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FRC announces new Board appointments

20 Mar 2018

The Financial Reporting Council (FRC) has announced the appointment of Julia Unwin and Jenny Watson to its Board.

They will take up their position from 1 April 2018.

Please click for the corresponding press release on the FRC website.

Please click for the corresponding press release on the FRC website.Please



New Office Director of the IFRS Foundation liaison office in Tokyo appointed

20 Mar 2018

The Trustees of the IFRS Foundation have announced the appointment of Makoto Takahashi as next Office Director of the Foundation's Asia-Oceania liaison office.

Mr Takahashi will take over from Mitsuhiro Takemura, who will return to Deloitte, where he was seconded from.

The IFRS Foundation established the Tokyo office in February 2011 in order to expand opportunities for direct contact between the IFRS Foundation and its stakeholders in the region. The Office Director is responsible for all operations of the liaison office.

Please see the announcement on the IASB website for more information.

IFRS 9 and IFRS 17 dominate ECON exchange of views

19 Mar 2018

At the annual exchange of views this afternoon between the Committee on Economic and Monetary Affairs (ECON) of the European Parliament and representatives of the IASB and the IFRS Foundation, Parliamentarians were most interested in Information about IFRS 9 'Financial Instruments' and IFRS 17 'Insurance Contracts'.

The meeting was chaired by ECON Vice-Chair Luděk Niedermayer who in his introduction already mentioned the topics IFRS 9/sustainable finance (impact of IFRS 9 on long-term finance) and IFRS 17, which has not yet been endorsed for use in the European Union.

The focus of the IASB Chairman's initial statement was IFRS 17, which he called the IASB's "most important standard". He showed some slides that illustrated the dimensions of the change the new standard would bring about. Given the magnitude of change, Mr Hoogervorst explained, there was also resistance against it and the high costs of implementing the standard were often cited. He could not help adding that the estimation of the costs were inversely related to the enthusiasm for the standard of the person estimating. Finally, Mr Hoogervorst pointed at tomorrow's EFRAG meeting that will see presentations by AccountancyEurope, CRUF, and an asset management company. (Papers for the meeting are available here; the meeting will be broadcast.)

Questions from the Parliamentarians on IFRS 17 included why it was perceived as so difficult to implement, why companies were against using current interest rates if for their own well-being they were surely already thinking in current interest rates, and whether the EU being the most important IFRS applying  jurisdiction could still influence the timeframe of implementation of the standard, which was perceived as being to short.

Questions on IFRS 9 included the effects of the standard on long-term finance (which EFRAG is currently investigating) and whether IFRS 9 is really an improvement over IAS 39 as IAS 39 already required writing down impaired assets. The discussion around IFRS 9 and long-term finance also strayed in to wider corporate reporting and the IASB project to update the Practice Statement on Management Commentary.

Other topics of discussion shortly touched upon were the Conceptual Framework (expected timing end of the month, "prudence" is in it), IFRS 16 (implementation is going smoothly, it is not expected to impact access to loans), and the succession of Michel Prada (candidates are being identified, interviews will be held in April, proposals will be submitted to the Monitoring Board in June).

As the meeting has been recorded, it will be available here in due course.

ACCA report indicates widespread benefits from the adoption of key audit matters

19 Mar 2018

The Association of Chartered Certified Accountants (ACCA) has published a report which highlights that, in addition to being useful for investors, there are further benefits from the adoption of Key Audit Matters.

In January 2015, the International Auditing and Assurance Standards Board (IAASB) released its new and revised auditor reporting standards that are designed to significantly enhance auditor's reports for investors and other users of financial statements. The most notable enhancement was a new requirement for auditors of listed entities' financial statements to communicate 'Key Audit Matters' (KAMs) that the auditor views as most significant, with an explanation of how they were addressed in the audit.

The ACCA report reviews the implementation of these new standards in eleven countries across four different continents. It reports the findings from a review of 560 new-style audit reports and also feedback gained during roundtables.

The key finding of ACCA’s report is that the benefits of KAMs go beyond better information for investors to encompass improved governance, better audit quality and enhanced corporate reporting. Specifically the report indicates:

  • KAMs encourage better conversations between the auditor and those charged with governance; this in turn contributes to better governance.
  • KAMs help the auditor to focus on the areas of the audit requiring the most careful judgement; this in turn contributes to higher audit quality.
  • KAMs give preparers incentives for revisiting financial reporting and disclosures in areas related to those KAMs. This in turn leads to better financial reporting.

A press release and the full report are available on the ACCA website.

Charity Commission review into charities with modified audit reports

19 Mar 2018

The Charity Commission has published the results of a review into the reasons why accounts for 80 charities in 2017 received a modified audit opinion.

The review follows a similar review that was conducted on charity accounts in 2016 where 97 charities received a modified audit opinion.

The main reasons that modified audit opinions were issued in the 2017 review included:

  • 48 (2016:50) charities where there was a lack of evidence to support figures within the accounts.
  • 31 (2016:45) charities who demonstrated material non-compliance with the Charity Statement of Recommended Practice (SORP)
  • One (2016: two) charity received an adverse opinion as it had prepared accounts on a going concern basis of accounting but their auditor had concluded that the charity was not a going concern.

It was noted that most of the charities that submitted accounts with a modified audit opinion in 2016 had addressed their auditor’s concerns in their following year’s accounts.

The Charity Commission review provides some wider lessons for other charities to minimise the risk of a modified audit opinion aimed at trustees. It comments:

To minimise the risk of a modified audit opinion, trustees need to check that their charity has sound financial systems and accounting records in place, take SORP compliance seriously and work with their auditors to provide the information that they will need for their audit.

The review also highlights a number of resources to assist trustees in this respect.

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

Recent sustainability and integrated reporting developments

19 Mar 2018

A summary of recent developments at the CDSB/CDP and FSB.

The Climate Disclosure Standards Board (CDSB) and the Carbon Disclosure Project (CDP) have released a report on research into 1,681 companies across 14 countries and 11 sectors that shows that there is a gap between the way companies identify climate-related risks and opportunities and how they are preparing to tackle them. Ready or not: Are companies prepared for the TCFD recommendations? is available through the press release on the CDP website.

The Chair of the Financial Stability Board (FSB) has written a letter to the G20 Finance Ministers and Central Bank Governors setting out the FSB priorities for the Argentine G20 Presidency. The letter notes that the Task Force on Climate-related Financial Disclosures (TCFD) is now focused on promoting companies’ voluntary implementation of its recommendations and will report on voluntary implementation at the Buenos Aires summit. The letter is available on the FSB website.

UNEP FI and investors to form leadership group to promote climate transparency by the investor community

19 Mar 2018

The UN Environment Finance Initiative (UNEP FI) together with nine investors from six countries have formed a leadership group to promote climate transparency by the investor community.

They will work together towards a first set of climate-related investor disclosures in alignment with the recommendations of the Financial Stability Board’s (FSB’s) Task Force on Climate-related Financial Disclosures (TCFD).

UNEP FI indicates:

The outputs and conclusions of this group will encourage and ease the adoption of the TCFD’s recommendations by the wider industry. The group will also closely coordinate with, and make its insights and outputs available to, the bigger networks of climate-savvy investors such as the Principles for Responsible Investment and the Institutional Investor Group on Climate Change whose new Investor Practices Programme is structured around the TCFD recommendations. It will also support and inform the global Investor Agenda through which the global investor community will display its ambition and determination to act on climate change.

A press release is available on the UNEP FI website here.

Annual ECON exchange of views with Hans Hoogervorst and Michel Prada

19 Mar 2018

At the annual exchange of views this afternoon between the Committee on Economic and Monetary Affairs (ECON) of the European Parliament and representatives of the IASB and the IFRS Foundation, IASB Chairman Hoogervorst and Michel Prada, Chairman of the IFRS Foundation Trustees, stand ready to answer questions of the Parliamentarians.

The meeting will be broadcast live and can be watched in any of the official languages of the European Union. The exchange of views is scheduled for the first slot starting at 3pm Brussels time.

Click here to watch the meeting.

ACCA issues follow up report on integrated reporting and indicates there are broader benefits to be reaped

16 Mar 2018

The Association of Chartered Certified Accountants (ACCA) has published a second report providing its latest assessment of integrated reporting.

The report, which is a follow up to the 2017 report Insights into Integrated Reporting – Challenges and best practice responses, analyses 45 corporate reports by participants in the <IR> Business network. It identifies a number of benefits of Integrated Reporting, identifies the progress made in Integrated Reporting and provides practical insights for improvement and development to those both yet to adopt integrated reporting and those which have already done so.

The report highlights that there has been “striking progress” in the quality of integrated reports over the past year. Notable improvements include:

  • A greater commitment to Integrated Reporting through making explicit reference to the <IR> Framework.
  • An increasing use of consistent performance measures from year to year.
  • A reduction in the average length of reports.

Despite the improvements, however, the ACCA also identifies a number of challenges that organisations continue to face in their integrated reporting such as:

  • the linking of strategy and performance through to key resources and value creation over the short, medium and long term;
  • the description of the board's role in enabling value creation; 
  • discussions about the organisation's outlook; and
  • the application of materiality.

According to the ACCA, to solve these challenges preparers will need to “think beyond reporting practice, about organisation management” and embed integrating thinking into their internal decision-making processes.

The report highlights the wider benefits both internal and external that <IR> network participants experienced as a result of adopting or progressing towards the adoption of Integrated Reporting. The most widely reported benefits were internal such as having a better understanding of how an organisation creates value and better connections between departments within an organisation. Participants also noted external benefits most notably in the area of stakeholder engagement, for example with providers of capital.

The report indicates that implementing integrated thinking throughout an organisation can unlock further benefits and provides a number of questions that organisations should consider in order to benefit fully from integrated reporting and integrated thinking. Although this will require organisational change, the ACCA comments that the “benefits make this effort worthwhile – as the organisations quoted in this report can testify”.

The press release and full report are available on the ACCA website.

EFRAG Board meeting March 2018

16 Mar 2018

The European Financial Reporting Advisory Group (EFRAG) will hold a Board meeting on 20 March 2018 in Brussels.

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

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