April

ICAEW publishes updated guidance on the disclosure of auditor remuneration

25 Apr, 2022

The Institute of Chartered Accountants in England and Wales (ICAEW) has issued updated guidance, in the form of TECH 01/22, to assist companies in the application of the legal requirement for companies to disclose in their individual and group accounts the remuneration receivable by the company’s auditor and the auditor’s associates for the audit of accounts and other (non-audit) services.

This guidance supersedes the guidance set out in TECH 14/13 Disclosure of auditor remuneration and is "substantively unchanged" from that technical release. However, additional guidance has been added to clarify the relationship between the requirements of the 2011 Regulations (the Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) (Amendment) Regulations 2011 (Statutory Instrument 2011/2198) which amended the 2008 Regulations (the Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) Regulations 2008 (Statutory Instrument 2008/489and the contents of the illustrative template for communicating information on audit and non-audit services to those charged with governance that is included in Appendix A of the Financial Reporting Council’s Revised Ethical Standard.

The guidance has also been updated to reflect the fact that small companies are no longer required to disclose auditor remuneration and to reflect changes to related pronouncements including the Revised Ethical Standard, the Companies Act 2006, UK Financial Reporting Standards and the UK Corporate
Governance Code.

The release is available on the ICAEW website.

The EFRAG Sustainability Reporting Board appoints the members of the EFRAG Sustainability Reporting Technical Expert Group

25 Apr, 2022

The EFRAG Sustainability Reporting Board (EFRAG SRB) has appointed the members of the EFRAG Sustainability Reporting Technical Expert Group (EFRAG SR TEG), which come from 11 different countries and represent a wide range of stakeholders.

The EFRAG SRB appointed the 22 members of the EFRAG SR TEG respecting an optimal balance for professional background, nationality, and gender. Each of them demonstrated a high level of expertise and experience on the specific areas and topics listed in the call for candidates.

The EFRAG SR TEG will provide technical advice, on the draft EU Sustainability Reporting Standards (ESRS), to the EFRAG SRB based on its own professional judgment, arguments, technical analysis resulting from its technical expertise and EFRAG’s due process. The EFRAG SR TEG is responsible for the development of these draft standards with input of EFRAG Expert Working Groups and Advisory Panels. The EFRAG SR TEG together with the EFRAG Financial Reporting TEG also ensures connectivity between financial reporting and sustainability reporting.

Click for the full press release at the EFRAG website. 

Pre-meeting summaries for the April 2022 IASB meeting

22 Apr, 2022

The IASB met in London over four days, from Monday 25 to Thursday 28 April 2022. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. We summarised the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

The following topics are on the agenda:

Management Commentary

At this meeting, the IASB will continue discussing feedback on its proposals for a revised Practice Statement on management commentary, as set out in the ED/2021/6 Management Commentary. No decisions will be asked from the IASB in this session.

Primary Financial Statements

The IASB will continue discussing the proposal in the ED that would require an entity that presents an analysis of operating expenses by function in the statement of profit or loss to disclose, in a single note, an analysis of its total operating expenses by nature. The IASB will consider a partial matrix approach and is asking for feedback on the proposed scope for future papers on the topic. The staff do not make any recommendations or ask the IASB to make any decisions.

Third Agenda Consultation

The staff recommend that the IASB add a maintenance and consistent application project on climate-related risks and research pipeline projects on intangible assets and statement of cash flows and related matters. They also recommend a reserve list of projects: operating segments and pollutant pricing mechanisms and not add to its work plan projects on cryptocurrencies and related transactions or going concern disclosures.

Maintenance and consistent application

At its March 2022 meeting, the IFRS Interpretations Committee decided to finalise an agenda decision in response to a submission about a demand deposits with restrictions on use. IASB members will be asked if they object to the agenda decision.

Post-implementation Review of IFRS 9

At this meeting, the IASB will discuss feedback on assessing a financial asset’s contractual cash flow characteristics. Most respondents shared the view that generally the contractual cash flow characteristics assessment works as intended.

Second Comprehensive Review of the IFRS for SMEs Standard

At its March 2022 meeting, the IASB decided on an approach to develop proposed amendments to the disclosure requirements in the IFRS for SMEs Accounting Standard that would result in consistency between these disclosure requirements and ED/2021/7 Subsidiaries without Public Accountability: Disclosures. At this meeting the IASB will deliberate the exceptions to that approach. 

Goodwill and Impairment

The staff have performed further research on the practical concerns raised by stakeholders on the IASB’s preliminary views to require entities to disclose information about the subsequent performance of business combinations and quantitative information about synergies expected from business combinations. The purpose of this meeting is to provide the IASB with a summary of the staff research. The agenda paper also provides information about the project plan and how this research is relevant to that plan. The IASB will not be asked to make any decisions during this session.

Equity Method

In October 2020, the IASB discussed and decided on the objective and approach of the Equity Method project. The IASB last discussed this project in October 2021. At this meeting, the IASB will discuss the staff analysis on purchases of an additional interest in an associate without a change in significant influence and to present a summary of the research findings on changes made to IFRS Accounting Standards arising from the Conceptual Framework, the Business Combinations and the Joint Arrangements project.

Disclosure Initiative—Subsidiaries without Public Accountability: Disclosures

The IASB published ED/2021/7 Subsidiaries without Public Accountability: Disclosures in July 2021, setting out proposed reduced disclosure requirements. At this meeting, the IASB will discuss the feedback from comment letters and outreach events on the ED. The IASB will not be asked to make any decisions. While most respondents agreed with the objective of the draft Standard, there were mixed views on the proposed scope and whether the IASB should have started with IFRS Accounting Standards rather than the IFRS for SMEs Accounting Standard. 

Our pre-meet­ing summaries is available on our April meeting notes page and will be sup­ple­mented with our popular meeting notes after the meeting.

IFRS Interpretations Committee holds April 2022 meeting

21 Apr, 2022

The IFRS Interpretations Committee (Committee) met on 20 April 2022. The Committee discussed the comment letters received on a tentative agenda decision.

Comment letters on tentative agenda decision

IFRS 15 Revenue from Contracts with Customers—Principal versus Agent: Software Reseller: In its November 2021 meeting, the Committee issued a tentative agenda decision on whether a reseller of software licences is a principal or agent in respect of the standard software licences provided to the customer. Most respondents agreed with the Committee's analysis and conclusions but provided comments on various aspects of the tentative agenda decision. All Committee members agreed with the staff recommendation to finalise the agenda decision with some edits.

Administrative matters

Work in progress: The following new matters have not yet been presented to the Committee:

  • Consolidation of a non-hyperinflationary subsidiary by a hyperinflationary parent (IAS 29 & IAS 21)
  • Group of insurance contracts that generate cash flows in a foreign currency (IFRS 17 & IAS 21)

More In­for­ma­tion

Please click to access the detailed notes taken by Deloitte observers.

EFRAG draft comment letter regarding a tentative agenda decision on IFRS 17

21 Apr, 2022

The European Financial Reporting Advisory Group (EFRAG) has published a draft comment letter on a IFRS Interpretations Committee tentative agenda decision on IFRS 17 and the transfer of insurance coverage under a group of annuity contracts.

The letter is not so much about the decision itself, more about the point of time (during the implementation period, shortly before the effective date). However, EFRAG does not offer a proposed alternative treatment for implementation questions discovered late in the implementation process.

Please click to access the draft comment letter on the EFRAG website. Comments on the draft comment letter are requested by 17 May 2022.

FCA finalises proposals to boost disclosure of diversity on listed company boards and executive committees

21 Apr, 2022

The Financial Conduct Authority (FCA) has published its final policy decision (Policy Statement (PS) 22/3) on measures to improve transparency for investors on the diversity of listed company boards and their executive management teams.

The FCA is introducing new Listing Rules (LR 9.8.6R(9) and LR 14.3.33R(1)) to require, as an ongoing obligation, in scope companies to include a statement in their annual financial report setting out whether the listed company has met specific board diversity targets on a 'comply or explain' basis, as at a chosen reference date within their accounting period and, if they have not met the targets, why not.

The targets are:

  • At least 40% of the board are women.
  • At least one of the senior board positions (Chair, Chief Executive Officer (CEO), Senior Independent Director (SID) or Chief Financial Officer (CFO)) is a woman.
  • At least one member of the board is from a minority ethnic background.

Issuers will also have to set out in their statement:

  • the reference date used, and where this is different from the reference date used in respect of the previous accounting period, an explanation of why, and
  • any changes to the board that have occurred between the reference date and the date on which the annual financial report is approved that have affected the company’s ability to meet one or more of the targets.

Alongside the annual narrative comply or explain disclosure, there is also a new requirement (in LR 9.8.6R (10) and LR 14.3.33R (2)) for in scope companies to publish numerical data on the sex or gender identity and ethnic diversity of their board, senior board positions (Chair, CEO, SID and CFO) and executive management in a standardised table format.  Some flexibility is allowed in the reporting on sex or gender identity, in order for companies to reflect their approach to data collection.

For the purposes of reporting ethnic diversity, the following categories are used to define those from a minority ethnic background:

  • Asian/Asian British
  • Black/African/Caribbean/Black British
  • Mixed/Multiple Ethnic Groups
  • Other ethnic group, including Arab

Issuers are also required to explain their approach to collecting the data.  New guidance in LR 9.8.6IG and LR 14.3.36G set out the FCA's expectations of what the explanation should cover.  The FCA has also included guidance in LR 9.8.6IG and LR 14.3.36G of additional disclosures that in scope companies might wish to make to provide further context.  

The above measures apply to UK and overseas issuers with equity shares, or certificates representing equity shares, admitted to the premium or standard segment of the FCA's Official List, including closed-ended investment funds and sovereign controlled companies, but excluding open-ended investment companies, and ‘shell companies’ as defined in LR5.6.5AR.  The rules also do not apply to issuers of listed debt and debt-like securities, securitised derivatives or miscellaneous securities.

The FCA is also changing the Disclosure Guidance and Transparency Rules (DTR) - specifically DTR 7.2.8AR - to expand existing reporting requirements to cover the diversity policies of key board committees and to indicate that reporting on board and board committee diversity policies could consider wider diversity characteristics.

These new requirements will apply to financial years starting on or after 1 April 2022. However, companies whose financial years began before then (from 1 January 2022 onwards) are encouraged to consider reporting on the targets and making numerical disclosures in relation to their current accounting period on a voluntary basis.

A press release and the full policy statement are available on the FCA website.

Summary of the March 2022 CGRR meeting

20 Apr, 2022

The Consultative Group of Rate Regulation (CGRR) held a virtual meeting on 4 March 2022. The meeting summary of the meeting has now been released.

The meeting focused on possible courses of actions the IASB should consider when responding to feedback and future deliberations on its proposal on regulatory returns on construction work-in-progress.

The meeting summary is available on the IFRS Foundation’s website.

Summary of the March 2022 GPF meeting

20 Apr, 2022

Representatives from the International Accounting Standards Board (IASB) and the Global Preparers Forum (GPF) held a hybrid meeting on 11 March 2022. Notes and a recording from the joint meeting have now been released.

The topics discussed at the meeting included:

  • Supplier finance arrangements
  • Non-current liabilities with covenants
  • Update on IASB and IFRS Interpretations Committee developments

The meeting summary and the recording are available on the IASB website. The next GPF meeting is proposed to be held on 16-17 June 2022 (jointly with the CMAC).

Podcast on Q1 2022 IFRS Interpretations Committee developments

19 Apr, 2022

The IASB has issued a podcast on the developments of the IFRS Interpretations Committee during the first quarter of 2022.

The podcast is hosted by IFRS Interpretations Committee Chair and IASB member Bruce Mackenzie and Technical Staff member Patrina Buchanan and focuses on the following topics:

  • Demand deposits with restrictions on use arising from a contract with a third party
  • TLTRO III transactions
  • Transfer of insurance coverage under a group of annuity contracts
  • Negative low emission vehicle credits
  • Lessor forgiveness of lease payments
  • SPAC transactions — Classification of public shares and accounting for warrants at acquisition
  • IASB narrow scope projects

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

EFRAG publishes feedback statement on IASB's proposed reduced disclosure IFRS

18 Apr, 2022

The European Financial Reporting Advisory Group (EFRAG) has published its feedback statement on the International Accounting Standard Board’s (IASB's) Exposure Draft ED/2021/7 'Subsidiaries without Public Accountability: Disclosures'.

EFRAG published its Final Comment Letter in February 2022. 

The Feedback Statement summarises constituent's feedback on EFRAG's draft comment letter relating to the proposals in the ED and explains how this feedback was considered by EFRAG in reaching a final position on the proposals.

A press release and the feedback statement are available on the EFRAG website.

Correction list for hyphenation

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