The IA indicates that its members have “expressed concerns over how companies are reporting on the long-term drivers of value creation and productive enterprise”.  Further it comments that “while our members need to be able to assess a company’s likely return on invested capital, and want to understand the balance of expenditures required to support productivity improvements, they [have] noted that this is difficult in practice”.  The IA notes that although the quality of company reporting has increased “additional effort is required so that our members are better able to identify and finance those companies contributing productive growth in the UK economy”.     

The guidance is intended to set out the IA’s members’ expectations in the areas of:

• Business models and long-term reporting – outlining members’ expectations on clear and concise business model disclosures, and companies adopting a longer-term approach in their reporting to shareholders.
• Productivity – outlining members’ expectations on how companies should report on the drivers of productivity within their business.
• Capital management – outlining members’ expectations on capital management disclosures, and how companies can improve reporting on the connection between capital management and its long-term strategy.
• Disclosure of material environmental and social risks – outlining the disclosures that members would expect to see included within the Annual Report.
• Human capital and culture – outlining members’ expectations as to how companies should report on human capital and nature. 

The IA indicates that the guidance will “allow investors to better identify, support, and finance companies that deliver long-term returns to shareholders, contribute towards long-term economic growth, and help build a more productive economy”.  

The press release and guidance are available on the IA website.

The review follows class inquiries undertaken by the Charity Commission which identify those charities who fail to file accounts properly in 2 consecutive years.  Fourteen of the 32 charities that were placed into the class inquiry by the Charity Commission in 2015-16 submitted their accounts to the Charity Commission during the year, as did 13 from the 2014-15 class inquiry. 

As well as highlighting that “the majority of the accounts submitted were found to be of good and acceptable quality”, the Charity Commission provides some wider lessons for trustees, auditors and independent examiners including: 

• The trustees of all registered charities must prepare a trustees’ annual report and accounts.
• All registered charities with an income of over £25,000 and all charitable incorporated organisations (CIOs) irrespective of income, must file their trustees’ annual report and accounts and external scrutiny report with the Charity Commission within 10 months of their financial year end.
• It is the responsibility of trustees to ensure the right external scrutiny is carried out where required by charity law.
• It is the responsibility of trustees of charitable companies to ensure that their charity’s report and accounts are filed with both Companies House and the Charity Commission.
• It is the responsibility of an independent examiner to check that their charity client is eligible for independent examination. 

The report also highlights a number of resources to assist trustees and independent examiners on the preparation and scrutiny of the annual report and accounts.  

The press release and report are available on the Charity Commission website.

Proposals in FRED 67 include an amendment that small entities will no longer need to estimate a market rate of interest when measuring loans from a director who is also a shareholder.  These proposals, which are being consulted on at the moment, are expected to be available for early adoption by small entities but are expected only to be finalised in December 2017. 

As a result, they will not be available for those small entities who are preparing financial statements within the scope of FRS 102 for the first time for accounting periods beginning on or after 1 January 2016 which must be filed at Companies House by 30 September 2017.  In order to avoid such entities applying the requirements of FRS 102 prior to these changes for one year, and hence having to measure such loans at present value using a market rate of interest for a similar debt instrument, the FRC proposes the following optional interim measure: 

1.15A   A small entity, as an exception to paragraph 11.13, may measure a basic financial liability that is a loan from a director who is a natural person and a shareholder in the small entity (or a close member of the family of that person) initially at transaction price.  Subsequently, for the same financial liability, a small entity is also exempt from the final sentence of paragraph 11.14(a). 

The amendment, which the FRC indicates has received “strong support” is effective immediately with retrospective application available; it shall not be applied directly, or by analogy, to any other transaction, event or condition. 

As it is an interim measure, this amendment will be deleted as part of the finalisation of FRED 67.  It will then be replaced with permanent requirements based on the proposals in FRED 67 after considering the outcome of the consultation process. 

The press release is available on the FRC website.

There are six topics on the agenda.

Tuesday 16 May

The meeting will start with an education session (meaning that the IASB will not be asked to make any decisions) on Dynamic Risk Management. The staff will be explaining to the Board how net interest margin is managed, and the related financial reporting implications.

This will be followed a session on Rate-regulated Activities, focusing on the characteristics of the supplementary rights and obligations created by rate adjustment mechanisms.

The afternoon session begins with implementation issues. The IASB will be asked to ratify an Interpretation Uncertainty over Income Tax Treatments. The staff are also recommending that the IASB finalise an amendment to IAS 28 Investments in Associates and Joint Ventures to clarify that IFRS 9 applies to long-term interests in such investments. The proposal was included in the Exposure Draft Annual Improvements to IFRS Standards 2015–2017 Cycle published in January 2017.

They complete the day with updates on the implementation of IFRS 16 Leases and the Research Programme.

Wednesday 17 May

The meeting continues on Wednesday morning with a 90 minute education session on goodwill and impairment.

Our pre-meeting summaries are available on our May meeting note page and will be supplemented with our popular meeting notes after the meeting. 

The agenda for the meeting is sum­marised below:

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

This thematic peer review offers 12 recommendations. The recommendations are mainly aimed at governments, regulators and other standard-setting bodies (such as the OECD, Basel Committee on Banking Supervision, International Association of Insurance Supervisors and International Organization of Securities Commissions), but are also relevant to financial institutions of FSB member jurisdictions.

Recommendations for government, regulators and standard-setting bodies focus around ensuring the basis for an effective corporate governance framework by identifying inconsistencies and gaps and augmenting enforcement powers of the supervisory authorities; improving the transparency of disclosures related to governance structures, voting arrangements, shareholder agreements and significant cross-shareholding and cross-guarantees; identifying remuneration information that could be usefully provided to shareholders and also considering ways to enhance the effectiveness of whistle-blower programmes.

Recommendations for individual financial institutions are mainly in relation to responsibilities of the board, focusing on adoption, implementation and disclosure of codes of ethics and conduct; encouraging boards to undertake regular assessments of their effectiveness and to receive training that helps them to keep up to date with relevant new laws and regulations; improving procedures and practises in respect of succession planning; enhancing transparency around the board nomination process, qualification and election of board members. Another recommendation is to consider implementing a shareholder vote on the remuneration policies and total value of compensation arrangements offered to the board and senior management.

The report’s final recommendation is broader in scope and encourages a range of parties to consider reviewing practices with respect to the framework for related party transactions, the disclosure of beneficial ownership, the role and responsibilities of independent directors on the board and board committees and the effectiveness of rules regarding the duties, responsibilities and composition of boards within group structures.

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

The Board will discuss:

• Dynamic risk management (education session)
• Rate-regulated activities
• IFRS implementation issues (IFRIC 23)
• Leases
• Reserach programme update
• Goodwill and impairment (education session)

Pre-meeting summaries on IFRS implementation issues and Leases are already available.

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

This first draft comment letter contains EFRAG's preliminary views on the questions contained in the discussion paper. The positions expressed in this document have been prepared by EFRAG's Technical Expert Group (TEG) and have been reviewed by the EFRAG Board. However, the Board concluded that with this topic answering the questions in the consultation document is as answering the ones that were not specifically asked but that arise from the paper nonetheless. These would regard cross-cutting and strategic issues, for example:

• the boundary between financial statements and the annual report;
• the consideration of the impact of technology on the presentation of financial statements;
• the relationship between general-purpose financial reporting and electronic filing; and
• the scalability of disclosure requirements and the relevance of the proposals to the broad spectrum of listed companies.

The EFRAG Board will continue discussing these issues in May and will then replace this initial consultation document with a full draft comment letter.

Comments on EFRAG's final draft comment letter are requested by 11 September 2017. For more information, see the press release and the initial draft comment letter on the EFRAG website.

The IASB issued its DP, Disclosure Initiative—Principles of Disclosure in March 2017. This webcast — hosted by IASB member Gary Kabureck — discusses:

• The background and objective of the Principles of Disclosure project.
• Disclosure issues identified by the Board.
• Possible approaches to remedy these disclosure issues, including the Board's preliminary views.
• The questions on which the Board is seeking feedback.

The webcast is available on the IASB’s website.

As reported earlier, the core topic of the meeting was consistent application of IFRSs across jurisdictions, including the meaning of "consistent application" and what the IASB and the national standard-setters can do to support it. Please see our detailed summary of that discusssion.

The IFASS members also discussed:

• Implementing “big” standards (presented by Marc Siegel and Cullen Walsh of the FASB);
• Treatment of income tax on distribution of dividends (presented by Shiwaji Bhikaji Zaware and Vijay Kumar Muthu Raju Paravasa Raju of the Institute of Chartered Accountants of India);
• Accounting for the effects of high inflation (presented by Felipe Pérez Cervantes of the Mexican Financial Reporting Standards Board);
• Research: What should Standard setters address? (with presentations by Professor Guochang Zhang (Hong Kong University), EFRAG and MASB, the IFASS Not-for-profit working group, AASB, as well as ANC and ASBJ); and
• Case studies on IFRS 15 and IAS 37 (presented by the IASB).

The next meeting of the IFASS will take place in London on 26 and 27 September 2017. The forum accepted the Indian delegation’s invitation to hold the spring meeting 2018 in Mumbai (Republic of India) on 12. and 13. April 2018.

Please click for the full report from the meeting.