2022

FRC publishes its draft 3-year Plan and Budget for 2022-25

19 Jan, 2022

The Financial Reporting Council (FRC) has published a consultation on its 3-year plan and budget for 2022-2025. Comments are requested by 1 March 2022.

The 3-year Plan acknowledges the FRC’s continued commitment to being an effective and transparent regulator as it prepares to transition to the Audit, Reporting and Governance Authority (ARGA). It contains a detailed breakdown of intended expenditure for 2022-23 and a summary of the expected trajectory of overall costs and headcount for the following two years.
 
In setting out its plan, the FRC have considered how, and when, it will need to increase the capacity to adapt to new powers and responsibilities. In 2022/23 overall costs are budgeted to increase by £9.1m with similar growth anticipated in 2023/24, being the year in which ARGA is expected to be created, followed by a period of stability and consolidation from 2025 onwards.

In line with this, headcount is expected to increase in 2022/23 from the current budgeted number of 417 in March 2022, to 489 at March 2023 with similar growth forecast in 2023/24, followed by smaller growth in 2024/25.

The plan details the FRC’s high-level assumptions on key divisional priorities across its four divisions which are: Regulatory Standards, Supervision, Enforcement and Corporate Services.  It also sets out the FRC's strategic priorities for 2022/23 in these areas as follows:

Regulatory Standards and Codes

  • Development and maintenance of standards and codes, including the periodic review of FRS 102, adoption of ISA (UK) 500 and ISA (UK) 600, and post-implementation review and revision of technical actuarial standards.
  • Alignment of its Corporate Governance & Stewardship monitoring and evaluation programme.
  • International influencing of auditing and ethical standards, and significant contribution to non-financial reporting developments in the UK and internationally.
  • Preparation for ARGA’s local audit systems leader role.
  • Activities focused on improvements and innovation to support high quality reporting and audit quality.
  • Promoting the use of technology throughout its policy areas
  • Supporting its objectives and activities through increased stakeholder engagement with impact and influence, including an overhaul of planned publications focused on collective impact.

Supervision

  • Deliver a full programme of high-quality Audit Quality Review (AQR) inspections, Corporate Reporting Review (CRR) reviews and professional oversight visits and publish associated reporting, including thematic reviews.
  • Carry out ISQC inspection work and prepare for ISQM1.
  • Increase supervision of audit firm culture.
  • Assess audit firms’ adoption of operational separation principles.
  • Implement Public Interest Entity (PIE) audit registration decision-making.
  • Increase intensity of forward-looking supervision of audit firms, with more ‘joined up’ regulation of firms’ actions on quality.
  • Negotiate mutual recognition agreements resulting from EU Exit.
  • Perform equivalence and adequacy assessments.

Enforcement

  • Fair, robust, and timely case closures or conclusion through focus of investigations, prioritisation, training, and recruitment.
  • Upskilling and training to respond to changes in AEP from January 2022 and implement future powers arising from regulatory reform.
  • Publication of the Annual Enforcement Review, driving improved behaviours through messaging case outcomes.

Corporate services

  • Develop a statutory funding model for ARGA.
  • Develop and implement an integrated information management strategy, including a medium-term IT strategy and enhanced data analytics and reporting.
  • Enhance cybersecurity risk management.
  • Appropriate workforce planning, aligned with the business planning cycle and designed to incentivise, reward, and retain key skills.
  • Strengthen support infrastructure, including in finance and procurement systems, internal controls, and IT.
  • Legal support for regulatory reform and legal and operational support for the UK Endorsement Board (UKEB).

The draft 3-year plan also covers other areas such aa governance, risks and challenges and KPIs. The FRC also sets out its proposed budget for 2022/23 for expenditure and funding.

The press release and draft 3-year Plan and Budget 2022-25 are available from the FRC website.

IASB member provides update on extractive activities project

18 Jan, 2022

IASB member Tadeu Cendon has issued an article which provides an update on the IASB’s extractive activities project. The article explains reasoning behind certain IASB’s decisions related to the scope and objectives of the project.

Specifically, the article discusses:

  • Feedback received from stakeholders on why the Board was looking at extractive activities.
  • Tentative board decisions reached on the scope and objective.
  • Diversity in accounting policy.
  • Challenges in applying certain accounting standards to extractive activities outside the scope of IFRS 6.
  • Reserve and resource information.
  • Upcoming research.

For more information, see the press release and article on the IASB’s website.

EFRAG draft comment letter on supplier finance arrangements

18 Jan, 2022

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB's Exposure Draft ED/2021/10 ‘Supplier Finance Arrangements’.

The exposure draft adds disclosure requirements, and ‘signposts’ within existing disclosure requirements, that would ask entities to provide qualitative and quantitative information about supplier finance arrangements.

In its draft comment letter, EFRAG supports ‘the project which increases conformity with existing disclosure requirements in IFRS Standards. However, EFRAG considers that the IASB's proposals do not completely address the wider issue of presentation and classification of such arrangements in the primary financial statements, the necessary transparency on liquidity risk and working capital leverage’.

Comments on EFRAG's draft comment letter are requested by 9 March 2022. For more in­for­ma­tion, see the press release and the draft comment letter on the EFRAG’s website.

EFRAG TEG appointments and reappointments

17 Jan, 2022

The Board of the European Financial Reporting Advisory Group (EFRAG) has announced the appointment of two new members of — and five reappointments to — its Technical Experts Group (TEG) as well as the appointment of a new TEG Vice Chair.

The new EFRAG TEG members are Carmen Barrasa (accountancy profession, Spain) and Aranzazu Leo Abad (preparer, banking and financial instruments specialist, Spain). Chiara Del Prete, EFRAG TEG Chairwoman, has been reappointed for a second three-year term. In addition, EFRAG TEG members Emmanuelle Guyomard, Erlend Kvaal, David Procházka, and Christoph Schauerte have been reappointed. Jens Berger (Leader of Deloitte Germany's IFRS and Corporate Reporting Centre of Excellence) has been appointed new EFRAG TEG Vice Chair.

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

Summary of the November 2021 ITCG meeting

17 Jan, 2022

The IASB has published a summary of the IFRS Taxonomy Consultative Group (ITCG) meeting held on 29 November 2021.

The ITCG discussed the following topic:

  • Digital reporting implications for the Exposure Draft Management Commentary (continued from the September 2021 ITCG meeting)

The meeting summary is available on the IASB website.

Agenda papers available for the UK Endorsement Board meeting on 20 January 2022

17 Jan, 2022

The agenda papers for the UK Endorsement Board (UKEB) meeting held on 20 January are available.

The agenda items for discussion are as follows:

  • Due Process Handbook
  • IFRS 17: Update on Consultation (including RITC)
  • Non-Current Liabilities with Covenants (IAS 1) – Approve PIP and Draft Comment Letter
  • Supplier Finance Arrangements—Approve PIP and Draft Comment Letter
  • PIR: IFRS 9 – Classification & Measurement—Approve Final Comment Letter, Feedback Statement and Compliance Statement
  • Intangible Assets – Approve PIP
  • Subsequent Measurement of Goodwill – Approve Updated PIP

The meeting agenda and papers and details of how to register are available on the UKEB website.

Update: a recording of the meeting is now available on the UKEB website.

January 2022 IASB meeting agenda posted

14 Jan, 2022

The IASB has posted the agenda for its next meeting, which will be held virtually on 25 January 2022. There are four topics on the agenda.

The Board will discuss the following:

  • Business combinations under common controls
  • Board work plan update
  • Maintenance and consistent application
  • Primary financial statements

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.

PRAG publishes guidance on TCFD disclosures for occupational pension schemes

13 Jan, 2022

The Pensions Research Accountants Group (PRAG) has published guidance to help practitioners understand the Taskforce on Climate-related Financial Disclosures (“TCFD”) governance and reporting requirements that have been introduced for certain pension schemes from 1 October 2021.

The new requirements do not affect financial reporting disclosures but do have an impact on the information included in, and linked from, the annual report of occupational pension schemes.

Click for the press release on the PRAG website. The guidance is available to PRAG members on its website.

Agenda for the upcoming SMEIG meeting

12 Jan, 2022

The next meeting of the SME Implementation Group (SMEIG) will be held on 21 January 2022 via video conference.

The SMEIG will discuss the following topics:

  • Definition of a business and reacquired rights in IFRS 3 Business Combinations
  • Simplifications to IFRS 15 Revenue from Contracts with Customers
  • Cryptocurrency
  • Recognition and measurement of development costs
  • Update on recent IASB decisions on the project to review the IFRS for SMEs

The papers for the meeting are available on the IASB website.

CMAC seeks members

11 Jan, 2022

The Capital Markets Advisory Committee (CMAC) is seeking new members and welcomes applications from analysts and investors from all over the world.

New members will start on 1 January 2023 for a term of three years, renewable once for a further three years. For more information, please see the press release on the IASB website.

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