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2017

We comment on the FRC consultation on changes to its Corporate Reporting review procedures

07 Jan 2017

We have published our comment letter on the Financial Reporting Council’s (FRC’s) consultation on changes to its Conduct Committee’s operating procedures for reviewing company reports and accounts.

We are supportive of balanced and proportionate measures which aim to increase the quality and transparency of financial reporting. We agree that the proposed changes will promote more effective and efficient processes, and enhance the transparency of reviews and their outcomes. 

We note that, in line with stakeholders’ requests for more transparency, the FRC has started writing to companies advising them when the FRC has completed a review of their report and accounts but has not identified any substantive matters. However, whilst this is clear from the Consultation Paper, this has not been included in the revised Operating Procedures. We believe this is a positive development for companies and recommend that such a practice be clarified in the revised Operating Procedures as the current drafting does not make it clear that the names of such companies will be included on the regularly published list of closed cases. 

In addition to the proposed changes, earlier in the year we recall the FRC mentioning that it would consider writing to some companies ‘fore-warning’ them of reviews on specific areas in their accounts. However, we could not see this in the revised Operating Procedures. The benefits of such an approach have already been evidenced by the FRC’s thematic review of tax disclosures and confirmed in an FRC press notice published on 31 October 2016. We believe this approach is a good idea and could result in further improvements in the quality of financial reporting in other areas of the annual report. We note that the FRC, in its thematic review of APMs, has confirmed it will be giving advance notice of its intention to review the next annual reports and accounts of two companies. 

Our full comment letter is available here.

January 2017 IASB meeting agenda posted

06 Jan 2017

The IASB has posted the agenda for its next meeting, which will be held at its offices in London on 18 January 2017.

The Board will discuss the post-implementation review of IFRS 13, symmetric prepayment options related to IFRS 9, accounting policies/estimates and the Conceptual Framework.

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

Call for candidates: ESMA Corporate Reporting Consultative Working Group

06 Jan 2017

The European Securities and Markets Authority (ESMA) has launched a call for candidates in order to renew the composition of its Consultative Working Group (CWG) for the Corporate Reporting Standing Committee (CRSC).

The CRSC advises ESMA on issues related to accounting, audit, periodic financial reporting, electronic reporting and storage of regulated information.  CWG members are expected to provide assistance to the CRSC by providing input on its work plan, its projects and broader policy objectives. 

ESMA will be seeking to ensure a balanced representation of the following types of stakeholders in the CWG: 

  • Users of financial information;
  • Retail and institutional investors;
  • Issuers of securities;
  • Accountants and auditors;
  • Parties involved in the storage of regulated information and its use; and
  • Academics

Further details are available in the Call for expression of interest on the ESMA website.  

Applications must be submitted by no later than 6 February 2017

ESMA publishes 20th enforcement decisions report

05 Jan 2017

The European Securities and Markets Authority (ESMA) has published further extracts from its confidential database of enforcement decisions taken by European national enforcers. This batch deals with decisions in relation to IFRS 7, IFRS 10, IFRS 12, IAS 1, IAS 8, IAS 12, IAS 16, IAS 17, IAS 32, IAS 36, IAS 37, IAS 38, IAS 39, and IFRIC 4.

The European national enforcers of financial information monitor and review financial statements published by issuers with securities traded on a regulated European market and who prepare their financial statements in accordance with International Financial Reporting Standards (IFRS) and consider whether they comply with IFRS and other applicable reporting requirements, including relevant national law.

ESMA has developed a confidential database of enforcement decisions taken by individual European enforcers as a source of information to foster appropriate application of IFRS.

The publication of enforcement decisions is designed to inform market participants about which accounting treatments European national enforcers may consider as complying with IFRS, i.e. whether the treatments are considered as being within the accepted range of those permitted by IFRS. ESMA considers the publication of the decisions, together with the rationale behind them, will contribute to a consistent application of IFRS in the European Union.

Topics covered in the latest batch of extracts, covering the period from March 2014 to June 2016, include:

Standard Topic
IFRS 7Financial Instruments: Disclosures Qualitative disclosures of the risks arising from financial instruments
IFRS 12 Disclosure of Interests in Other Entities Disclosure of significant judgements and assumptions in determining the existence of significant influence
IAS 36Impairment of Assets Disclosures relating to determination of value in use
IAS 39Financial Instruments: Recognition and Measurement Recognition of losses on loans upon conversion to shares
IAS 1Presentation of Financial Statements Presentation of equal and opposite gains and losses in the statement of profit or loss and other comprehensive income for the period
IAS 8Accounting Policies, Changes in Accounting Estimates and Errors
IAS 38Intangible Assets
Reclassification of capitalised milestone payments by a pharmaceutical company to the statement of profit or loss
IFRS 10Consolidated Financial Statements Legal requirements that prevent a shareholder from exercising its rights
IFRS 10Consolidated Financial Statements Determining whether an entity is an investment entity
IAS 16Property, Plant and Equipment Depreciation of vessels in the oil and gas industry
IAS 8Accounting Policies, Changes in Accounting Estimates and Errors
IAS 36Impairment of Assets
Application of value in use methodology in impairment testing
IAS 36Impairment of Assets
IAS 37Provisions, Contingent Liabilities and Contingent Assets
Recognition of onerous contract provisions
IAS 36Impairment of Assets Identification of cash-generating units
IAS 8Accounting Policies, Changes in Accounting Estimates and Errors
IAS 17Leases
IAS 32Financial Instruments: Presentation
IFRIC 4Determining whether an Arrangement contains a Lease
Purchase of a car fleet with an agreed buy-back agreement
IAS 12Income taxes Recognition of deferred tax assets for unused tax losses

Click for access to the full report (link to ESMA website). The ESMA has also published an updated overview of all enforcement decisions ever published.

IFRS Foundation seeks new office location

05 Jan 2017

The IFRS Foundation is exploring options for relocating its London office. The Foundation is soliciting proposals for an estate agency to help find alternative office locations 'possibly overseas, but with a preference for remaining in the UK within the City of London or its outskirts'.

The Foundation has posted to its website an invitation to tender, which includes specifications, scope of services, timing, process, and proposal requirements. Proposals are being requested through 3 February 2017.

High-level recap of changes resulting from the application of IFRS 9 and IFRS 15

04 Jan 2017

The IASB has published 'IFRS 9 and IFRS 15 — one year to go' on its website.

Basically, the recap offers a very general overview of the changes IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers will bring about and then links to the IASB's IFRS 9 implementation page and IFRS 15 implementation page. The recap also reminds preparers that investors need to be informed about the expected impact of a new standard even before companies apply that standard. Please click to access the recap on the IASB website.

EFRAG TEG meeting January 2017

03 Jan 2017

The European Financial Reporting Advisory Group (EFRAG) will hold a TEG meeting on 25 and 26 January 2017 in Brussels.

An agenda and details on how to register for the meeting can be found on the EFRAG website.

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