The following topic was discussed:

International Tax Reform—Pillar Two Model Rules—Amendments to the IFRS for SMEs Standard: The IASB discussed the feedback received in response to Exposure Draft International Tax Reform—Pillar Two Model Rules—Proposed Amendments to the IFRS for SMEs Standard. The IASB agreed to finalise the proposals in the ED with minor revisions.

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

The full agenda for the meeting can be found here. We will post any updates to the agenda, our com­pre­hen­sive pre-meet­ing summary, as well as observer notes from the meeting on this page as they become available.

Local authorities in the United Kingdom are required to keep their accounts in accordance with 'proper practices'. This includes compliance with the terms of the Code of Practice on Local Authority Accounting in the United Kingdom prepared by the CIPFA/LASAAC Local Authority Accounting Code Board (CIPFA/LASAAC).

The changes and feedback requested in the Invitation to Comment (ITC) for the 2024/25 Code relate to the following:

• Mandatory implementation of IFRS 16 Leases
• Accounting for infrastructure assets
• Changes to accounting standards for 2024/25
• IFRS 17 Insurance Contracts
• CIPFA LASAAC's strategic plan, including:
  • CIPFA’s Better Reporting Group
  • Overview of Performance and Summary Financial Information
  • Review of the structure and format of the Code
  • Sustainability reporting
• Other emerging issues, including:
  • Local audit and accounting issues
  • Statutory specifications for local authority financial reporting
  • Recognition of the Net Defined Benefit Pensions Asset
  • Changes to International Public Sector Accounting Standards (IPSAS) which could impact on the Code

Comments are requested by 17 October 2023.

Click for (all links to the CIPFA website):

• Press release
• The 2024/25 Code of Practice on Local Authority Accounting in the United Kingdom - Invitation to Comment

The Financial Reporting Council (FRC) has approved the CCAB bodies for the purpose of issuing a recognised SORP for LLPs incorporated in Great Britain under the Limited Liability Partnerships Act 2000. The members of the CCAB are; The Institute of Chartered Accountants in England and Wales (ICAEW), The Institute of Chartered Accountants of Scotland (ICAS), The Institute of Chartered Accountants in Ireland (ICAI), The Association of Chartered Certified Accountants (ACCA) and The Chartered Institute of Public Finance and Accountancy (CIPFA). 

Proposed amendments to the SORP include:

• updates to the section of the SORP which outlines the contents of an LLPs annual report and financial statements to take into account the Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022 (SI 2022/46) which came into effect for financial years beginning on or after 6 April 2022.  These regulations require certain LLPs and groups to make climate-related financial disclosures aligned with the Taskforce for Climate-related Disclosures (TCFD) recommendations.
• additional guidance for certain specific scenarios in relation to the sharing of group profits and amounts payable to former members in response to stakeholder feedback received as part of the 2021 LLPs SORP consultation.

It is proposed that the updated SORP would be effective for periods commencing on or after 1 January 2024.

The full consultation is available on the CCAB website.

EFRAG has received contrasting feedback on these disclosures from different stakeholders. In order to develop a position that takes account of the cost-benefit balance of these disclosures, EFRAG, therefore invites users of financial statements to participate in one-to-one interviews on the effects of IFRS 15 including its required disclosures. These interviews will be conducted until early October 2023.

Please see the press release on the EFRAG website for more information.

The FCA expects to consult in the first half of 2024 on proposals to implement disclosure rules referencing UK-endorsed IFRS S1 and IFRS S2 for listed companies.  This will take into account the Government’s own endorsement process based on the Government's intention to endorse both ISSB standards within 12 months of their publication.  Assuming the Government’s endorsement process is completed within this timeframe, the FCA aims to finalise its policy decision by the end of 2024, with a view to bringing in new requirements for accounting periods beginning on or after 1 January 2025 (with the first reporting from 2026).

The FCA will be consulting on:

• The scope and design of the new regime taking into account its proposed equity listing reforms.
• Transitional measures to allow smooth implementation.
• The possibility of moving from ‘comply or explain’ to mandatory disclosures for listed companies.
• Introducing guidance, aligned with the Transition Plan Taskforce (TPT) Framework, into its Handbook on what a good practice climate transition plan should cover.

Whilst acknowledging that the ISSB standards and transition plan guidance will not replace the TCFD disclosure framework immediately, the FCA ‘strongly encourages’ listed companies to start considering the standards now and to build them into their plans for future reporting.  The Bulletin highlights the following actions that companies can take now:

• Continue to improve reporting in line with existing climate-related disclosure rules taking into consideration the TCFD recommendations and accompanying guidance, areas identified for improvement in its Primary Market Bulletins 36 and 42, Technical Note 802.1, FCA and Financial Reporting Council (FRC) thematic reviews and expectations under the IFRS Foundation’s education material.
• Engage early with IFRS S1 and S2, the associated guidance, and the TPT Disclosure Framework and Guidance (once finalised) and consider reporting on a voluntarily basis.
• Engage with the UK endorsement and implementation process for the ISSB standards by responding to the Technical Advisory Committee call for evidence and the FCA’s consultation on implementation, when published.

The FCA will continue to use thematic reviews in 2023/24 to consider TCFD-aligned disclosures made by all listing companies within scope of its existing TCFD-aligned disclosure rules. 

The Bulletin is available on the FCA website here.

Structured digital reporting can improve transparency of market disclosures by applying 'tags' to information.  This makes it easier for market participants to extract, compare and analyse it.  This supports efficient price formation and investors' decision making.

The changes were originally consulted on in Consultation Paper (CP) 23/2 in January 2023.  In CP23/2 the FCA proposed to simplify the structure of its current rules by:

• simplifying the content and arrangements of its existing requirements by revoking the Technical Standard where they were currently set out, and including the key provisions directly into its Disclosure, Guidance and Transparency Rules sourcebook (DTRs);
• making a new rule in DTRs requiring issuers to tag their annual financial statements (where they are prepared in accordance with IFRS Accounting Standards) using a ‘generally accepted taxonomy’ for annual corporate reporting in UK regulated markets;
• issuing guidance on ‘generally accepted taxonomies’ in a new Technical Note on its website.

The FCA’s changes are broadly as consulted with some minor adjustments to the DTR Sourcebook and Technical Note.  The final rules apply to financial years starting on or after 1 January 2022.

Handbook Notice 111 setting out the FCA’s final rules and feedback received on the consultation and the new Technical Note are available on the FCA website.

The FRC strongly supports the IAASB's proposed revision of ISA 570 to deliver a more robust process for auditing going concern matters that will help address performance gaps and support the public interest.  

The FRC's full comment letter is available on the FRC website.

In its 2022 position paper on audit market reform, the FRC committed to revising the Ethical Standard, and to consult at the same time about the withdrawal of the Other Entities of Public Interest (OEPI) category introduced in 2019. This is in light of the government’s proposed changes to the statutory Public Interest Entity (PIE) definition.

The proposed revisions to the Ethical Standard enhance prohibitions where an audit firm’s independence could be threatened by an economic over reliance on fees from specific entities that are connected. Other changes to prohibitions reflect relevant findings from audit inspections and enforcement cases.
 
Additional changes reflect significant developments in the International Ethics Standards Board for Accountants (IESBA) Code since the FRC last revised the Ethical Standard in 2019. These ensure that the UK’s Ethical Standard is no less stringent than the international code.
 
The new standard has also been revised to ensure breaches of ethical standards are reported to the FRC on a more timely basis.

The revised Ethical Standard will apply for periods commencing on or after 15 December 2024.

Click for (all links to FRC website):

• Press release
• Invitation to Comment and Impact Assessment
• The proposed FRC Ethical Standard
• The key changes to the FRC Ethical Standard

The publication provides statistical information and trends on the members and students in the accountancy profession. 

The publication includes:

• information related to members, students, income and staffing of the seven accountancy bodies;
• information related to the supervision of statutory audit firms; and
• information on the registered audit firms with public interest entity clients.

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