The manual was originally published by ESMA in December 2017. It is intended to provide guidance on issues commonly encountered when generating Inline XBRL instance documents in compliance with the ESEF Regulation. Following feedback from market participants, ESMA decided to publish a second revised version (following a first revision in 2019) of the manual to expand existing guidance and update the guidance included in the publication.

Please click to access the updated manual on the ESMA website.

Question 16 of the EC consultation had asked: "Do you see any further areas in existing financial accounting rules (based on the IFRS framework) which may hamper the adequate and timely recognition and consistent measurement of climate and environmental risks?" Possible answers to choose from had included "impairment and depreciation", "provisions", "contingent liabilities" and "other".

In its response, ESMA writes:

Similarly, the EBA response to the consultation states:

Deloitte supports this stance. In our comment letter, we state: "Existing financial accounting requirements do not in our view hamper the adequate and timely consideration of climate and environmental risks in the recognition and measurement of assets and liabilities of entities in their financial statements."

Please click to access the following additional information:

• Consultation page on the EC website
• ESMA response to the consultation (ESMA website)
• EBA response to the consultation (EBA website)

The deadline for applications for membership of the multi-stakeholder project task force to be set up is 17 August 2020.

Please click for more information in the press release on the EFRAG website.

The project will seek to identify how information about stakeholders can be reported most effectively by examining existing practice and understanding investors' needs in this area.  Of particular interest will be reporting on other stakeholders including customers and suppliers.

The scope of the project will:

• focus on communications targeted towards shareholders but which may be of use to other stakeholders;
• explore companies’ approach to reporting about stakeholders, including how stakeholders’ views are gathered and the communication channels used;
• investigate how companies report on the decisions they are taking in relation to customers, employees, suppliers and the environment in which they operate, including difficult decisions in light of COVID-19;
• discuss which areas of reporting are most challenging for companies;
• consider the extent to which lessons can be learnt from emerging international reporting practice; and
• highlight interesting examples from current reporting practice (across both Section 172 statements and wider reporting).

A press release and further information are available on the FRC website.

The newsletter provides an update of the Lab's current projects and a brief overview of its other activities.  Some highlights include:

• an update on the Lab’s recent recent reports, COVID-19 Resources, action, the future and COVID-19 Going concern, risk and viability.
• an update on recent new projects including a project on corporate disclosure on stakeholders, including statements in response to section 172 of the Companies Act and a project on Video, Virtual and Augmented Reality.
• Other activities of the Lab including work on climate change and the European Single Electronic Format (ESEF).
• A summary of published guidance for companies and auditors regarding COVID-19.

The full newsletter is available on the FRC website here.ull newsletter is available on the FRC website FuThe full newsletter is available on the FRC website herehere

The April podcast (21 minutes) focuses on IFRS Interpretations Committee activities and developments between Janaury and March 2020. Among the topics covered are the various questions discussed at these meetings, including the agenda decisions finalised on the definition of a lease, on training costs and on hyperinflationary foreign operations.

The July podcast (24 minutes) focuses on IFRS Interpretations Committee activities and developments between April and June 2020. Among the topics covered are sale and leaseback transactions, player transfer payments, deferred tax and reverse factoring arrangements.

Please click to access the podcasts through the press release on the IASB website.

ISA (UK) 315 (Revised-July 2020) adopts the revisions made to the underlying international standard issued by the International Auditing and Assurance Board (IAASB).Those revisions are designed to establish a more robust and consistent risk identification and assessment.

ISAE (UK) 3000 adopts the corresponding ISAE issued by the IAASB but has been modified to require that assurance practitioners applying it for engagements that the FRC has designated as "public interest assurance engagements" comply with the FRC's Ethical Standard.  Compliance with ISAE (UK) 3000 will be mandatory for such engagements which will ordinarily be particular engagements for which there is a requirement in law or regulation for an assurance report to be provided by an auditor or other assurance practitioner, or where a clear need has been identified to serve the public interest. Voluntary application to other assurance engagements is permitted.

Please click below for (all links to FRC website):

• Press Release
• ISA (UK) 315 (REVISED-July 2020)
• Feedback Statement and Impact Assessment for ISA (UK) 315
• (ISAE) (UK) 3000
• Feedback Statement and Impact Assessment for (ISAE) (UK) 3000

The objectives of operational separation are to ensure that audit practices are focused on delivery of high-quality audits in the public interest and do not rely on cross subsidy from the rest of the firm.  The desired outcomes include:

• Audit practice governance that prioritises audit quality and protects auditors from influences from the rest of the firm that could divert their focus away from audit quality;
• The total amount of profits distributed to the partners in the audit practice does not persistently exceed the contribution to profits of the audit practice;
• The culture of the audit practice prioritises high-quality audit by encouraging ethical behaviour, openness, teamwork, challenge and professional scepticism/judgement; and
• Auditors act in the public interest and work for the benefit of shareholders of audited entities and wider society.

The FRC has asked the Big 4 firms to agree to operational separation of their audit practices on this basis and to provide a transition timetable to complete implementation by 30 June 2024.

Please click for the press release on the FRC website and the Deloitte press release. 

FRED 75 proposes to amend FRS 104 to clarify the requirement to assess the going concern basis of accounting and require the disclosure of any related material uncertainties when preparing interim financial statements in accordance with FRS 104. These amendments address an unintentional difference between FRS 104 and related IFRS requirements. IFRS Standards require management to assess an entity’s ability to continue as a going concern and disclose any related material uncertainties when preparing interim financial statements.  Although these requirements are not contained within IAS 34 Interim Financial Reporting they apply to condensed interim financial statements prepared in accordance with IAS 34.  FRS 104, which is based on the requirements of IAS 34, does not include any explicit requirements covering the assessment and reporting on the going concern basis of accounting.  However FRS 104 currently requires an entity to include a statement that the same accounting policies are applied in the interim financial statements as compared with the most recent annual financial statements, which would include a statement about the going concern basis of accounting.  The amendments therefore propose amendments to FRS 104 to introduce requirements covering going concern in a similar way to EU-adopted IFRS Standards.  They are are intended to ensure consistency in this regard going forward.

FRED 76 proposes to introduce explicit requirements for accounting for temporary rent concessions for operating leases occurring as a direct consequence of the COVID-19 pandemic.  The FRED proposes amendments to Section 20 Leases of FRS 102 to require entities to recognise changes in operating lease payments that arise from COVID-19-related rent concessions over the periods that the change in lease payments is intended to compensate.  The FRC considers that this would best reflect the economic substance of the benefit of these concessions and their temporary nature and improve the consistency of reporting for users of financial statements. The proposed amendments are restricted to temporary rent concessions occurring as a direct consequence of the COVID-19 pandemic, when any reduction in lease payments affects only payments originally due on or before 30 June 2021.  These changes would apply both to FRS 102 and FRS 105 reporters. 

The comment deadline for both FREDs is 1 September 2020.  The proposals in FRED 75 are expected to apply to interim periods beginning on or after 1 January 2021, and the proposals in FRED 76 are expected to apply to accounting periods beginning on or after 1 January 2020.  In both cases early application will be available.

Click for (all links to FRC website):

• Press release
• FRED 75 ‘Draft amendments to FRS 104 - Going concern'
• FRED 76 'Draft amendments to FRS 102 and FRS 105 - COVID-19-related rent concessions'.
• Our related comment letter on FRED 75.
• Our related comment letter on FRED 76.

The annual report outlines the FRC’s financial position and highlights achievements and challenges in 2019/20, including those related to COVID-19. It also sets out progress made to date as it began to implement the recommendations of the independent review carried out by Sir John Kingman and transition to the Audit, Reporting and Governance Authority (ARGA). During the year it has also carried out a thorough governance review which has resulted in proposed changes to simplify the FRC's structure, clarify responsibilities and improve the speed and effectiveness of decision-making.