Government approves the Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019

28 Feb, 2019

The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (SI 2019/177) have been approved by the government.

The regulations set out some of the changes to be made to the framework for the regulatory oversight and professional recognition of statutory auditors and third country auditors in the UK, although the timing of when they become effective is dependent on other agreements made in the broader scheme of the UK’s exit from the EU.

In addition, the government has approved The Companies, Limited Liability Partnerships and Partnerships (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019/348), which make consequential amendments to the Companies Act 2006 and related secondary legislation.

Please click to access SI 2019/177 here.

Please click to access SI 2019/348 here.

Our related Need to know publication is available here.

IASB concludes two projects by publishing project summaries

28 Feb, 2019

The IASB has published 'Improvements to IFRS 8 'Operating Segments' — Proposed amendments to IFRS 8 and IAS 34 project summary' and 'Discount rates in IFRS Standards project summary'. The IASB will not conduct any further work regarding these projects.

In 2012, the IASB started a post-implementation review of IFRS 8 Operating Segments and subsequently published a report and feedback statement summarising the findings of the review. In March 2017, the IASB proposed to address the findings from the review in the exposure draft ED/2017/2 Improvements to IFRS 8 'Operating Segments' (Proposed amendments to IFRS 8 and IAS 34). However, feedback to the ED revealed that some of the Board's proposals could be dealt with by existing requirements, that other proposals would not be effective in addressing the findings from the review, and that the remaining proposals would not result in sufficient improvements in information to investors to justify the additional costs. Therefore, the Board decided not to proceed with the amendments proposed in the ED. Thus, the project summary published today concludes the project.

The project on discount rates resulted from feedback in the Agenda consultation 2011 where constituents had commented that the reasons for differences in discount rate requirements under various IFRSs is not well understood and could be considered inconsistent. Therefore, the IASB conducted a research project from 2014 to 2017 to investigate reasons for inconsistencies between requirements relating to discount rates in IFRSs and to assess whether the Board should consider addressing those inconsistencies. The Board’s investigation found that, in some cases, inconsistencies arise between requirements relating to discount rates in IFRSs because different standards adopt different measurement bases. There are also some inconsistencies because different standards were developed at different times and with different areas of focus. The Board will use those findings in other projects but has no plans to conduct a separate project on discount rates. This project is, therefore, also conluded by publishing a project summary.

The following information is available on the IASB website:

IFRS Foundation seeks Trustee applications

28 Feb, 2019

The IFRS Foundation announces that it is seeking applications for the role of Trustee.

The IFRS Foundation are seeking three Trustees: one from Asia Oceania and two from the Americas. Trustees’ responsibilities include oversight of the organisation in the public interest, its strategic direction, appointments to the Board, the IFRS Interpretations Committee and the IFRS Advisory Council, and ensuring the financing of the organisation and approving its budget. The role description notes:

Qualified candidates should have top-level experience in an organisation with an interest in accounting standards. They should demonstrate a firm commitment to serving the public interest, to the work of the Foundation and to the Board as a high quality global standard-setter. They should be financially knowledgeable and be able to meet the time commitment, which includes, but is not limited to, up to four two-day meetings each year. Trustees should have an understanding of, and be sensitive to, the challenges associated with the adoption and application of high quality global accounting standards developed for use in the world’s capital markets and by other users.

Please click to access the press release on the IASB website.

EFRAG early-stage analysis of FICE discussion paper

28 Feb, 2019

The European Financial Reporting Advisory Group (EFRAG) Secretariat has issued a working paper that provides an early-stage analysis of some possible effects of the IASB Discussion Paper DP/2018/1 'Financial Instruments with Characteristics of Equity'.

The analysis offers an assessment of the potential effects of the proposals in the discussion paper. It can inform and be one of the inputs to a more comprehensive impact analysis if the IASB were to further proceed with the project on financial instruments with characteristics of equity (FICE) in its current form.

This early-stage analysis is also a pilot study into the assessment of potential wider effects during the development of new IFRS requirements. The evidence gathering and analysis has been carried out at a level of detail appropriate to the proposals put forward in the IASB discussion paper.

Comments on the working paper are requested by 17 May 2019.

Please click to access the following information on the EFRAG website:

IASB issues latest edition of ‘The Essentials’ newsletter

27 Feb, 2019

The IASB has issued the fifth edition of its newsletter “The Essentials,” which is intended to increase investors’ awareness of IFRSs and enhance their insights into IFRS financial statements.

This issue highlights attributes of free cash flow (FCF) measures reported by lessees that limit comparability with FCF measures reported by companies that buy assets.

Issue 5 of The Essentials, as well as an archive of previous issues, is available on the IASB’s website.

Summary of the January 2019 ITCG meeting

27 Feb, 2019

The IASB has published a summary of the IFRS Taxonomy Consultative Group (ITCG) meeting held via conference call on 31 January 2019.

The ITCG discussed the following:

  • Proposed Taxonomy Update – Common Practice (IFRS 13): analysis of comments received
  • Updates to the Preparer’s Guide

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

EFRAG publishes a feedback statement on 'Financial Instruments with Characteristics of Equity' Discussion Paper

26 Feb, 2019

The European Financial Reporting Advisory Group (EFRAG) has published a feedback statement on the discussion paper 'Financial Instruments with Characteristics of Equity, issued by the International Accounting Standards Board (IASB).

EFRAG has also published video where Andrew Watchman, Chairman and CEO of EFRAG's Technical Expert Group, explains how the comments received were considered by EFRAG during its technical discussions.

EFRAG published its final comment letter on the IASB's discussion paper DP/2018/1 'Financial Instruments with Characteristics of Equity' on 1 February 2019. This feedback statement summarises the main comments received by EFRAG during the consultation and explains how they were considered by EFRAG during its technical discussions leading to the publication of its final comment letter.

A press release and the full feedback statement and video are available on the EFRAG website.

EFRAG issues final endorsement advice on 'Definition of Material (Amendments to IAS 1 and IAS 8)'

26 Feb, 2019

The European Financial Reporting Advisory Group (EFRAG) has issued its final endorsement advice letter relating to the use in the European Union (EU) of 'Definition of Material (Amendments to IAS 1 and IAS 8)' ("the Amendments").

The Amendments, issued in October 2018, aim at clarifying the definition of material by including guidance that until now has featured elsewhere in IFRS Standards; align the definition used in the Conceptual Framework for Financial Reporting with that in the IFRS Standards themselves; and improve the explanations accompanying the definition.

EFRAG recommends the endorsement of the Amendments. EFRAG assesses that the Amendments meet all the technical endorsement criteria of the IAS Regulation and are conducive to the European public good.

A press release and the endorsement advice letter to the European Commission are available on the EFRAG website. EFRAG has also updated its endorsement status report.

Agenda for the March 2019 IFASS meeting

26 Feb, 2019

The International Forum of Accounting Standard Setters (IFASS) will meet in Buenos Aires on 28–29 March 2019. The meeting will see the handover official duties to the new IFASS Chair Mr Yasunobu Kawanishi, Board member of the Accounting Standards Board of Japan (ASBJ).

The full agenda for the meeting is summarised below.

Thursday, 28 March 2019 (09:00–17:30)

  • Welcome and opening remarks
  • EFRAG's discussion paper on non-exchange transfers
  • FRC's research project on ‘Variable and contingent consideration’
  • Proposals for the NFP accounting technical advisory group
  • Financial instruments with characteristics of equity: Preferred approach and IFRIC 2
  • Follow-up on AcSB's project on performance measures reporting
  • Climate related and other emerging risk issues on financial statements and the impact of practice statement 2 on materiality
  • Optional breakout sessions:
    • Inline XBRL and blockchain
    • IFRS for SMEs: Standard review; Relief for subsidiaries

Friday, 29 March 2019 (09:00-16:15)

  • IFRS 17 (I): Tentative views of the IASB on upcoming amendments to IFRS 17
  • IFRS 17 (II): Implementation activities, insights, experience
  • Financial reporting in an electronic format
  • The Fitness check on the EU framework for public reporting by companies: Result of the consultation
  • Presentation of finance cost - IAS 1, IFRS 7, IAS 23
  • Improving the impairment testing model in IAS 36 Impairment of Assets
  • Handover of official duties

Annual ECON exchange of views with Hans Hoogervorst and Erkki Liikanen

26 Feb, 2019

At the annual exchange of views this morning between the Committee on Economic and Monetary Affairs (ECON) of the European Parliament and representatives of the IASB and the IFRS Foundation, IASB Chairman Hans Hoogervorst and Erkki Liikanen, Chairman of the IFRS Foundation Trustees, stood ready to answer questions of the Parliamentarians. IFRS 17 'Insurance Contracts' and wider corporate reporting dominated the exchange.

On IFRS 17, Mr Hoogervorst stressed the IASB's efforts to support implementation. He noted that the IASB had always said it was willing to consider addressing problems that become obvious during the implementation phase as long as addressing them would not disrupt the implementation process. He explained about the list of issues the IASB is looking into and also about the IASB's tentative decision to defer the effective date of IFRS 17 by one year.

On wider corporate reporting, Mr Liikanen noted that the IFRS Foundation and the IASB are well aware of the fact that investors want more information about long-term risks and environmental, social and governance (ESG) matters. Mr Hoogervorst pointed to the IASB's project to update the management commentary practice statement and noted that management commentary provided the space for information that does not naturally fit into the financial statements but can have a financial effect nonetheless. He also used the opportunity to follow up on a question from an earlier exchange of views regarding country-by-country reporting and explained that while there was no direct fit with IFRSs, information on for example risky tax strategies could also very well be reported in the management commentary.

Questions from the almost empty room were few and were mostly focused on extra financial reporting. In response, Mr Hoogervorst explained that the IASB does not see itself as a sustainability standard-setter as it a) lacks the expertise in the area and b) as there are already many standard-setters ("too many") active in the field. Therefore, the updated management commentary practice statement will include guidelines how sustainability information can be included in the management commentary and will provide space for such information, but it will not contain any standards for doing so. He also agreed that insurance is an industry very much exposed to effects of the climate change, but he noted that between the information resulting from the forward-looking standard itself and the management commentary there is enough space to report on these effects. Finally, he noted that the management commentary is also the place to report on intangibles and crypto currencies that are not caught by the financial statements.

A recording of the exchange of views is available on the European Parliament website (begins at 09:11, ends at 09:54). There are intermittent problems with the English language and original language soundtrack, all other translations work well.

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