SORPS issued by the SORP Board apply to further and higher education institutions preparing accounts under UK GAAP to present a ‘true and fair view’ and are intended to supplement accounting standards and other legal and regulatory requirements to reflect transactions or circumstances that are unique to the sector within which such institutions operate. The SORP is intended to

• improve the quality of financial reporting by institutions;
• enhance the relevance and comparability of, and the ability to understand, the information presented in institutions’ financial statements;
• provide clarification, explanation and interpretation of accounting standards and their application to sector-specific transactions; and
• assist those who are responsible for the preparation of financial statements.

The updated SORP reflects the Amendments to FRS 102 – Triennial review 2017 – Incremental improvements and clarifications issued by the Financial Reporting Council in December 2017.

The amended SORP is effective for financial periods beginning on or after 1 January 2019. Early adoption is permitted if the  accounts direction of the relevant regulator permits it.

The revised SORP is available here

The Global Reporting Initiative (GRI) and the United Nations Global Compact initiative have released a new publication Integrating the SDGs into Corporate Reporting: A Practical Guide. The publication helps companies of all sizes to prioritize SDG targets to act and report on, set related business objectives, and measure and report on progress.

The GRI has also launched an updated version of its widely used GRI 403: Occupational Health and Safety reporting standard.

A series of ‘breakthrough’ moments have been named by the International Integrated Reporting Council (IIRC) in its 2017 integrated report, signalling the breadth of support for integrated reporting as it becomes embedded by businesses around the world. Please see the IIRC press release for a summary and access to the annual report.

The IIRC also announces that Dominic Barton has been appointed Chair of the IIRC. The IIRC website offers a press release and an interview with the new Chair.

The TCFD Knowledge Hub now offers two new sections – case studies and upcoming events – providing companies with the additional resources they need to ensure all the knowledge on the Task Force on Climate-related Financial Disclosures (TCFD) is available in one place.

Accounting for Sustainability (A4S) has released a two minute survey on sustainability in finance for all finance professionals to take. The survey aims to understand the current perceptions and attitudes to sustainability within the finance community. Please click here to participate.

A4S has also released a report setting out actions to deliver a global sustainable financial system, with recommendations for all parts of the investment chain. The recommendations in the report include building a compelling evidence base and motivating people to act, developing consistent terminology, allocating funds to sustainable outcomes, adopting reporting standards, and pricing externalities. The report can be accessed through the press release on the A4S website.

The World Federation of Exchanges (WFE) has formally launched its Principles for Sustainable Exchanges. The principles include education of market participants, promotion of ESG disclosures, multi-stakeholder engagement for sustainable finance, provision of markets and products, and establishing effective internal governance in support of sustainability efforts.

During the meeting, the TRG discussed the following:

• Insurance risk consequent to an incurred claim
• Determining discount rates using a top-down approach
• Commissions and reinstatement premiums in reinsurance contracts issued
• Premium experience adjustments related to current or past service
• Cash flows that are outside the contract boundary at initial recognition
• Recovery of insurance acquisition cash flows
• Premium waivers
• Group insurance policies
• Industry pools managed by an association
• Annual cohorts for contracts that share in the return of a specified pool of underlying items

Please click to download our summary of the discussions at the meeting.

In April 2017 the Charity Commission selected two random samples of charities that had filed their 2015 annual returns or annual updates. One sample was of 106 charities that had reported an income of £25,000 or more (‘larger charities’) and the other of 110 charities that had reported an income of less than £25,000 (‘small charities’).

In January 2018, it also selected a random sample of 106 charities that had reported an income over £500,000 in their 2016 annual returns.

For each charity in each sample, it checked whether the figures reported in their annual return agreed to their accounts

The key findings from an analysis of total income and expenditure include:

• Only 93% of the larger charities’ income agreed to the accounts with a figure of 66% for small charities.
• Only 92% of the larger charities’ expenditure agreed to the accounts with a figure of 65% for small charities.
• 89% of larger charities’ income and expenditure both agreed to the accounts with a figure of 62% for smaller charities.        

The key findings of those with income over £500,000 include:

• 83% of the charities’ income analysis agreed to their accounts.
• 85% of the charities’ expenditure analysis agreed to their accounts.
• 98% of the charities’ balance sheet analysis agreed to their accounts.
• 97% of the charities’ fund analysis agreed to their accounts.
• Only 71% of the charities’ in the sample had all analysis which agreed to their accounts.

The Charity Commission reminds the trustees of charities that they must provide financial information in the charity’s annual return or annual update based on the charity’s accounts. It also indicates that those familiar with the charity’s accounts should complete or check the annual return figures.

The full report is available  on the Charity Commission website here.

The deadline for applications has now been extended to 2 November 2018. Please click for more information on the EFRAG website.

The Update reports on the EFRAG Board meetings on 3 September 2018 and 20 September 2018, the EFRAG TEG meetings on 5 September 2018 and 27 September 2018 and the EFRAG TEG and EFRAG Consultative Forum of Standard Setters (EFRAG CFSS) meeting on 26 September 2018.

The Update also lists EFRAG publications  issued in September which included:

• EFRAG’s letter to the International Accounting Standards Board (IASB) to highlight certain aspects of IFRS 17 Insurance Contracts that, in the view of the EFRAG Board, merit further consideration.
• EFRAG’s call for candidates for those interested in becoming a member of the European Lab Steering Group
• EFRAG’s invitation to register for a webinar Financial Instruments with Characteristics of Equity (FICE) which will take place on 12 October.
• EFRAG’s video outlining its tentative views on the key principles under consideration in the IASB Discussion Paper and EFRAG draft comment letter on Financial Instruments with Characteristics of Equity (FICE)

Please click to download the September EFRAG Update  from the EFRAG website.

As reported earlier, the resolution notes the benefits that IFRS 17 will bring about but also states that ECON members have several concerns regarding the standard.

The motion for a resolution was discussed in the plenary session of the EP on 1 October 2018. During the plenary session, the European Comission (EC) representative and the EP members:

• noted that IFRSs are essential and costs are inevitable in changing to a new environment;
• stressed that the benefits from IFRS 17 are clear as it will bring comparability and clarity to an industry that is currently not transparent;
• noted that in order to be endorsed, IFRS 17 should comply with the EU policy in relation to sustainability, European public good, climate change and long-term investments;
• noted the importance of assessing the impact of IFRS 17 on financial stability;
• recalled that the EC has no possibility of changing IFRSs during endorsement;
• noted that EFRAG has identified six issues to be considered by the IASB again;
• noted that the IASB is going to discuss in October potential amendments to IFRS 17 and a possible delay of the timeline;
• called for the industry to be realistic regarding the solutions it is asking of the IASB;
• noted that standards do and should evolve over time; and
• noted that the EC will continue to monitor the work on IFRS 17 ensuring it is in line with the European public good and puts no undue strain on the insurance industry.

The resulotion was adopted by show of hand by the EP on 3 October 2018.

The following additional information is available on the EP website:

• Text of the resolution adopted by the EP
• Recording of the plenary discussion on 1 October (begins at approx. 19:29)
• Recording of the vote on 3 October (begins at approx. 13:01)

Please click to access the short overview (17 minutes) on YouTube.

The topic was introduced by Peter Sampers, Chairman of the Dutch Accounting Standards Board (DASB). Mr Sampers coordinated the response of eleven smaller European standard-setters to the consultation and is also familiar with developments at the European oversight bodies ESMA, EIOPA, EBA, and ECB.

Mr Sampers introduced the topic to the wider standard-setter community by explaining the history of the fitness check beginning with the EU IAS Regulation over the Maystadt report, the evaluation of the IAS Regulation, the report of the HLEG on sustainable finance to the EC action plan on sustainable finance thus summarising what he called the European "love-hate relationship" with IFRSs. (Mr Sampers has kindly given us permission to make his presentation slides available on IAS Plus, they are available here.)

Mr Sampers then turned to the fitness check itself, especially to question 19 of the consultation: "Given the different levels of commitment to require IFRS as issued by the IASB around the globe, is it still appropriate that the IAS Regulation prevents the Commission from modifying the content of IFRS?" After a short comment on the lack of neutrality of the consultation language and format, which was later echoed by an irate FRC representative, Mr Sampers gave a balanced overview of pros and cons and shared consultation results that saw only the French standard-setter in favour of possible carve-ins and carve-outs while the other standard-setters and the oversight bodies all came down in favour of no changes. He also shared first results that had been presented by EC representatives at the meeting of EFRAG's Consultative Forum of Standard Setters in September (an official report on the consultation outcomes is expected in October 2018):

• 338 responses were received.
• Most responses came from accounting organisations.
• 60% came from 5 member states.
• The IFRS questions were addressed by approx. 70% of the respondents.

According to Mr Sampers, the EC representatives at the CFSS meeting also noted the following overall conclusions from the consultation: "IFRS is essentially fine" and "some think nothing should be done".

When the discussion was opened to the floor, the following main comments were made:

• The wording of the HLEG in its final report seemed to indicate that there is equality between sustainability and long-term investment, which is not the case.
• France's position is not pro carve-ins and carve-outs per se, it is for such a possibility as a last resort.
• Canada has theoretically the possibility to change IASB pronouncements but has never done so yet. If there ever would be changes, it would be the standard-setter's decision and not a political one. Political decisions in other parts of the world that would have an effect on the international accounting community would be viewed with great concern.
• It was noted that the question was connected with sovereignty issues but it was also noted by others that sovereignty issues have been on the table since adoption in the EU. The binary adoption decision was built into the endorsement process intentionally to keep the possibility of political influence to a minimum.
• Next steps in the process will not necessarily be coming soon as Parliamentary elections are coming up in the EU, which could mean a standstill of developments in 2019.
• The EU is not a bubble, "we are trading with the rest of the world and the rest of the world is trading with us". (Australia, Canada, and Hong Kong have in fact also responded to the EU consultation for exactly this reason.)
• By trying to make accounting bring about long-termism, governments are ducking out of their jobs of addressing things directly themselves.

The last comment from the audience was from IASB Chairman Hans Hoogervorst. He thought the European thinking of giving the EU more power by being able to "threaten" the IASB with carve-ins and carve-outs was completely wrong. Mr Hoogervorst explained that the IASB is listening very carefully to concerns brought to its attention and many adjustments are made during the process of development of a standard. Why, he asked, should the IASB continue to listen to European concerns if in the end the EU would change the final standards during endorsement according to their own wishes anyway?

This revised standard is the first to be completed as part of the IAASB’s broader programme, Addressing the Fundamental Elements of an Audit, and is an important part of the IAASB’s efforts to improve audit quality globally.

The revisions include:

• an enhanced risk assessment that requires auditors to consider complexity, subjectivity and other inherent risk factors in addition to estimation uncertainty. This will drive auditors to think more deeply about the risks inherent to accounting estimates;
• a closer link between the enhanced risk assessment and the methods, data and assumptions used in making accounting estimates, including the use of complex models;
• specific material to show how the standard is scalable to all types of accounting estimates;
• emphasis on the importance of applying appropriate professional scepticism when auditing accounting estimates to foster a more independent and challenging sceptical mindset in auditors.

ISA 540 (Revised) becomes effective for financial statement audits for periods beginning on or after 15 December 2019.

For further details on the updates see the International Federation of Accountants (IFAC) website.