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December

BEIS proposes shortening accounts filing deadlines by three months, changing small and micro exemptions and improving the financial information which is filed with Companies House

16 Dec 2020

The Department for Business, Energy and Industrial Strategy (BEIS) has published a consultation on improving the financial information which is filed with Companies House.

The Government believes there are opportunities to improve the way financial information is filed with, and published by, Companies House. It is seeking to deliver benefits for those filing information, the users of that information, for Companies House and for the rest of government.

The headline proposals are to:

  • Shorten the time limits for filing annual accounts at Companies House from six months to three months for public companies (plcs) and from nine months to six months for private companies;
  • Require all accounts filings to be digital with full i-XBRL tagging;
  • Introduce a ‘file with government once’ approach which would also cover tax filings;
  • Require directors to make a formal declaration of entitlement to small and micro company accounting exemptions;
  • Remove some small and micro company exemptions; and
  • Give Companies House greater powers to make checks on financial information.

The proposals in the consultation seek to:

  • Deliver efficiencies for filers, users and Companies House by requiring digital submission of accounts in a machine-readable format, bringing the UK into line with global best practice;
  • Expand the use of tagging standards to make comparison and bulk analysis of accounts simpler for investors and assist businesses seeking investment;
  • Simplify the multiple processes for filing financial information across Companies House and HMRC systems, and explore opportunities for filing financial information once with government;
  • Tackle fraud and error by closing known loopholes in filing requirements and address problems of companies filing the wrong set of accounts;
  • Improve the quality and value of information on the register by reviewing the timescales for delivering accounts and exploring options to improve how information is displayed; and,
  • Require additional information to be submitted with accounts to improve their statistical and analytical value.

The consultation sets out proposals under three themes:

How information is submitted to Companies House

The first part of the consultation focuses on how accounts are delivered to Companies House and includes:

  • Proposed new timescales for accounts to be filed. It is proposed to cut the time limit for filing accounts from six months to three months for a plc and from nine months to six months for a private company. The Government states that this will improve accuracy as financial information is often significantly out of date before it is filed with Companies House.
  • Options for progressing towards filing once with government which would also cover tax filings where the same set of accounts would be received by both Companies House and HMRC.
  • Proposals to require accounts to be delivered digitally and to introduce full tagging of accounts in line with the requirements that are already in place when filing with HMRC. The consultation indicates that this will be an important step towards any future plans for companies to be able to file once with the government.

What information should be filed at Companies House

This part of the consultation outlines the information that is currently required by Companies House and asks whether further information might improve the value of the register. It includes:

  • A proposal that company directors should confirm the company’s eligibility to file small or medium-sized accounts under Part 15 of the Companies Act. Under the proposals all three threshold conditions set out in Part 15 of the Act (turnover, balance sheet and number of employees) will be required to be disclosed by all companies. It is proposed that the director(s) will have to confirm that the company meets the threshold conditions to file under the regime being used. In the case of dormant accounts being filed, it is proposed that the declaration will confirm that the company is not trading and meets the criteria for filing dormant accounts.
  • Proposals which will also see Companies House introduce validation checks to ensure that the threshold conditions match the requirements for the filing regime being used. Additionally the Government proposes to create an offense if a false declaration is made by director(s).
  • Proposals for revising the small company accounts filing options. These include proposals to:
    • Remove the current filing exemptions whereby small and micro companies do not need to file their profit and loss account.
    • Require micro entities to provide more information in accounts filed at Companies House.
    • Abolish ‘abridged accounts’ which enable small companies to omit some information from their profit and loss account and balance sheet prepared for members and for filing.

What Companies House does with this information

The final part of the consultation explores what Companies House should do with information it receives in accounts. It:

  • Sets out proposals to increase the checking of accounts. This would include a check by Companies House to ensure that the information provided is coherent, complete for a company of that size/type and consistent with accounts submitted to other relevant agencies.
  • Asks for views on how financial information could be better displayed on the register.

Responses are requested by 3 February 2021.

A press release and the full consultation are available on the BEIS website.

Creation of new IFRS SSB

03 Dec 2020

Mark Carney, UN Special Envoy for Climate Action and Finance, has commented on the IFRS Foundation Trustees' sustainability consultation and stresses that he endorses the creation of new IFRS Sustainability Standards Board (SSB).

In September 2020, the Trustees of the IFRS Foundation published a consultation paper to assess demand for global sustainability standards and, if demand is strong, assess whether and to what extent the Foundation might contribute to the development of such standards. The paper noted the option of creating the SSB. The new board could operate alongside the IASB under the same three-tier governance structure, build on existing developments, and collaborate with other bodies and initiatives in sustainability, focusing initially on climate-related matters.

In his letter, Mr Carney notes:

The IFRS Foundation has an essential role to play in making this vision a reality, and I fully endorse your proposal for a new Sustainability Standards Board under the Foundation’s remit. The Foundation, with its track record of robust, reliable and independent global standard-setting should play a pivotal role in delivering sustainability reporting standards that are in the public interest.

Please click to download the full letter from the IASB website.

December 2020 IASB meeting agenda posted

07 Dec 2020

The IASB has posted the agenda for its next meeting, which will be held via video conference on 14–16 December 2020.

During the meeting, the IASB will discuss the following:

  • Maintenance and consistent application
  • Comprehensive review of the IFRS for SMEs
  • Disclosure initiative — Accounting policies
  • Primary financial statements
  • Post-implementation review of IFRS 9
  • Disclosure initiative — Subsidiaries that are SMEs
  • Financial instruments with characteristics of equity
  • Pension benefits that depend on asset returns

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.

December 2020 IASB meeting notes posted

21 Dec 2020

The IASB met on Monday 14, Tuesday 15 and Wednesday 16 December 2020, by video conference. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

Maintenance and Consistent Application — IFRIC Update: At its December meeting the IFRS Interpretations Committee finalised an agenda decision in relation to supplier financing. At this meeting, the Board cleared that decision. If four or more Board members had objected, the decision would not have been published. This is the first agenda decision to be subjected to the revised due process. The final agenda decision was published immediately after the meeting, on 14 December, and can be accessed at https://www.ifrs.org/news-and-events/updates/ifric-updates/december-2020/#5.

Disclosure Initiative — Subsidiaries that are SMEs: The IASB is developing a Standard setting out reduced disclosure requirements for subsidiaries that apply IFRS Standards, but meet the definition of an SME. At this meeting, the Board decided to seek views on whether the consultation document should include proposed reduced disclosure requirements for IFRS 17; and that IFRS 1 not be amended and that transition provisions are not required. The Board also decided that if an entity stops applying the reduced disclosure Standard that the comparatives should apply full IFRS; that the reduced disclosures can be applied for the ‘first time’ more than once; and that the Standard is optional and an entity can reverse its decision to apply it.

SME Standard review and update: The IASB published Request for Information (RFI) ‘Comprehensive Review of the IFRS for SMEs Standard' in January. The IASB received 66 comment letters, mainly from accountancy bodies and standard-setting bodies. Overall, respondents expressed support for the IFRS for SMEs Standard to be based on full IFRS Standards. The paper also contains feedback on the specific questions asked in the RFI. The Board decided that the SME Implementation Group (SMEIG) be asked to develop a set of recommendations for the Board in its review of the IFRS for SMEs Standard. The next meeting of the SMEIG is planned for February 2021.

Disclosure Initiative — Accounting Policies: The Board is amending IAS 1 and its Practice Statement on applying materiality. The Board decided not to add any transition requirements and that the Practice Statement not include anything that would allow a reader to identify which version of the Practice Statement they were reading. They also decided to change the wording in IAS 1:117B.

Primary Financial Statements: In December 2019, the IASB published Exposure Draft ED/2019/7 General Presentation and Disclosures. The staff have summarised feedback from the 215 comment letters it received, outreach activities, fieldwork and a review of academic literature. There are 11 papers, each summarising an aspect of the feedback. To give a flavour of the feedback, there was support for many aspects of the proposals, such as defined subtotals and categories in the statement of profit or loss and introducing a definition for unusual items. But many respondents thought additional guidance was required and most did not agree with the proposed definition of unusual items. There was broad support for the proposed roles for the primary financial statements and the notes. However, there was almost no support for separating integral and non-integral associates and joint ventures and the proposals related to management performance measures received mixed, and strongly expressed, views. The staff did not ask the Board to make any decisions but asked for feedback and for the Board to identify areas they thought would require further research. The Board discussion lasted over four hours, although they did not get to all of the papers. The Board was particularly interested in making sure adequate consideration was given to how the various parts of the project link together. The staff will bring the papers not discussed back to the next meeting and start to set out their plans for the project.

Post-implementation review of IFRS 9 — Classification and Measurement: In October 2020, the Board decided to begin the post-implementation review (PIR) of the IFRS 9 classification and measurement requirements. The staff plan to identify and assess the matters to be examined, which will then form the basis for a public Request for Information (RFI). The staff expect the PIR will take around 18-24 months to complete, with the RFI being issued in the third quarter of 2021. The Board provided feedback to the staff.

Financial Instruments with Characteristics of Equity: The Board decided to move the FICE project from the research programme to the standard-setting programme.

Pensions Benefits that depend on Asset Returns: In January the Board decided to develop examples to illustrate how a proposed capped approach would compare to the outcome of the existing requirements in IAS 19 for defined benefit plans with benefits that vary with asset returns. The Board provided feedback on an illustrative example.

Please click to access the detailed notes taken by Deloitte observers for the entire meeting. For an analysis of how the IASB work plan has changed after this meeting, please see here.

Deloitte IFRS Masterclass 2020

07 Dec 2020

On 8-10 December 2020, Deloitte Middle East offers the IFRS Masterclass 2020 as an online event. There is no charge for attending, however, prior registration is required.

Each day of the event offers a keynote address by a member of the Deloitte Global IFRS Leadership Team (addressing IFRS 9, IFRS 15, and IFRS 16, respectively), which is then followed by a roundtable on industry perspectives or on technical and implementation questions, followed again each day by a Q&A session. Spanning all three days of the event, there is a three-part series on the impact of COVID-19 on financial reporting.

Please click for more information and registration for the event.

EFRAG draft comment letter on the IASB's proposed amendment to IFRS 16

22 Dec 2020

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB exposure draft ED/2020/4 'Lease Liability in a Sale and Leaseback (Proposed amendment to IFRS 16)'.

The proposed amendment aims at clarifying how a seller-lessee should apply the subsequent measurement requirements in IFRS 16 Leases to the lease liability that arises in a sale and leaseback transaction.

EFRAG supports the proposals in the exposure draft as they provide practical guidance on an area not currently addressed by IFRS 16 while relying on existing measurement principles. However, EFRAG encourages the IASB to reconsider the matter more broadly as part of the future post-implementation review of IFRS 16.

Comments on EFRAG's draft comment letter were originally requested by 21 February 2021; however, to allow more time for stakeholders to provide their view, the comment deadline has been extended to 23 March 2021. For more information, see the press release and the draft comment letter on the EFRAG's website.

EFRAG is looking for new Board members

07 Dec 2020

The European Financial Reporting Advisory Group (EFRAG) has published a call for candidates for new Board members.

By the end of April 2021, several of the EFRAG Board members will have served their maximum term of six years and will rotate off the Board. Other members for which the term expires are eligible for reappointment. European stakeholder organisations and national standard setters in countries that are part of EFRAG’s membership and new organisations that are joining the EFRAG membership are invited to nominate candidates.

Please click for more information on the EFRAG website.

EFRAG outreach event on business combinations and the investor view – summary report

01 Dec 2020

On 12 November 2020, EFRAG, along with the IASB, hosted an outreach event to discuss business combinations and the subsequent accounting for goodwill. A summary report is now available.

The event focused on the views of European investment decision-makers as regards information about the objectives and targets for an acquisition and, in subsequent periods, information about how that acquisition is performing against those targets that they consider important.

High-level speakers and panellists considered the IASB’s preliminary views included in the Discussion Paper Business Combinations —  Disclosures, Goodwill and Impairment and the EFRAG’s Draft Comment Letter.

Please click for access to the summary report on the EFRAG website.

EFRAG plans outreach events on non-financial reporting standards

17 Dec 2020

The EFRAG has announced a series of online outreach events to gather stakeholders' view from various jurisdictions on tentative proposals of the Project Task Force on non-financial reporting standards.

The outreach events are scheduled between 13 and 22 January 2021 and will consist of speakers from the public sector, private sector, SMEs and civil society from across Europe.

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

Note: On 11 January 2021, EFRAG released a background paper for the outreach events beginning on 13 January. Please click to see the background paper here.

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