July

IFAC and CIPFA launch new International Public Sector Financial Accountability Index

13 Jul, 2017

The International Federation of Accountants (IFAC) and the Chartered Institute of Public Finance and Accountancy (CIPFA) have launched a new International Public Sector Financial Accountability Index.

The index, which has been jointly developed by IFAC and CIPFA, will provide “an accurate global picture of public sector financial reporting quality”. 

In particular the index will “provide a picture of the extent of accrual accounting and adoption of International Public Sector Accounting Standards. It will also aim to provide a better understanding of accounting and budgeting reform plans, and help stimulate public financial management (PFM) reforms”.

Further information can be found on the IFAC website.

Recent sustainability and integrated reporting developments

13 Jul, 2017

A summary of recent developments at GRI, Accountancy Europe and WBCSD.

The Global Reporting Initiative (GRI) has published a summary of a GRI and World Federation of Exchanges (WFE) co-hosted round-table discussion on 7 June in London. Sharing their views on environmental, social and governance (ESG) reporting challenges, participating reporters, investors and exchanges indicated three ways to facilitate streamlined ESG reporting: (i) greater engagement between investors and reporters, (ii) report once, use several times, and (iii) guidance on available ESG frameworks and how to use them. Please click for the summary on the GRI website.

GRI and Accountancy Europe announce a publication EU Directive on Non-financial and Diversity Information: A comprehensive guide to the national laws that will be available in fall 2017. Please see the announcement here.

Accountancy Europe announces an event 'Shaping the future of corporate reporting' on 18 September 2017 in Brussels to further develop some of the points put forward in its 2015 CORE & MORE discussion paper. Registration for the event is available through the press release on the Accountancy Europe website.

The World Business Council for Sustainable Development (WBCSD) and the Natural Capital Coalition have launched the "Natural Capital Protocol Toolkit", a new resource to help businesses address natural capital depletion by improving understanding, measurement and decision-making. More information is available here.

ESMA expands Q&A document on the implementation of its APM guidance

13 Jul, 2017

In June 2015, the European Securities and Markets Authority (ESMA) published its final Guidelines on Alternative Performance Measures (APMs) for listed issuers that became effective in July 2016. Since then, ESMA has published several questions and answers on the guidelines to promote common supervisory approaches and practices in the implementation of them. Four new questions have now been added to the document.

The new questions on the guidelines provide information on the definition of APMs in the context of interim financial statements, on the prominence of APMs, and on the use of the “compliance by reference” principle as set out in the Guidelines.

Please click for the following additional information on the ESMA website:

ESMA issues report on the application of IFRS 13

12 Jul, 2017

The European Securities and Markets Authority (ESMA) has issued a report, “Review of Fair Value Measurement in the IFRS Financial Statements.” The report provides an overview of the application of fair value measurement and disclosure requirements in IFRS 13, “Fair Value Measurements,” as applied by European issuers.

The review focused on four key topics, which included (1) fair value disclosures, (2) unit of account, (3) level of market activity and fair value, and (4) valuation adjustments for derivatives. The review found that the Standard has “generally been well incorporated in the financial statements of the issuers in the sample.” However, the report noted that compliance and comparability in the application of IFRS 13 could improve.

The results of this review will contribute to the IASB’s post-implementation review of IFRS 13.

For more information, see the press release and report on the ESMA’s Web site.

FRC issues amendments to FRS 101

12 Jul, 2017

The Financial Reporting Council (FRC) has issued amendments to FRS 101 ‘Reduced Disclosure Framework’.

When FRS 101 was originally published, the FRC committed to review the standard on an annual basis and update it to ensure that it maintains consistency with IFRS and remains cost-effective for groups.  The amendments, which were consulted on within FRED 66 Draft Amendments to FRS 101 Reduced Disclosure Framework 2016/17 cycle, are the fourth of these annual updates.

The amendments provide certain disclosure exemptions in relation to IFRS 16 Leases.

Specifically the amendments provide the following disclosure exemptions:

  • For lessees from the requirements of paragraphs 52 (single lease disclosure note) and paragraph 58 (maturity analysis of lease liabilities) as long as disclosure is made of details of indebtedness required by paragraph 61(1) of Schedule 1 to the Accounting Regulations separately for lease liabilities and other liabilities, and in total.   
  • For lessors from the requirements of the second sentence of paragraph 89 and paragraphs 90, 91 and 93.

The amendments are available from when an entity applying FRS 101 first applies IFRS 16.

The press release and amendments are available on the FRC website.

EFRAG solicits literature review on possible effects of IFRS 9 on equity portfolios

12 Jul, 2017

The European Financial Reporting Advisory Group (EFRAG) calls for an academic literature review on the effects of IFRS 9 'Financial Instruments' on long-term investment decisions.

EFRAG has already developed a questionnaire for European issuers on the same topic and now wants to support that impression with an academic perspective. The research goes back to a request of the European Commission.

More information is available on the EFRAG website. Proposals should be submitted to EFRAG by 15 September 2017.

*Update12 September 2017- The deadline was extended to 9 October 2017.  Further information is available on the EFRAG website here*

CIPFA/LASAAC consults on new Code of Practice on Local Authority Accounting

12 Jul, 2017

The Chartered Institute of Public Finance and Accountancy (CIPFA) and the Local Authority (Scotland) Accounts Advisory Committee (LASAAC) are seeking comments, via an ‘Invitation to Comment’, on proposals for developing the 2018/19 Code of Practice on Local Authority Accounting in the UK (the Code) which would apply to accounting periods beginning on or after 1 April 2018.

Local authorities in the United Kingdom are required to keep their accounts in accordance with ‘proper practices’. This includes compliance with the terms of the Code of Practice on Local Authority Accounting in the United Kingdom prepared by the CIPFA/LASAAC Local Authority Accounting Code Board (CIPFA/LASAAC).

The proposed developments for the 2018/19 Code are:

  • IFRS 9 Financial Instruments
  • IFRS 15 Revenue from Contracts with Customers
  • Narrow scope amendments to International Financial Reporting Standards (IFRSs)
  • Legislative and policy developments.

The approach to the adoption of both IFRS 9 and IFRS 15 was detailed by CIPFA/LASAAC as part of their consultation for the 2017/18 Code.  The agreed position is set out in a separate publication – Forthcoming Provisions for IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers in the Code of Practice on Local Authority Accounting in the United Kingdom 2018/19. The Invitation to comment focuses on two areas for consideration on the approach to adoption of IFRS 9:

  • whether certain housing rents debtors might meet the definition of purchased or originated credit-impaired financial assets, and
  • CIPFA/LASAAC’s decision not to mandate the use of the simplified approach to impairment for all trade receivables or contract assets that result from transactions within the scope of IFRS 15 and that contain a significant financing component and all lease receivables that result from transactions that are within the scope of IAS 17 Leases and whether there are any consequences as a result of this decision.

With respect to IFRS 15, the amendments set out in Forthcoming Provisions for IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers in the Code of Practice on Local Authority Accounting in the United Kingdom 2018/19 remain largely unchanged.  However, CIPFA/LASAAC are seeking views on its approach to the disclosure framework under IFRS 15 in the Invitation to Comment.

The following narrow scope amendments to IFRSs are proposed to be included in the 2018/19 Code (subject to their EU adoption):

The Invitation to comment also includes an appendix highlighting the proposed approach to the adoption of IFRS 16 Leases, the work of the CIPFA/LASAAC sub group on IFRS 16 and details on the timetable for future consultation of that standard.

Comments are requested by 6 October 2017.

Click for (all links to the CIPFA website):

FRC calls for participants for its pilot Audit and Assurance Lab project on audit committee reporting

12 Jul, 2017

The Financial Reporting Council (FRC) is calling for participants for its pilot Audit and Assurance Lab project into the role of Audit Committee reporting in promoting audit quality. Audit Committee members, companies, investors and audit firms are invited to participate in the project that will commence in July 2017.

The project will explore how investors’ confidence in audit is enhanced by, and supported through:

  • the external reporting by audit committees in the annual report, in accordance with the UK Corporate Governance Code (Phase 1). This includes consideration of improvements that have been made in recent years; and
  • auditors’ reports to audit committees, including how they can better support audit committee reporting (Phase 2).

A report for phase 1 is expected to be published in time for consideration for December 2017 year-ends.  A report for phase 2 will be published in the first half of 2018.

Further information including the press release is available on the FRC website.

AICPA issues proposed financial instruments disclosure framework

12 Jul, 2017

As global accounting standards, as well as requirements promulgated by other standard-setting bodies, increasingly call for measurements and disclosures that comply with a defined measurement objective, the American Institute of Certified Public Accountants (AICPA) has issued a proposed disclosure framework for the valuation of financial instruments.

The purpose of the document is to provide a framework for the valuation professional when engaged or assigned to provide fair value and other measurements of financial instruments and components thereof. By design, the framework does not provide instructions on how to arrive at a valuation conclusion, but instead, the documents provide valuation professionals with guidance on the level of documentation and substantiation that is required when performing, reviewing or working with securities or financial instrument valuations.

Please click for more information on the AICPA website.

FRC publishes ‘Key Facts and Trends in the Accountancy Profession 2017'

12 Jul, 2017

The Financial Reporting Council (FRC) has published the fifteenth edition of its annual ‘Key Facts and Trends in the Accountancy Profession’ publication.

The publication provides key data on the accountancy profession, its member bodies and practising firms.  The publication illustrates the size and shape of the accountancy profession and shows how it has evolved over recent years.  It brings together information about the major audit firms and seven accountancy bodies including both those who offer audit qualifications and those who register and supervise audit firms.

The publication includes:

  • information related to membership, students, income, costs and staffing of the seven accountancy bodies;
  • information related to the supervision of statutory auditors; and
  • information on the 37 registered audit firms with public interest entity clients.

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

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