The publication provides key data on the accounting profession, its member bodies and practising firms. The publication illustrates the size and shape of the accounting profession and shows how it has evolved over the years. It brings to together information about the major audit firms and accounting bodies including both those who offer audit qualifications and those who register and supervise audit firms.

The publication includes:

• information related to membership, students, income, costs and staffing of the seven accountancy bodies;
• information related to the supervision of statutory auditors;
• information on the registered audit firms with public interest entity clients and;
• a greater focus on the profession's track record on diversity and inclusion.

A press release and the full publication is available on the FRC website.

Further, the EFRAG General Assembly extended the mandate of all EFRAG Board members that was to expire on 31 October 2020 (date incorrect in press release) by six months to 30 April 2021, to allow the EFRAG Board in its current composition to finalise the endorsement advice on IFRS 17 Insurance Contracts.

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

In view of COVID-19, many companies are facing a challenging year-end. While the uncertainty creates risks for annual reporting it also presents opportunities. The two new guides look at key elements in respect of resources, action, and the future and in respect of going concern, risk, and viability. Both guides:

• summarise key messages from earlier reports;
• provide an update on recent developments in corporate reporting;
• offer some thoughts regarding how corporate reporting can develop; and
• contain practical examples from reports and presentations released by companies.

Please click to access COVID-19: Resources, action, the future - a look forward and COVID 19: Going concern, risk, and viability - a look forward on the FRC website.

The Trustee's published the consultation paper on 30 September 2020. Comments are requested by 31 December 2020.

Please click to access the video (just over three minutes long) on YouTube.

The tips have been developed following the Financial Reporting Lab's discussions with investors and other stakeholders about what information would be most useful on how directors have had regard to the matters set out in section 172(1) (a) to (f) of the Companies Act 2006 when performing their duty under Section 172 to promote the success of the company and how it can be presented effectively. The Financial Reporting Lab has also spoken to companies to understand the challenges they are facing in preparing the Section 172 statement. 

The tips are structured under three headings:

Building in useful content - the Section 172 statement should: 

• not merely be a compliance exercise but instead should reflect on how the company met the requirements, should explain what is relevant to it and what happened during the year and, where applicable, what the board and management plan to do in the future. 
• explain the board's reasoning behind why, for example, particular stakeholders are identified as key and why particular engagement methods were effective.
• link to strategy.
• include difficulties not just positives.
• reflect the board’s oversight - specifically information on how the board challenges and oversees engagement with stakeholders and formulation of strategy and what stakeholder management processes are in place.
• include material KPIs on the key stakeholders.
• address future consequences and planned actions - specifically when setting out the engagement undertaken and decisions made, companies should disclose the implications of the feedback received, the impact of decisions on relevant stakeholders, and what actions have been taken or are planned as a result. Where the statement highlights issues or concerns raised by a stakeholder, it should be clear how they have been or are going to be addressed.
• be consistent with the rest of the annual report.

Presented in a way that make sense - the Section 172 statement should:

• reflect the strategic link and be clear about the board's role.  Companies are also advised to think about where to place the statement so that it is positioned in the most helpful and useful position for investors and logically flows to other information presented in the strategic report.
• be clearly labelled and referred to in the contents pages of the annual report.
• make use of cross referencing, where appropriate, to expand upon points made in the statement and provide further context.  However, this should not just be a list of links and the statement should still provide a coherant message by itself.
• include examples and case-studies of significant strategic decisions taken during the year, explaining how stakeholders were taken into account to bring the statement to life.

Supported by process - companies should:

• start considering their Section 172 statements early in the year and not leave considerations until the end of the year. 
• consider tailoring board agendas, papers and minutes to include reminders for both the board and management to consider which stakeholders are relevant for decisions. 

The press release and publication are available on the FRC website. 

The IFRS Foun­da­tion initiated the new com­pi­la­tion series in October 2019 and will continue it by pub­lish­ing new volumes bian­nu­ally in April and October. For more in­for­ma­tion, see the press release and com­pi­la­tion on the IASB website.

In addition to the recent major developments at the European Commission, CFA Institute, five ESG standard-setters, the World Economic Forum, and the IFRS Foundation Trustees, the following smaller developments occurred recently:

• The Climate Disclosure Standards Board (CDSB) released CDSB Framework application guidance for climate-related disclosure. The release is the first in a series of guides on nature-related financial disclosure, with water guidance to follow early next year. Please click for more information on the CDSB website.
• The CDSB also offers free consultation on climate-related reporting for EU businesses. See here for more information.
• Efforts are underway to create a Task Force for Nature-related Financial Disclosures (TNFD). An Informal Working Group has been founded that will lead to the creation of the TNFD itself in 2021. Establishing a reporting framework for finance sector impacts and dependencies on nature is seen as critical for halting biodiversity and ecosystem loss. A TNFD website is already available.
• Following the launch of a collaborative workplan between the Global reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB), the standard-setters are working together to develop materials that show how the two sets of reporting standards can be used together. As a next stage in the collaboration, a joint survey has been launched to help understand current experiences by organisations that use either or both sets of standards for their sustainability reporting. Please click for more information on the GRI website.
• Also, a recent GRI public opinion poll on social and environmental corporate performance revealed rising trust in sustainability reporting around the world. Please see the GRI website for more information.
• Principles for Responsible Investment (PRI) has published a call by investor groups on companies to reflect climate-related risks in financial reporting. They stress the investor view that climate-related risks are material factors that should be reflected appropriately in financial statements. More information is available on the PRI website.
• New Zealand will implement mandatory climate risk reporting in line with the TCFD recommendations, becoming the first country to do so. Please see the press release of the New Zealand government for more information.
• The Hong Kong Money Authority (HKMA) recently set out a supervisory approach designed to ensure banks build resilience to climate-related risk. In terms of disclosures and data, HKMA notes that supervised financial institutions should take the TCFD recommendations into account while developing an ‘appropriate’ approach to disclosing climate-related risk that enhances transparency. More information is available in the corresponding HKMA White Paper.
• AccountAbility announces three developments:
  • German and simplified Chinese translations of the AA1000 AccountAbility Principles (press release)
  • Spanish, Portuguese, and Bahasa Indonesian translations of the AA1000 AccountAbility Principles (press release)
  • Latest guidance on sustainability assurance (press release)
• The International Auditing and Assurance Standards Board (IAASB) has issued a Staff Audit Practice Alert The Consideration of Climate-Related Risks in an Audit of Financial Statement. The Staff Audit Practice Alert assists auditors in understanding what already exists in the International Standards on Auditing (ISA) today and how it relates to auditors’ considerations of climate-related risks in an audit of financial statements. Please click for more information on the IAASB website.
• The Center for Audit Quality (CAQ) released a new report that finds external auditors can contribute to the reliability and comparability of non-GAAP financial measures and KPIs – information found outside of the audited financial statements. Please see the CAQ website for more more information.

Intangible assets are often, and increasingly, the primary drivers of the value of a company. While there is significant European Union regulation governing how publicly accountable companies report intangible assets in their financial statements, the accounting directive has no explicit regulations for SME companies except for the accounting for goodwill. Therefore, EFAA carried out a study to gain insights into the accounting treatment of intangible assets across jurisdiction of EFAA member bodies.

The objectives of the study were: 

• To determine the applicable regulatory framework for accounting for intangible assets in each jurisdiction;
• to compare these frameworks;
• to establish whether there are incentives that influence the acquisition and valuation of intangible assets; and
• to inform the current debate on intangible assets in Europe.

Not surprisingly, the study revealed that there are significant variations between jurisdictions in Europe when it comes to the accounting treatment of intangibles by SMEs and, consequently, users of SME financial statements need to be alert to the lack of comparability of information on intangibles.

Please click to access The Financial Reporting of Intangibles by SMEs in Europe on the EFAA website.

The amendments address issues that might affect financial reporting after the reform of an existing interest rate benchmark, including its replacement with alternative benchmark rates. The amendments are effective for annual periods beginning on or after 1 January 2021, with earlier application permitted.

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.

Final endorsement of the amendments is currently expected in the fourth quarter of 2020.

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 update reports on the EFRAG Board webcast meetings on 10 and 14 September, the EFRAG TEG webcast meeting on 2-3 and 14 September and the EFRAG TEG, the EFRAG CFSS webcast meeting on 23 September and the European Lab Steering Group webcast on 15 September. The publication also covers the activities of the European Reporting Lab.

The update also lists EFRAG publications issued in September including:

• EFRAG's final endorsement advice on the IASB amendments Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16);
• EFRAG's draft endorsement advice letter and separate invitation to comment on the endorsement for use in the EU of IFRS 17 Insurance Contracts;
• EFRAG's launch of the project on preparatory work for the elaboration of possible EU non-financial reporting standards; and
• Invitation to contribute to the ad personam mandate of EFRAG Board President Jean Paul Gauzès on non-financial reporting standard setting The publication also covers the activities of the European Reporting Lab

Please click to download the August EFRAG Update from the EFRAG website.Please click to download the September EFRAG Update from the EFRAG website.