The Global Reporting Initiative (GRI) and the United Nations Global Compact have announced that they will launch the first outcome publication of their Action Platform for Business Reporting on the Sustainable Development Goals (SDGs) on 21 September 2017. According to the press release on the GRI website, the publication An Analysis of the Goals and Targets "demystifies the esoteric world of sustainability disclosures" for companies seeking to report their impact on the SDGs.

The United Nations Conference on Trade and Development (UNCTAD) and the World Federation of Exchanges (WFE) have published a report examining the role of stock exchanges in promoting economic growth and sustainable development. The report notes that by mid-2017 there were 32 stock exchanges providing formal guidance to issuers on reporting environmental, social, and governance (ESG) information and that stock exchanges, through their ability to influence the reporting behaviour of their listed entities, are successfully generating a rapid uptake in sustainability disclosure. Please click to access the report on the WFE website.

The UN Environment Finance Initiative’s (UNEP FI) has launched a new guide for practitioners on integrating sustainability across a bank.  The guide is a functional overview of what a sustainable bank looks like and is designed for all employees from senior management to new employees as well as other stakeholders such as banking associations, regulators and supervisors.  The guide is available on the UNEP FI website here.

The United Nations Sustainable Stock Exchanges (SSE) initiative announces that the Shanghai Stock Exchange, one of the largest exchanges in the world, has joined the SSE initiative as the first exchange from China. Please click for the press release on the SSE website.

The topics covered during the meeting were the following (numbers in brackets are ref­er­ences to the cor­re­spond­ing para­graphs of the summary):

• Disclosure initiative — Principles of disclosure (1–17): ASAF members provided feedback gathered from stakeholders in their jurisdictions.
• Goodwill and impairment (18–35): ASAF members provided comments on two papers which summarized analyst views on financial information about goodwill and possible approach to impairment losses on goodwill. Further, the ASAF members discussed the single-model approach as well as the indicator-only approach to impairment testing for goodwill.
• Accounting policy changes (36–46): ASAF members discussed the impracticability threshold for voluntary changes in accounting policy and whether the proposed threshold should consider the benefits and costs of retrospective application.
• Post-implementation review of IFRS 13 (47–53): ASAF members were updated on the request for information for the post-implementation review of IFRS 13 and were presented with phase 2 plans for the PIR.
• Primary financial statements (54–67): ASAF members provided feedback on proposals for the presentation in the statement of financial performance of (a) EBIT, (b) management performance measure and adjust earnings per share, and (c) share of profit or loss of associates and joint ventures.
• Property, plant and equipment (68–74): ASAF members provided preliminary views on the proposed amendments to IAS 16.
• Project updates and agenda planning (75–78): ASAF members were updated on (1) investor engagement activities since the issuance of IFRS 17, (2) proposed amendments to IFRS 9, and (3) current IASB projects.
• Wider corporate reporting (79–89): ASAF members provided views on prominence and importance of wider corporate reporting and whether to revise its 2010 Practice Statement Management Commentary.
• Amendments to IFRS 8 and IAS 34 (90–102): ASAF members discussed four proposals in the exposure draft, Improvements to IFRS 8 Operating Segments.
• Rate-regulated activities (103–112): ASAF members were updated on recent Board discussions on defined rate regulation and discussed the analysis of rights and obligations arising from a rate-regulated mechanism in a regulatory agreement.

A full summary of the meeting is available on the IASB's website.

The briefing paper covers:

• A brief introduction about the development of IFRS 9 and expected loss accounting.
• A word of caution from the ICAEW that it is very unlikely that the expected loss estimates which banks have had to assess for banking regulatory purposes would be the same as those required for IFRS 9 purposes.
• Stages of measuring impairment under IFRS 9.
• Complexities for banks in applying the requirements of IFRS 9.

The briefing note covers an understanding of the role of banks, changes required by IFRS 9 and the expected effect on banks in applying its requirements.

Click for:

• Briefing paper (link to ICAEW website)
• Briefing note (link to ICAEW website)
• Our UK Accounting Plus Standards page on IFRS 9

This issue features discussions on:

• New metrics for evaluating the performance of insurers.
• Premiums versus insurance revenue.
• Contractual service margin.
• Disclosures and ratios.

For more information, see the issue on the IASB’s Web site.

Both organisations have a public interest mission and the transparency created by appropriate disclosures as a result of rigorous accounting standards promotes financial stability and enhances market discipline.

The Memorandum of Understanding notes two priorities of interaction:

• Fostering the sharing of information and the BCBS members’ views in support of work in the development of IFRS Standards and sharing information to support the understanding of interactions between IFRS Standards and the BCBS Framework.
• Fostering the sharing of information to support both parties in their work in the application of IFRS Standards on a globally consistent basis.

Please click to access the following information of the IASB website:

• Press release
• Memorandum of Understanding

The guidance has been published following feedback to a June 2016 consultation and updates the CC’s previous publication that was published in June 2015.

Among other things, the updated guidance includes:

• Three new Directions that must be followed by independent examiners about:
  • examiner independence (Direction 2);
  • conflicts of interest and disclosure of related party transactions (Direction 7); and
  • financial sustainability and going concern (Direction 9).
• A framework for the independent examination of small charity group accounts.
• An expanded range of example examiner’s reports.
• Advice on fund accounting.
• Guidance for examiners about helping charities with accounts preparation and book keeping.

Alongside the guidance the CC have also published a new checklist to help independent examiners meet all of the requirements when undertaking an examination.  The updated guidance also reflects guidance published in April 2017 by the UK charity regulators for auditors and examiners about reporting matters of material significance.

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

The article is certainly also intended as a reminder that comments on the request for information published as part of the post-implementation of IFRS 13 are due 22 September 2017.

The main reason for the article, however, seems to be expectation management. As Mr Kabureck explains, the post-implementation review process is not intended to be a cover-to-cover reconsideration of the entire underlying standard. Rather, the main aim of the process is to look at the following questions:

• Have the standard’s objectives been achieved?
• Are difficult or challenging requirements performing as intended?
• Have new issues emerged since the standard was issued? 
• Are the compliance costs consistent with expectations?

And yet Mr Kabureck notes that even if potential improvements are identified the Board might conclude that it will make no changes to the standard:

This is because our constituents also want a stable financial reporting platform and minor changes may not pass the cost-benefit test; processing even minor changes still consumes a significant amount of both constituents' time and the Board's time.

Please click to access the full article on the IASB website.

Under FRS 102 The Financial reporting standard applicable in the UK and Republic of Ireland, investment funds which meet certain conditions contained within paragraph 7.1A of that Standard, are not required to prepare a statement of cash flows in accordance with Section 7 of FRS 102. However the FCA note includes important information for eligible investment companies wishing to make use of this exemption:

It is likely that a number of investment companies will meet the conditions contained in FRS 102. However a prospectus that includes audited financial information prepared according to national accounting standards (such as FRS 102) must include a cash flow statement (as specifically stated in PR Appendix 3 Annex I item 20.1).

Therefore, investment companies who qualify for the exemption in FRS 102 may wish to consider whether to make use of the exemption in FRS 102 when preparing audited financial information, as the financial information then will not contain all the information required for a prospectus.

We have power to authorise the omission of information from a prospectus in limited circumstances. These include where the information is of minor importance and unlikely to influence investors’ ability to make an informed assessment (section 87B(1) FSMA, as set out in PR 2.5.2UK). These omission requests will be considered on a caseby- case basis. Investment companies producing a prospectus who have not prepared a cash flow statement and wish to make a request to omit information should contact us at an early stage of their transaction. 

The FCA note is available of the FCA website.

Finalisation of draft agenda decisions

The Committee will consider the public feedback on six matters which it had tentatively decided not to add to its agenda:

• IFRS 9 Financial Instruments - Financial assets eligible for the election to present changes in fair value in other comprehensive income - Agenda Paper 5A
• IAS 12 Income Taxes - Interest and penalties - Agenda Paper 5B
• IFRS 1 First-time Adoption of International Financial Reporting Standards - Subsidiary as a first-time adopter - Agenda Paper 5C
• IAS 37 Provisions, Contingent Liabilities and Contingent Assets - Costs considered in assessing whether a contract is onerous - Agenda Paper 5D
• Goods acquired for promotional activities - Agenda Paper 5E
• Acquisition of an associate or joint venture from an entity under common control - Agenda Paper 5F

The staff are recommending that the Committee finalise all of these decisions. In one case, onerous contracts, the staff are also recommending that the IASB be asked to add a narrow scope project to its work plan.

New issues

There are three new issues:

• IFRS 15 Revenue from Contracts with Customers — Pattern of revenue recognition in a real estate contract – Initial consideration - Agenda Paper 2
• IAS 41 Agriculture — Taxation in fair value measurements – Initial consideration - Agenda Paper 3
• IAS 28 Investments in Associates and Joint Ventures — Contributing property, plant & equipment to an associate – Initial consideration - Agenda Paper 4

For all three issues the staff are recommending that the IC not add the issue to its agenda. However in the case of the fair value measurement for agriculture, the staff are recommending that the IASB make a small change to IAS 41 as part of its next Annual Improvements cycle to correct an inconsistency in IAS 41.

Further information

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

Under existing rules, some societies can choose to disapply the requirement to appoint an auditor and prepare a less onerous audit report if they meet all of the following conditions:

• Turnover less than £5.6m
• Assets less than £2.8m
• Their members have passed a resolution to disapply the requirement
• They are not on the list of exempted societies that cannot disapply this requirement.

HM Treasury is proposing to increase the turnover threshold to £10.2m and the assets threshold to £5.1m which would bring those into line with the equivalent thresholds for companies. 

The change in the thresholds will not, however, remove the requirement for members of a co-operative or community benefit society to pass a resolution to disapply the audit requirement if they wish to take advantage of it.  They must also not be on the list of exempted societies that cannot disapply the requirement.   

This change will only apply to co-operatives and community benefit societies.  The current audit requirements for credit unions will remain. 

Comments on the proposals are requested by 22 September 2017.

The press release and consultation are available on HM Treasury’s website

Update 05 December 2017

HM Treasury has published responses from the consultation.  The majority of responses were supportive and the government will be going ahead with the change to audit thresholds.  The responses document is available on HM Treasury's website here.