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HM Treasury consults on amendments to the financial reporting manual (FReM)

19 Sep 2019

HM Treasury has issued a consultation proposing revisions to the government financial reporting manual (FReM) (2020-2021).

The Government Financial Reporting Manual (FReM) is the technical accounting guide to the preparation of financial statements. It complements guidance on the handling of public funds published separately by the relevant authorities in England and Wales (HM Treasury and the Welsh Government respectively), Scotland (the Scottish Government) and Northern Ireland (the Executive Committee of the Northern Ireland Assembly). The FReM is prepared following consultation with the Financial Reporting Advisory Board (FRAB) and is issued by the relevant authorities.

The revisions have been proposed in light of the Government financial reporting review and a thematic review of the Statement of Parliamentary Supply (SoPS). The proposals include a new four-part structure of the FReM as well as proposals for new and updated chapters.

The full consultation is available on the HM Treasury website.  Comments are requested until 25 October 2019.

Agenda for the October 2019 IFASS meeting

18 Sep 2019

The International Forum of Accounting Standard Setters (IFASS) will meet in London on 1–2 October 2019. This will be the first meeting under 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.

Tuesday, 1 October 2019 (14:00–18:00)

  • Welcome and opening remarks
  • Extractive activities (panel discussion)
  • International financial reporting for non-profit organisations
  • IPSASB update
  • UK developments:
    • Replacement of the FRC by ARGA
    • Proposals for endorsing IFRSs for the UK post-Brexit

Wednesday, 2 October 2019 (08:30-16:45)

  • Government grant receivables and government grant income under IAS 40 (optional)
  • ESG and intangibles (roundtable discussion)
    • KASB research
    • IASB proposals related to ESG and intangibles in the project on management commentary
  • Connecting with stakeholders through use of technology (presentation and roundtable discussion)
  • Goodwill (roundtable discussion)
    • FASB invitation to comment on identifiable intangible assets and subsequent accounting for goodwill
    • Issues identified during KASB and ASBJ research
  • Application of IFRS 16 — Italian experiences
  • Call for volunteers to assist in academic research
  • Closing remarks

New Charities SORP development process announced

17 Sep 2019

The Charities SORP-making body has announced a new process for developing the next Charities SORP.

The SORP-making body, which comprises the Charity Commission for England and Wales, the Office of the Scottish Charity Regulator and the Charity Commission for Northern Ireland, plans to engage with stakeholders earlier in the process of developing the SORP to ensure that any changes best meet user needs. As part of this focus on increased engagement, seven stakeholder groups will be convened as 'engagement partners', to include trustees, preparers, professional advisers, major donors, academics, government and public interest proxies. 

A new, smaller SORP committee will also be formed, comprising 12 members rather than the previous 16 and including a greater weighting of members from smaller charities. 

A summary of the process can be found on the Charity SORP website.

IASB announces seventh research forum

17 Sep 2019

The International Accounting Standards Board (IASB) will host its seventh Research Forum on 2–3 November 2020 in Oxford.

The Forum will be held in conjunction with the journal Accounting and Business Research (ABR). The call for papers inviting submissions that can provide evidence to inform the standard-setting activities of the IASB notes the following areas of particular interest:

  • Performance measures, including alternative (management) performance measures
  • Wider financial reporting and management commentary
  • Better disclosure
  • Comparability of financial information
  • Intangibles
  • Goodwill and impairment
  • Equity accounting
  • Financial Instruments, especially effects analyses
  • Revenue from Contracts with Customers, especially effects analyses
  • Leases, especially effects analyses
  • Any other topics on the IASB research agenda or research pipeline

Please click for more information on the IASB website.

September 2019 IASB meeting agenda posted

13 Sep 2019

The IASB has posted the agenda for its next meeting, which will be held at its offices in London on 24–26 September 2019. There are 15 topics on the agenda.

The Board will discuss the following:

  • Agenda consultation — Proposed approach to developing the request for information
  • Research programme — Research update
  • Implementation matters — Onerous contracts: Costs that relate directly to the contract
  • Classification of liabilities as current or non-current (amendments to IAS 1) — Completion of due process and permission to begin balloting process
  • Business combinations under common control — When to apply which measurement approach
  • Financial instruments with characteristics of equity — Project direction
  • IBOR reform and the effects on financial reporting (Phase 2) — Project plan and preliminary timing
  • Rate-regulated activities
  • Management commentary — Faithful representation
  • Disclosure initiative — IFRS 13 disclosure objectives
  • Primary financial statements
  • SME standard review and update
  • Subsidiaries that are SMEs — research results
  • Extractive activities
  • Post implementation review of IFRS 10–12 — Project update

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.

EFRAG draft comment letter on proposed amendments to IAS 12

13 Sep 2019

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB exposure draft ED/2019/5 ‘Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction — Proposed amendments to IAS 12'.

The exposure draft addresses the uncertainty in practice about how an entity applies the initial recognition exemption in paragraphs 15 and 24 of IAS 12 Income Taxes to transactions that give rise to both an asset and liability on initial recognition and may result in temporary differences of the same amount.

EFRAG is broadly supportive of the changes proposed; however, it questions whether the IASB's approach ('gross method') that considers the unit of account in IAS 12 as being the asset and the liability rather than as a single transaction is the best approach given the complexity. EFRAG also has concerns with the recogniton 'cap' in paragraph 22A(b) for a deferred tax liability, and the consequences of this proposal in subsequent periods.

Comments on EFRAG's draft comment letter are requested by 25 October 2019. For more information, see the press release and the draft comment letter on the EFRAG's website.

ESMA continues series of video tutorials on ESEF

11 Sep 2019

The European Securities and Markets Authority (ESMA) has released the third in a series of tutorial videos designed to guide market participants through the new requirements of European Single Electronic Format (ESEF), which will become effective in 2020.

The new video answers ten questions which are frequently asked by market participants to ESMA and National Competent Authorities on the ESEF Regulation.

Please click to access the seven minute video on YouTube.

IASB publishes project update on goodwill and impairment related to business combinations

10 Sep 2019

The IASB has published an article by IASB member Tom Scott on the status of the Board's goodwill and impairment project following its post-implementation review of IFRS 3, 'Business Combinations'.

Within its goodwill and impairment project, the Board is investigating how companies can provide users of financial statements with better information about mergers and acquisitions (business combinations) at a reasonable cost. This investigation includes the challenging question of how companies should account for goodwill after the business combination.

The six-page article discusses the Board's preliminary views that:

  • "we should enhance disclosure objectives and requirements to improve the information provided to users about an acquired business and its subsequent performance, even if that information must be on a combined basis where the acquired business has been integrated into an existing business;
  • it is not feasible to make the impairment test significantly more effective at recognising impairment losses of goodwill;
  • reintroducing amortisation of goodwill would not provide significantly better information to users;
  • we should reduce the cost and complexity of the impairment test by providing relief from the mandatory annual quantitative impairment test for goodwill;
  • we should also reduce the cost and complexity of the impairment test by simplifying some of the requirements for estimating value in use;
  • we should not allow more intangible assets to be included in goodwill; and
  • we should enhance transparency by requiring companies to present total equity before goodwill in their balance sheets."

The article notes that the Board plans to issue a discussion paper on these issues at the end of 2019.

EFRAG appoints new TEG member

10 Sep 2019

The Board of the European Financial Reporting Advisory Group (EFRAG) has announced the appointment of Olivier Schérer​ to its Technical Experts Group (TEG), effective from 16 September.

Mr Schérer will replace Isabelle Grauer-Gaynor, who is stepping down from EFRAG TEG as of 13 September.

For more information, see the press release on the EFRAG's website.

Responses to the ESMA consultation on short-termism in financial markets

09 Sep 2019

In July 2019, the European Securities and Markets Authority (ESMA) launched a consultation that aimed to gather evidence on potential short-term pressures on corporations stemming from the financial sector. The individual responses to the consultation are now available.

Part of the consultation was a questionnaire intended to support ESMA’s analysis of potential sources of undue short-termism with an aim to identifying areas in which existing rules may contribute to mitigating undue short-termism and areas where the rules may exacerbate short-term pressures.

Section IV of the questionnaire "The role of fair value in better investment decision-making" contained questions on whether and how fair value may impact the capacity of financial reporting to provide relevant and reliable information on equity instruments held for long-term investment purposes. With these questions ESMA wanted to assess how the measurement and disclosure of fair value may impact the selection of a short-or long-term horizon.

Please click to access the press release, which offers access to the responses to the questionnaire, on the ESMA website.

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