national standard-setters.

The above summary is based on our observer notes from the meeting. The IFASS will provide a summary of all topics discussed at the meeting in due course.

Mr Kabureck noted that the IASB would begin addressing non-GAAP earnings measures in its research project on primary financial statements. However, he stated that “[t]he challenge for us is to put some order and structure into the reporting of financial performance while simultaneously providing relevant information that faithfully represents the performance of the company.” Some of the challenges include EBIT, income before non-recurring items, income from core operations, and operating profit. Next, he provided three possible philosophical approaches when determining the composition of an alternative performance measure. These approaches included:

• Explicit requirements for composition.
• Managerial approach similar to segment reporting.
• Principles-based approach.

Finally, he discussed accounting policy disclosures that are being considered by the IASB.

For more in­for­ma­tion, see the article on the IASB’s website.

The provisional agreement was dependent on the EFRAG’s ability to implement certain governance reforms recommended in the Maystadt report and will need to be confirmed by the Council and the European Parliament before it becomes official.

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

The guidance covers: 

• The accounting options available to small entities under new UK GAAP
• The requirements of the micro-entities regime under company law. and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime.
• The key accounting changes necessitated by FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 102 section 1A.
• The filing requirements for small companies.
• The tax implications of the new accounting standards. 

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