As many public sector entities have heritage responsibilities, the consultation paper is intended to be a first step toward developing financial reporting guidance to support accountability and decision making in this area. The paper describes heritage items as items that are intended to be held indefinitely and preserved for the benefit of present and future generations because of their rarity and/or significance. It proposes that:

• heritage items' special characteristics do not prevent them from being assets for the purposes of financial reporting;
• heritage items should be recognised in the statement of financial position if they meet the recognition criteria in the Conceptual Framework; and
• in many cases, it will be possible to assign a monetary value to heritage assets.

The paper also discusses initial and subsequent measurement of heritage assets, whether heritage preservation responsibilities could involve present obligations for entities that should be recognised as liabilities in the financial statements, and presentation of information for heritage in general purpose financial reports.

Comments on the consultation paper are due to the IPSASB by 30 September 2017.

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

• Press release
• Consultation paper

The guidance replaces TECH 02/10 Guidance on the determination of realised profits and losses in the context of distributions under the Companies Act 2006 (link to ICAEW website) which required significant updating following changes to International Financial Reporting Standards (IFRSs) and UK Accounting Standards (notably the introduction of Financial Reporting Standard (FRS) 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland) and to provide additional guidance on a number of areas that have arisen in practice.  

Substantive changes have been made to the guidance on accounting for intragroup off-market loans, the guidance on retirement benefit schemes and clarity has been provided on the application to long-term insurance businesses as a result of Solvency II.  Other changes are in the nature of updating references to the revised standards, removing obsolete material that had become outdated in TECH 02/10 and providing further clarity in certain areas. 

Investors are demanding greater disclosure around distributable reserves.  Whilst not proposing changes to disclosure, the guidance will assist companies to meet investor expectations in this respect.  It will also help to avoid the potentially serious consequences for companies and their directors of making an unlawful distribution. 

The guidance, published following a period of consultation, is equally applicable to companies applying both IFRSs and UK GAAP. 

The updated guidance is available on the ICAEW website here.  Our related Need to know publication is available here.

European enforcers examined the interim and/or annual financial statements of more than 1,200 issuers representing an average examination rate of 21% of all IFRS issuers with securities listed on regulated markets (2015: 20%). These examinations resulted in 311 actions taken to address material departures from IFRS (2015: 273). As in 2015, the main deficiencies were identified in the areas of financial statements presentation, impairment of non-financial assets, and accounting for financial instruments.

Please click to access the full report on the ESMA website.

The ITCG discussed:

• an update on the recently issued ESMA Feedback Statement relating to the European Single Electronic Format (ESEF);
• the forthcoming IFRS Taxonomy releases; and
• amendments to the ITCG charter.

For more information, see the summary on the IASB's website.

Gender Pay Gap 

From 2017 onwards, private and voluntary sector employers in Great Britain with more than 250 employees need to calculate and publish information on gender pay gaps within their organisation. 

The Government Equalities Office has launched its campaign website. This provides a location for employers to access resources and case studies on gender pay gap. This will be the portal on which companies must publish their gender pay gap information. The campaign website can be found here. 

The “snapshot” date on which companies and charities must measure pay data is 5 April. This means that the first disclosures are now required by 4 April 2018.

Our related Governance in brief publication is here.  A final version of the non-statutory guidance by Acas and the Government Equalities Office (GEO) on the gender pay gap reporting requirement has been published and is available on the ACAS website.

Duty to report on payment practices and performance 

The new duty to report on payment practices and performance comes into force for periods starting on or after 6 April 2017. 

This will affect individual UK companies that meet the size criteria, with no group-wide reporting possible, and reporting is required within 30 days of the end of each six month period. 

The Reporting on Payment Practices and Performance Regulations 2017 are available on the government website here.  The Department for Business, Energy and Industrial Strategy (BEIS) guidance on business payment practices and performance reporting requirements is available here.

Our recent Governance in brief on the new duty to report on payment practices and performance is available here.

Annual Improvements to IFRS Standards 2014 – 2016 Cycle was published by the International Accounting Standards Board (IASB) in December 2016.  The pronouncement contains amendments to three International Financial Reporting Standards (IFRSs) (IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 12 Disclosure of Interests in Other Entities and IAS 28 Investments in Associates and Joint Ventures) as a result of the IASB's annual improvements project. 

EFRAG supports the adoption of the amendments and recommends their endorsement.  EFRAG’s assessment is that the amendments meet the technical requirements of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards.  

EFRAG also considers that the overall benefits of the amendments are likely to outweigh the associated costs to implement them.

The EFRAG press release regarding this, including endorsement advice letter are available on the EFRAG website.  

EFRAG has also updated its endorsement status report to reflect the issuance of the endorsement advice.

In December 2016, the IASB issued the amendments to IAS 40 to clarify transfers of property to, or from, investment property. 

EFRAG supports the adoption of the amendments and recommends their endorsement.  EFRAG’s assessment is that the amendments meet the technical requirements of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards.  

EFRAG also considers that the overall benefits of the amendments are likely to outweigh the associated costs to implement them.

The EFRAG press release regarding this, including endorsement advice letter are available on the EFRAG website.  

EFRAG has also updated its endorsement status report to reflect the issuance of the endorsement advice.

IFRIC Interpretation 22 was published by the International Accounting Standards Board (IASB) in December 2016.  The objective of IFRIC 22 is to clarify how the date of the transaction should be assessed for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability arising from advance consideration in a foreign currency. 

EFRAG supports the adoption of the amendments and recommends their endorsement.  EFRAG’s assessment is that the amendments meet the technical requirements of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards.  

EFRAG also considers that the overall benefits of the amendments are likely to outweigh the associated costs to implement them.

The EFRAG press release regarding this, including endorsement advice letter are available on the EFRAG website.  

EFRAG has also updated its endorsement status report to reflect the issuance of the endorsement advice.

More of a regulatory than accounting nature the three questions are all related to the right of use asset and the question whether this is a tangible or an intangibel asset.

Please click to access the BCBS statement on the website of the Bank for International Settlements (BIS).

The topics discussed at the meeting included:

• IASB Update. Members were updated on the importance of post implementation reviews and the upcoming review of IFRS 13, a possible update of the the Practice Statement Management Commentary, and the research project on goodwill and impairment.
• Implementation activities and maintenance projects. Topics covered included implementation support on IFRS 9, IFRS 15, and IFRS 16; educative guidance in recent agenda decisions published by the IFRS Interpretations Committee; and symmetric prepayment options (proposed amendments to IFRS 9) where an exposure draft is expected in April 2017. This section of the meeting also included the discussion of three issues in breakout groups:
  • Income tax consequences of payments on financial instruments classified as equity,
  • Long-term interest in associates and joint ventures, and
  • Interest and penalties related to income taxes.
• Impairment of goodwill. The staff sought feedback from the GPF members on ideas for possible simplifications to the goodwill impairment testing requirements in IAS 36:
  • one-model approach,
  • relief from annual testing,
  • improving the value in use methodology, and
  • providing additional guidance on allocating goodwill.
• IFRS Taxonomy. The staff introduced the new IFRS Taxonomy and explained that moving towards more electronic reporting would reduce the overall data information costs (not undisputed by GPF members as it might simply shifts costs from users to preparers), would give preparers back some control of the data, and lead to more standardised IFRS financial reporting (again questioned as preparers would still come under market pressure).
• Business Combinations under Common Control. The staff provided an overview of the research results, discussed the its preliminary views on the issue, and explained the next steps of the project. Only a few GPF members provided questions or comments on the topic.

The next GPF meeting will be held on 15 and 16 June 2017 (joint meeting with the CMAC).

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