EFRAG Board-TEG Joint Meeting June 2019

31 May, 2019

The European Financial Reporting Advisory Group (EFRAG) will hold a Board-TEG joint meeting on 4 June 2019 in Brussels.

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

Death of Thomas E. Jones, former Vice-Chairman of the IASB

31 May, 2019

The members of the IASB and staff of the IFRS Foundation have released condolences on the death of Thomas E. Jones, former Chair of the IASB's predecessor body, the IASC and the first Vice-Chairman of the IASB.

Mr Jones' work as an accounting standard-setter followed a successful career in investment banking. In 2007, Financial Executives International recognised his career achievements by inducting him into the FEI Hall of Fame.

Please click for the statement on the passing of Mr Jones on the IASB website.

IFIAR publishes report of 2018 survey inspection findings

31 May, 2019

The International Forum of Independent Audit Regulators (IFIAR) has published ‘International Forum of Independent Audit Regulators – 2018 Survey of Inspection Findings’ (“the report”). It shows that 37% of audit engagements inspected had at least one finding compared to 40% in 2017. IFIAR comments that "while the downward trend is encouraging, the recurrence and level of findings reflected in the survey indicate a lack of consistency in the execution of high quality audits and the need for a sustained focus on continuing improvement."

IFIAR comprises 55 independent audit regulators from jurisdictions in representing Africa, North America, South America, Asia, Oceania, and Europe. IFIAR provides a forum for regulators to share knowledge of the audit market and share the practical experience gained from their independent audit regulatory activity.

The report summarises the key inspection findings from the audits of listed public interest entities (including systematically important financial institutions) and firm systems of quality control submitted by 45 jurisdictions representing IFIAR’s members. Findings were submitted from the most recent audit inspection reports of members during the twelve months ended 30 June 2018. IFIAR collected information about two categories of activities; inspections performed on firm-wide systems of quality control and inspections of individual audit engagements.

In June 2018 the Financial Reporting Council (FRC) published its own report of audit quality inspection work carried out by its Audit Quality Review (AQR) team.

Click for (all links to IFIAR website):

IASB publishes proposed amendments to IFRS 3 to update a reference to the Conceptual Framework

30 May, 2019

The International Accounting Standards Board (IASB) has published an exposure draft 'Reference to the Conceptual Framework (Proposed amendments to IFRS 3)' with three proposed amendments to IFRS 3 'Business Combinations' that would update an outdated reference in IFRS 3 without significantly changing its requirements. Comments are requested by 27 September 2019.



In March 2018, the IASB issued the 2018 Conceptual Framework and most references to the Framework included in IFRSs were updated to the 2018 Framework at that time. However, paragraph 11 of IFRS 3 Business Combinations, which still refers to the 1989 Framework, was not updated as this could have caused conflicts for entities applying IFRS 3.

Potential conflicts occur as the definition of assets and liabilities in the 2018 Framework differ to those in the 1989 Framework potentially leading to day 2 gains or losses post-acquisition for some balances recognised.

The IASB has now identified three possible amendments to IFRS 3 that would update IFRS 3 without significantly changing its requirements.


Suggested changes

The changes proposed in ED/2019/3 Reference to the Conceptual Framework (Proposed amendments to IFRS 3):

  • update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Framework;
  • add to IFRS 3 a requirement that, for transactions and other events within the scope of IAS 37 or IFRIC 21, an acquirer should apply IAS 37 or IFRIC 21 (instead of the Conceptual Framework) to identify the liabilities it has assumed in a business combination; and
  • add to IFRS 3 an explicit statement that an acquirer should not recognise contingent assets acquired in a business combination.

The exposure draft also notes alternative approaches considered by the Board as well as the Board's reasons for not choosing those.

Comments on the proposed changes are requested by 27 September 2019.


Effective date

The exposure draft does not contain a proposed effective date for the amendments as the intention is to decide on it after the exposure period. However, it is already clear that early application would be permitted if an entity also applies all other updated references (published together with the updated Conceptual Framework) at the same time or earlier.


Additional information

Please click for:

Government approves legislation amending directors' remuneration requirements

30 May, 2019

The Companies (Directors' Remuneration Policy and Directors' Remuneration Report) Regulations 2019 ("the Regulations") have been approved.

The Regulations, which implement the requirements of the Revised Shareholder Rights Directive (SRD), will come into force on 10th June 2019.

The changes to remuneration reporting will come into effect in respect of financial years starting on or after 10th June 2019.

The changes to the requirements on the remuneration policy will apply in respect of any new policy brought to shareholders for approval on or after 10th June 2019. Existing policies before then will not be affected, and this policy can continue until the end of its maximum three year period, or an earlier date that the company brings a policy to vote.

For more detail on the specifics of the Regulations, please see the previous news article.

A link to the Regulations is available here.

Investment Association calls on companies to improve the transparency of their approach to paying dividends

28 May, 2019

The Investment Association (IA) is calling on companies to improve the transparency of their approach to paying dividends.

The call comes after research into dividend payments carried out by the IA in response to a request by the Secretary of State for the Department for Business, Energy and Industrial Strategy (BEIS) to investigate a concern that an increasing number of companies are bit seeking shareholder approval for dividend distributions at their AGMs.

Findings of the research indicate that:

  • 22% of listed companies paying ordinary dividends did not seek an annual shareholder vote on those distributions.
  • this practice is particularly prevalent within the largest twenty companies in the FTSE ALL-Share and also amongst Investment Companies.
  • Over half of these Investment companies put forward a resolution on a ‘dividend policy’ typically detailing the format that dividend distributions would take throughout the year but not seeking approval for the total dividend amount.

Engagement was sought with FTSE 100 companies who did not seek shareholder approval for their dividend payments and with the Association of Investment Companies (AIC) to understand the reasons why a shareholder vote was not sought. Two main drivers behind this behaviour were identified:

  1. Companies either argued that company-specific operational features make paying dividends without shareholder approval appropriate, due to regulatory requirements, legal or tax structures.
  2. Companies argued this was in response to growing investor demand for dividends to be paid quarterly to provide a regular income stream, with the timing of the AGM vote inconvenient in relation to the timing of quarterly payments.

The IA indicates that by not seeking a shareholder vote on dividend distributions “an essential mechanism for accountability to shareholders is being undermined”. It continues:

A shareholder vote is one mechanism by which transparency and accountability to shareholders can be exercised – the majority of companies do employ this. There may be some legitimate reasons for not providing this opportunity, in which case transparency and accountability to shareholders should, as a matter of principle, be achieved by other means.

In response to the findings the IA recommends:

all listed companies, including those that put a dividend resolution to shareholders, should as a minimum, articulate a ‘distribution policy’. This policy would include their long-term approach to making decisions on the amount and timing of returns to shareholders, including dividends, share buybacks and other capital distributions within the context of any relevant legal or financial constraints.

The IA has indicated that it will develop best practice guidance on a ‘distribution policy’ in Autumn 2019. It will also make recommendations to the Government as to whether a shareholder vote on the distribution policy and/or yearly distributions should be mandatory.

A press release and the report is available on the IA website.

IASB issues podcast on latest Board developments

28 May, 2019

The IASB has released a podcast featuring Chair Hans Hoogervorst, Vice-Chair Sue Lloyd, and technical staff member Matt Tilling to discuss the deliberations at the May 2019 IASB meeting as well as other recent developments.

The podcast features discussions of the following topics in more detail (length of the podcast: 13 minutes):

The podcast can be accessed through the press release on the IASB website. More information on the topics discussed is available through our comprehensive notes taken by Deloitte observers at the May IASB meeting.

FRC makes amendments to FRS 102

24 May, 2019

The Financial Report Council (FRC) has made amendments to Section 28 of FRS 102.

The amendments, which were consulted on within Financial Reporting Exposure Draft (FRED) 71 - Draft amendments to FRS 102 – Multi-employer defined benefit plans, respond to a current financial reporting issue by introducing new requirements to Section 28 of FRS 102 requiring that the impact of transition from defined contribution accounting to defined benefit accounting be presented in other comprehensive income.

Such a transition is required by FRS 102 when sufficient information becomes available for an employer participating in a multi-employer defined benefit plan to apply defined benefit accounting for the first time. The amendments do not affect the requirement to recognise the relevant liability (or asset) in relation to the plan.

The amendments are effective for accounting periods beginning on or after 1 January 2020, with early application permitted.

A press release and the amendments are available on the FRC website.

New appointment to the FRC

24 May, 2019

The Financial Reporting Council (FRC) has appointed David Rule to a newly established position as Executive Director of Supervision.

David will lead the FRC's audit quality and corporate reporting review functions and sit on the FRC's Executive Committee.  He will be responsible for overseeing the supervision and monitoring of audit and company reporting.

The press release can be found on the FRC website, here.

Report on the spring 2019 IFASS meeting

23 May, 2019

A report has been issued summarising the discussions at the meeting of the International Forum of Accounting Standard Setters (IFASS) held in Buenos Aires on 28 and 29 March 2019.

As reported earlier, among the topics discussed at the meeting were amendments to IFRS 17 and the EC fitness check on public reporting by companies.

The full list of topics discussed at the meeting was:

  • 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
  • Presentation of finance cost - IAS 1, IFRS 7, IAS 23
  • 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
  • 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
  • Financial instruments with characteristics of equity: Preferred approach and IFRIC 2
  • Improving the impairment testing model in IAS 36 Impairment of Assets

The meeting also saw the handover of official duties to the incoming IFASS Chair Mr. Yasunobu Kawanishi (Accounting Standards Board of Japan, ASBJ).

The next meeting of the IFASS will take place in London in October 2019.

Please click for the full report from the meeting.

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