November

IFRS Foundation Trustees and Due Process Oversight Committee hold October 2019 meeting

07 Nov, 2019

The IFRS Foundation Trustees and the Due Process Oversight Committee (DPOC) met in New York on 15–17 October 2019.

Meeting ac­tiv­i­ties included the following:

  • Executive session:
    • Report of the Executive Director — The Trustees received a report from the Executive Director Lee White on ac­tiv­i­ties since the last meeting.
    • Strategy review — The Trustees discussed non-financial reporting including sustainability reporting.
    • Gov­er­nance issues — The Trustees received a presentation on the annual Risk Review for the Foundation and discussed managing and mitigating risk.
    • Op­er­a­tions analysis — The Trustees received pre­sen­ta­tions on the work of the Foundation’s Legal and Compliance team.
    • Committee reports — The Trustees discussed reports from the Business Process and Technology Committee, the Audit and Finance Committee, the Human Capital Committee, the Nom­i­nat­ing Committee, and the DPOC. (A report of the DPOC meeting is attached to the meeting summary.)
  • IASB Chairman’s report — The Chair of the IASB provided the Trustees with a general update on the IASB’s technical ac­tiv­i­ties, es­pe­cially on the IBOR reform, proposed amendments to IFRS 17, accounting for goodwill, and the 2020 agenda consultation.
  • External engagement — The Trustees met with Nicolas Veron and Curtis Ravenel. In addition, they held a stakeholder event with the CFA Institute on how financial reporting can remain relevant in a changing world. The event featured a keynote speech by Bob Pozen and a panel discussion between IASB Chair Hans Hoogervorst and FASB Chair Russell Golden.

For more information, see the press release, which also offers an article on the stakeholder event, and the full summary on the IFRS Foun­da­tion Trustees’ and DPOC meeting on the IASB’s website.

EFRAG publishes October 2019 issue of 'EFRAG Update'

07 Nov, 2019

The European Financial Reporting Advisory Group (EFRAG) has published an 'EFRAG Update' summarising public technical discussions held and decisions made during October 2019.

The Update reports on the meeting of the EFRAG Board on 8 October, the conference call of the EFRAG Technical Expert Group (EFRAG TEG) on 14 October and the meeting of the European Lab Steering Group (European Lab SG) on 15 October.

The Update also lists EFRAG publications issued in October:

Please click to download the October EFRAG update from the EFRAG website.

ICAEW webinar on hot topics and tips for the 2019/20 reporting season

07 Nov, 2019

The Institute of Chartered Accountants in England and Wales (ICAEW) will be hosting a webinar covering current hot topics and tips for the 2019/20 reporting season.

The webinar will cover:

  • Findings from the Financial Reporting Council’s (FRC’s) Annual review of corporate governance and reporting 2018/19 and recent thematic reviews
  • Important aspects relating to new accounting standards and other regulatory developments affecting 2019/20 annual reports
  • The impact of wider political and economic factors

Although aimed primarily at IFRS reporters, the topics and practical tips covered in the webinar will also be relevant to larger entities reporting under UK GAAP.

Further details are available on the ICAEW website.

IFRS Foundation appoints three new Trustees

07 Nov, 2019

The IFRS Foundation has announced the appointment of Alexsandro Broedel, Joanna Perry, and Maria Theofilaktidis as Trustees of the IFRS Foundation. Their appointments will begin on 1 January 2020 and will expire on 31 December 2022.

Alexsandro Broedel is Group Executive Finance Director and Investor Relations Head at Itau Unibanco in Brazil.

Joanna Perry holds a variety of senior non-executive positions for both public and private organisations in New Zealand and is serving the last few weeks of her second term as Chair of the IFRS Advisory Council.

Maria Theofilaktidis is Executive Vice-President, Chief Compliance Officer and Head of Enterprise Risk for The Bank of Nova Scotia.

In addition, the current IFRS Foundation Trustees Else Bos, Su-Keun Kwak, and Guangyao Zhu have been reappointed to serve a second three-year term, also beginning on 1 January 2020.

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

Summary of the October 2019 CMAC meeting

06 Nov, 2019

Representatives from the International Accounting Standards Board (IASB) met with the Capital Markets Advisory Council (CMAC) in London on 10 October 2019. Notes from the joint meeting have now been released.

The topics discussed at the meeting included:

  • Rate regulated activities.
  • Post-implementation review of IFRS 10, IFRS 11, and IFRS 12.
  • Agenda consultation.

The next meeting will be held on 26 March 2020.

For more in­for­ma­tion, see the meeting page and the meeting summary on the IASB's website.

FRC publishes the results of its IFRS 16 thematic review

06 Nov, 2019

The Financial Reporting Council (FRC) has published the results of its thematic review looking at the interim disclosures made by companies in the first year of application of IFRS 16 “Leases”.

The review identified that there are a number of areas where disclosure could be improved. Notwithstanding that half-yearly disclosures are less extensive than those of a full year, the FRC were of the opinion that “some companies did not sufficiently explain the impact of adopting IFRS 16”. The FRC expects that disclosures in full year reports will be more comprehensive.

The FRC’s key findings were that the following disclosures could be improved:

  • information about key judgements made on adopting the new standard, explaining the specific judgements made and the effect on the accounts;
  • for modified retrospective adopters:
    • clearer communication of transition choices;
    • better explanations of the difference between the IAS 17 commitments and the IFRS 16 lease liability; and
    • clarification that alternative performance measures have not been restated and where new APMs are used that disclosure is consistent with ESMA’s Guidelines.

The FRC indicates that the best disclosures were those that were specific to the entity. Some examples of disclosure from interim accounts that the FRC considers good are provided in the report.

The FRC comments:

We encourage companies to carefully consider the findings of this review when determining the extent of disclosures included within their next annual reports. Companies should aim to ensure not only that mandatory disclosure requirements have been met, but that they have addressed the disclosure objective of the standard. Starting with this objective will go a long way to ensuring that readers understand the impact of IFRS 16 on the company.

A press release and the full thematic review are available on the FRC website.

FRC publishes a report on developments in audit

06 Nov, 2019

The Financial Reporting Council (FRC) has published a report on developments in audit.

The report sets out the work that the FRC has undertaken in the last year to drive the delivery of consistent, high quality audit by UK firms, and address the risks that stand in the way of that.

The report covers:

  • Audit quality and the FRC’s response. This includes:
    • FRC monitoring results;
    • FRC enforcement;
    • Audit firm monitoring and supervision;
    • Audit monitoring of non-public interest entity audits; and
    • Regulatory supervisory body enforcement.
  • A section on international influence and future developments.
  • A number of appendices including the approach taken to monitor audit quality and the results for the seven biggest firms

Key findings from the report are:

  • Audit quality is not reaching the standards that the FRC expects. Results of the audit quality inspection work carried out by the FRC’s Audit Quality Review (AQR) team for 2018/19 indicated that 75% (73% in 2017/18) of FTSE 350 audits reviewed from the major audit firms were assessed as “good” or “requiring limited improvements”. No firms achieved the FRC’s audit quality target for 90% of FTSE 350 audits to have “no more than limited improvements” by 2018/19.
  • Auditors “struggle” to sufficiently challenge management in areas such as long-term contracts, goodwill impairment and the valuation of financial instruments.
  • “Routine procedures” when auditing revenue are not being performed.
  • With respect to work on internal controls, the FRC’s work indicated that a number of auditors “were not properly identifying relevant controls in areas of significant risk or were not adapting their audit procedures sufficiently when controls were found to be deficient”.
  • “Inconsistent work” on the front half of annual reports which did not “always meet the requirements of Auditing Standards”.
  • Improvements are required in firms’ root-cause analysis and response procedures.

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

New appointments to the FRC Conduct Committee and Audit Quality Review Committee

05 Nov, 2019

The Financial Reporting Council (FRC) has appointed Andrew Johnston to the Conduct Committee and Colin McCarthy-Lille to the Audit Quality Review Committee.

Both Andrew and Colin's term begins on 1 November 2019.

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

IASB Chair discusses the future of financial reporting

05 Nov, 2019

In a speech at the Eumedion Annual Symposium, IASB Chair Hans Hoogervorst discussed the Board’s projects on primary financial statements (PFS), management commentary and sustainability reporting.

Mr Hooger­vorst began with an overview of the PFS project and provided comments related to new subtotals, such as operating profit and profit before financing and tax. He also discussed the need for greater transparency and discipline in the use of non-GAAP measures.

Next, Mr Hooger­vorst commented on man­age­ment com­men­tary to provide broader financial in­for­ma­tion, such as the impact of in­tan­gi­ble assets. In addition, the project will revise the Practice Statement to accommodate the increase in interest in sustainability reporting.

Lastly, he agreed with the Eumedion’s green paper, Towards a global standard-setter for non-financial reporting, which called for the need for consolidation in non-financial reporting.

For more in­for­ma­tion, see the tran­script of his speech on the IASB’s website.

FRC launches 'Horizons' project series

05 Nov, 2019

The Financial Reporting Lab is inviting investors and companies to participate in a new project on the disclosure of business models, strategy and the longer-term. The project is part of a new series focused around integrating longer-term time horizons into reporting.

The first reporting topic project will consider what users want from business model and strategy disclosures and how companies might best communicate the longer-term.  The scope of the project is likely to: 

  • explore how companies develop, monitor and communicate their business model and strategy;
  • examine how companies include a longer-term focus in their reporting;
  • consider how companies communicate uncertainty in their disclosures;
  • analyse how investors use this information in their decision-making process and identify whether emerging reporting meets investor needs;
  • discuss which areas of reporting are most challenging for companies; 
  • consider the extent to which UK companies can learn lessons from emerging international reporting practice; and 
  • highlight best practice in current company reporting. 

A final report is likely to be published in autumn 2020.

Please click for more information on the FRC website.

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