The FRC have indicated that 2019/20 will be a year of transition for the FRC. In response to the recommendations of Sir John Kingman’s Independent Review, the Department for Business, Energy and Industrial Strategy (BEIS) is consulting on proposals to replace the FRC in its current form with a new statutory regulator to be called the Audit, Reporting and Governance Authority (ARGA). The FRC indicates that it recognises the need for change and “believe the speedy implementation of the recommendations of the Independent Review can help increase public confidence in audit, reporting and governance in the UK”.

During 2019/20 the FRC’s strategic priorities include:

• Supporting the transition to the new Audit, Reporting and Governance Authority (“ARGA”).
• Driving a step change in audit quality through the use of its powers to set audit standards and its monitoring and supervision of auditors.
• Promoting the quality and usefulness of corporate reporting through increasing the number of corporate reporting reviews undertaken and focusing on those areas that it believes boards and preparers needs to address. These reviews will also cover the whole of a company’s annual report.
• Promoting corporate governance and investor stewardship that contribute to trust in business. The FRC will extend its monitoring of practice and reporting on corporate governance and assess how effectively companies are implementing the new UK Corporate Governance Code.
• Working with Government to implement an effective regulatory framework following EU exit:

The FRC also sets out its proposed budget for 2019/20 for expenditure and funding. Overall, the funding requirement is expected to increase by 11% and this increase is expected to fund an expansion in audit quality reviews, audit firm monitoring and supervisory approach and enforcement work.

Comments are requested until 08 May 2019. 

The press release and Draft Plan and Budget 2019/20 are available on the FRC website.

The regulations set out some of the changes to be made to statutory requirements in relation to the application of IFRS in the UK after exit day, 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 particular, they repeal the IAS Regulation so that it will not apply to the UK and introduce a new legal term ‘UK-adopted international accounting standards’ for IFRS as adopted by the UK. This will apply to UK companies that choose this framework, or which are required to use this framework, for accounting periods commencing on or after exit day. IFRS as adopted by the EU immediately before exit day is preserved as the initial set of IFRS as adopted by the UK on exit day. The regulations also provide for a UK mechanism for the adoption of IFRSs; endorsement will be by the Secretary of State but allows for delegation of this function.

Please click to access the regulations here.

Our related Need to know publication is available here.

The alignment dashbord was updated for the March 2019 IPSASB meeting and now also includes IPSAS 42 Social Benefit issued in January 2019.

Please click to access the updated dashboard on the IPSASB website.

In this context, please also so our 2019 edition of IPSAS in your pocket published yesterday.

The main conference programme includes:

Day 1

• Chairman’s keynote
• Keynote address
• IASB update
• Break-out sessions:
  • Business combination under common control
  • Goodwill and impairment
  • Management commentray
  • Implementation and application of standards

Day 2

• Better Communication — What the Board is doing to improve communication in financial reporting
• Electronic reporting – Why everyone should care about the IFRS Taxonomy
• Break-out sessions (repeated from day 1)
• Getting the best from IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers
• Q&A session with IASB Members and staff

There are also three pre-conference special interest workshops.

More details, including registration information, are available on the conference website. 

The Amendments, published in October 2018 aimed at resolving the difficulties that arise when an entity determines whether it has acquired a business or a group of assets.

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

EFRAG also considers that the overall benefits of the amendments are likely to outweigh the associated costs to implement them.

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.

The IFRS Taxonomy 2019 is consistent with IFRSs as issued by the IASB at 1 January 2019 and includes changes to the IFRS Taxonomy 2018 such as:

• disclosure requirements in IFRS 13 Fair Value Measurement; and
• improvements including (1) the introduction of implementation notes and duration type elements, (2) the removal of entry points without documentation labels, and (3) other improvements.

The IFRS Foundation has also published IFRS Taxonomy 2018—Update 1 Common Practice (IFRS 13 Fair Value Measurement) and IFRS Taxonomy 2018—Update 2 General Improvements. The IFRS Taxonomy 2019 incorporates the changes resulting from these two updates.

For more information, see the press release and the IFRS Taxonomy 2019 page on the IASB's website.

European enforcers examined the financial statements of about 950 issuers representing an average examination rate of 16% of all IFRS issuers with securities listed on regulated markets. These examinations resulted in 328 actions taken to address material departures from IFRS.

Enforcers also assessed the non-financial information related to ESG for 819 issuers, covering approximately 31% of the total estimated number of issuers subject to the new requirements, resulting in 51 enforcement measures.

In addition, 746 management reports were reviewed for evaluating compliance with ESMA’s guidelines on alternative performance measures, covering around 15% of all IFRS listed issuers in Europe against which were taken 136 corrective actions.

Please click to access the full report on the ESMA website. ESMA has also updated its compliance table showing which competent authorities have informed ESMA that they comply, do not comply or intend to comply with the ESMA’s guidelines on the enforcement of financial information.

One of the awards is for ‘Communicating integrated thinking’, and is open to organisations that are demonstrating clearly, through communicating to their providers of financial capital, how sustainability is embedded into their overall strategy and decision making process, and how this integrated thinking is contributing to a sustainable business model which delivers long-term value.

Other categories recognise organisations who embed an integrated approach into their decision making; innovative projects; financial services organisations who integrate long-term thinking; sustainable financial products; and individuals who drive change through education, training and academia. This year there is an additional Judges Award to be presented, recognising Climate Leadership, which will be selected from the finalists from across all the categories.

Founded by Institute of Chartered Accountants in England and Wales (ICAEW) and The Prince’s Accounting for Sustainability Project (A4S) and in partnership with Deloitte, these global awards recognise financial leadership in driving sustainable economies.

Last year’s winners and finalists include Salesforce (US), Coca Cola HBC (Switzerland), Solvay SA (Belgium), Standard Bank (South Africa), Econet Life (Zimbabwe), Stora Enso (Finland), and Heathrow Airport (UK).

Find out more information about the Awards, including details on the judging process and how to enter (by 17 May), as well as interviews with last year’s winners at www.financeforthefuture.org

The overview provides insights into:

• why the research was undertaken;
• what the research is about;
• key research findings and observations; and
• what the standard-setters recommended to the IASB.

The IASB plans to consider the results of the research on hybrid plans when assessing priorities in its next agenda consultation.

Please click to access the overview on the AcSB website.

The Corporate Reporting Dialogue (CRD), via an online survey, will consult stakeholders on how to support effective disclosures, addressing the Task Force for Climate-related Financial Disclosures (TCFD) recommendations, and identifying how non-financial metrics relate to financial outcomes and how this can be integrated in mainstream reports.

As well as an online survey (which closes on 30 April 2019), the consultation process will also include regional stakeholder engagement roundtables to be held in locations around the world up until the end of May 2019.

Information gathered from the consultation period will inform an initial report due for publication in September 2019, showing the linkages of the TCFD recommendations with the respective frameworks and the linkages between the frameworks.

Further information is available on the CRD website here.