Academies accounts direction 2019 to 2020 published

19 Jun, 2020

The Education and Skills Funding Agency has published the ‘Academies accounts direction 2019 to 2020’ (“The accounts Direction”). The Accounts Direction 2019 to 2020 is a guidance pack for academy trusts and their auditors to use when preparing their annual reports and financial statements for accounting periods ending 31 August 2020.

The Accounts Direction is based upon the Charities Statement of Recommended Practice (SORP) 2019, Financial Reporting Standard (FRS) 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and other relevant guidance applicable to academy trusts.

It supplements the Academies Financial Handbook and has the same status in that it derives from requirements set out in academy trusts’ funding agreements with the Secretary of State for Education.

The Accounts Direction outlines the requirements for each academy trust to:

  • prepare an annual report and financial statements to 31 August
  • have these accounts audited annually by independent registered auditors
  • produce a statement of regularity, propriety and compliance and obtain a regularity assurance report on this statement from the auditor
  • submit the audited accounts and auditor’s regularity assurance report to ESFA within 4 months of its year end, usually by 31 December
  • file the accounts with the Companies Registrar as required under the Companies Act 2006
  • publish the audited accounts on the trust’s website, usually by 31 January

The full Accounts Direction is available from the Education and Skills Funding Agency website.

Accountancy Europe publishes follow-up paper on interconnected standard-setting

16 Jun, 2020

In December 2019, Accountancy Europe has published a paper describing and calling for a global solution to interconnected standard-setting that can meet the need for reliable, consistent information in non-financial reporting that is interconnected with financial reporting. A follow-up paper has now been made available that analyses the feedback received, provides an update on the latest EU and global developments, and reflects on a way forward.

As reported in April 2020, the responses to the cogito paper show strong support for a global solution to non-financial reporting. Accountancy Europe summarises the key takeaways from the comment letters received as follows:

  • The ultimate objective should be a system solution to deliver global NFI reporting standards connected to financial information.
  • The ‘system solution’ could be achieved in steps such as bilateral moves to closer align or converge NFI reporting standards, policy developments, and expand the mandates for multilateral organisations.
  • A ‘building blocks’ approach could address global challenges and varying policy needs with a core set of global metrics for NFI reporting to ensure comparability and address global challenges and with optional further blocks to reflect jurisdictional priorities or address sector-specific topics.
  • Quickest progress could be made by building on the best of NFI frameworks and standards (CDP, CDSB, GRI, and SASB).
  • The European Union should collaborate with different organisations to help catalyse a global solution.

Please click to access the follow-up paper on the Accountancy Europe website.

Accountancy Europe recommends actions for the public sector in the context of COVID-19

03 Jun, 2020

Accountancy Europe has analysed short-term and long-term actions that could support the public sector in countering the pandemic's impact, among them many actions with regard to transparency and reporting.

Accountancy Europe notes that the COVID-19 pandemic has resulted in rapid deployment of government financial resources and development of support programmes. As governments should be very transparent about the effects of this, the recommended short-term actions include:

  • Controls over public sector expenditure have been relaxed. It is essential that governments are transparent as to the amount of funds received by beneficiaries and that such payments are retrospectively audited to ensure they have been correctly used.
  • Public sector entity reporting and auditing requirements may need to be temporarily relaxed in certain circumstances. But transparency is important, and they should report what truly matters.
  • Central governments should urgently provide guidance for public sector entities on reporting of going concern, post balance sheet events and management commentary.

Accountancy Europe also notes that it will not be business as usual once the crisis is over and that governments should seize the opportunity to drive forward programmes that support long-term fiscal resilience. The recommended long-term actions, therefore, include:

  • Public sector balance sheets will be more important than ever with public sector assets and liabilities set to balloon.
  • Post coronavirus crisis, the public sector finances will need to be restored and economies will need a kick-start. Robust accruals-based accounts provide the foundation necessary for forward looking estimates and economic models.
  • Governments will need record levels of borrowing, much of it from open markets, and investors will want to see reliable, internationally comparable and timely information. Adopting internationally recognised public sector accounting standards (IPSAS) would provide such foundations.

The actions recommended by Accountancy Europe are available in a summary overview, an in-depth analysis of the short-term actions and an in-depth analysis of the long-term actions.

Comprehensive project update on business combinations under common control

30 Jun, 2020

The IASB is currently working on a research project on combinations of businesses under common control as IFRS 3 'Business Combinations' only covers how to account for mergers and acquisitions between unrelated parties. IASB member Gary Kabureck has compiled a comprehensive project update that summarises and discusses the preliminary views the Board has so far reached in the project.

Mr Kabureck's update is structured along the following ten questions:

  1. What are these business combinations?
  2. Why is the Board doing the project?
  3. What is the focus of the project?
  4. What has the Board heard?
  5. Why not a single method in all cases?
  6. When would the acquisition method be applied?
  7. When would a book-value method be applied?
  8. What about costs to companies?
  9. How would financial reporting improve?
  10. What happens next?

Please click to access the comprehensive and informative update on the IASB website.

DPOC to hold conference call on 10 June

05 Jun, 2020

The Due Process Oversight Committee (DPOC) of the IFRS Foundation has published an agenda and papers for a conference call to be held on 10 June 2020. The DPOC meeting is part of the general meeting of the IFRS Foundation Trustees that will be held (non-public) on 9-11 June 2020.

The DPOC will discuss:

  • Introduction and actions from the DPOC meeting held on 18 February 2020 and public call held on 16 April 2020
  • Technical Activities — Update report on behalf of the International Accounting Standards Board
  • Formal approval for publication of the revised Due Process Handbook.
  • Correspondence

Agenda papers for the meeting are available on the IASB's website.

EFRAG final comment letter on deferral of IAS 1 effective date ED

05 Jun, 2020

The European Financial Reporting Advisory Group (EFRAG) has published its final comment letter on the IASB exposure draft ED/2020/3 'Classification of Liabilities as Current or Non-current - Deferral of Effective Date (Proposed amendment to IAS 1)'.

In the final comment letter, EFRAG agrees with the proposals in the exposure draft published on 4 May 2020 that would defer the effective date of the January 2020 amendments to IAS 1 by one year.

EFRAG acknowledges that there may be related operational consequences of the amendments, but opines that the advantages of a deferral during this time of significant disruption due to COVID-19 would outweigh the disadvantages, as earlier application of the amendments will continue to be permitted. 

EFRAG also agrees with the IASB's conclusion that no additional disclosure requirements are needed as part of the proposed amendment, as paragraph 30 of IAS 1 will provide for the appropriate requirements.

For more information, see the press release and the final comment letter on the EFRAG website.

EFRAG issues draft endorsement advice on 'Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)'

06 Jul, 2020

The European Financial Reporting Advisory Group (EFRAG) has issued a draft endorsement advice letter and a separate invitation to comment relating to the use in the European Union (EU) of 'Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)' ('the Amendments').

The Amendments change the effective date of the temporary exemption from IFRS 9 from 1 January 2021 to 1 January 2023.

EFRAG recommends the endorsement of the Amendments. EFRAG’s initial assessment is that the Amendments meet the technical requirements of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards.

Comments are required by 03 July 2020

For more information, see the press release, draft endorsement advice letter and the invitation to comment on the EFRAG’s website. EFRAG has also updated its endorsement status report which is available here.

EFRAG moves quickly on endorsement advice on IFRS 16 amendment

03 Jun, 2020

The European Financial Reporting Advisory Group (EFRAG) has issued final endorsement advice for 'Covid-19-Related Rent Concessions (Amendment to IFRS 16)' not even a week after the amendment was issued by the IASB.

EFRAG assesses that the amendment meets the technical endorsement criteria of the IAS Regulation and is conducive to the European public good. It therefore recommends its endorsement.

The European Commission's Accounting Regulatory Committee's (ARC) vote, the next step in the endorsement process, is expected to take place later in June, however, final endorsement is currently expected not before "Q3/Q4 2020".

Please click to access the final endorsement advice letter and a corresponding press release on the EFRAG website.

EFRAG publishes May 2020 'EFRAG Update'

05 Jun, 2020

The European Financial Reporting Advisory Group (EFRAG) has published an 'EFRAG Update' summarising public technical discussions held and decisions made during May 2020.

EFRAG undertakes first step in the endorsement process for IFRS 4/IFRS 9 amendment

26 Jun, 2020

Yesterday, the International Accounting Standards Board (IASB) issued in addition to 'Amendments to IFRS 17' also 'Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)'. While the two pronouncements result from the same project, publishing two documents instead of one will help the endorsement process for the amendments in the European Union.

Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4) defers the fixed expiry date of the exemption in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments from annual periods beginning on or after 1 January 2021 to annual periods beginning on or after 1 January 2023. Therefore, in order to be meaningful to European issuers, the amendment needs to be endorsed by the fourth quarter of 2020. As a first step, EFRAG has now published draft endorsement advice and in view of the urgency of the matter requests comments on it by 3 July 2020. As a next step, EFRAG intends to issue final endorsement advice on 7 July 2020.

Please click for the press release on the EFRAG website, which offer access to the draft endorsement advice and additional information.

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