For more information, see the press release on the EFRAG Website. 

The IFRS Accounting Standards 2024 — Required publication contains all IASB and IFRS Interpretation Committee pronouncements that are mandatory on 1 January 2024. It does not include IFRSs with an effective date after 1 January 2024. The IFRS Accounting Standards 2024 — Required Annotated includes the same content, but with additional annotations containing extensive cross-references, explanatory notes and IFRS Interpretations Committee agenda decisions.

The books are available in electronic format to IFRS Digital subscribers through the IFRS Accounting Standards Navigator. Printed copies of the books are available for sale through the IFRS Foundation's web shop.

The agenda items for dis­cus­sion are as follows:

• Lack of Exchangeability – Draft Endorsement Criteria Assessment 
• Financial Instruments with Characteristics of Equity – Draft Comment Letter
• IFRS IC Tentative Agenda Decision – Comment Letter
• IASB General Update
• Intangibles – Draft User Survey Report

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

Update 09/02/2024 - The recording of the January 2024 UKEB's public board meeting is available here.

The European Union’s Corporate Sustainability Reporting Directive, published in December 2022, tasks EFRAG with providing technical advice to the European Commission on ESRSs. As part of this mandate, EFRAG has been asked to develop an ESRS for SMEs that are public-interest entities. These include entities whose transferable securities (bonds, shares and other securities) are admitted to trading on a regulated market in the European Union, small and non-complex institutions, and captive insurers and reinsurers.

The ESRS LSME will be issued as a delegated act and will be effective on 1 January 2026 with the option to opt out for an additional two years. According to the press release, the purpose of the ESRS LSME ED is to set reporting requirements that are proportionate and relevant to the scale and complexity of the activities and to the capacities and characteristics of public-interest SMEs. EFRAG expects that the standard will support these entities in getting better access to finance and avoid discrimination against them by financial market participants, as it will facilitate standardised sustainability information. 

The VSME ED (that has been published alongside the ESRS LSME ED) proposes a simple reporting tool to assist non-listed micro-, small- and medium-sized enterprises in responding to requests for sustainability information that they receive from business partners.

For more information, including access to the exposure drafts, how to respond to the exposure drafts and how to participate in a field test for preparers and users, please see the press release on the EFRAG website.

Note: EFRAG has published a series of webcasts on the exposure drafts. Please click the press release on the EFRAG website for more information and access to the videos. In addition, see our Need to know newsletter.

In 2022 the Government Response to the BEIS White Paper asked the FRC to use a Code-based approach to strengthen boardroom focus on internal control matters rather than introducing a legislative framework and, further to changes in Government policy around other aspects of the reform agenda, this represents the most significant change to the new Code although changes have been made to the proposal which was previously consulted on.

Final form of the declaration on the effectiveness of the risk management and internal control framework

With the ultimate aim of strengthening board accountability for the effectiveness of the risk and internal control framework, there has been a change to the relevant Code Principle; Principle C.  “The board should establish a framework of prudent and effective controls, which enable risk to be assessed and managed” is replaced by “The board should establish and maintain an effective risk management and internal control framework”.

This amended Principle is reinforced by an extension of the existing Code provision (Provision 29) in relation to the board’s responsibility to monitor the company’s risk management and internal control framework and, at least annually, carry out a review of its effectiveness. Building on this review and monitoring activity, it is proposed that the board provides the following disclosure in the annual report:

• a description of how the board has monitored and reviewed the effectiveness of the framework;
• a declaration of effectiveness of the material controls as at the balance sheet date; and
• a description of any material controls which have not operated effectively as at the balance sheet date, the action taken, or proposed, to improve them and any action taken to address previously reported issues.

Importantly, this new declaration will cover, in line with the board’s review and monitoring responsibilities, “material controls” which have been changed from “financial, operational and compliance” to cover  “financial, operational, reporting and compliance”.  Therefore this includes a specific “reporting” control consideration intended to cover controls over both financial and non-financial reporting.

The FRC states that it is for a board to determine what should comprise its material internal controls noting that the needs for each business may vary and that the level of maturity of non-financial controls for some businesses may not be, or need to be, as mature as for their financial controls. Further, the FRC states that it is for the board to determine what level of maturity is right for its business and their own levels of required assurance in relation to the effectiveness of these controls.

The final wording of the declaration also removes any suggestion of a need for “continuous monitoring” of internal controls which had concerned many respondents. The declaration of effectiveness will now be as at the balance sheet date. In addition, reference to identification of “material weaknesses” has been removed to provide further differentiation from language used in other jurisdictions.

The FRC believes that this new approach is a targeted, proportionate and balanced response to meeting enhanced investor and stakeholder expectations for better governance reporting around risk management and internal controls whilst minimising reporting burdens on businesses. Also that this approach, which is principles based and relies on boards making their own judgments on what is material, is better suited for the UK commercial and governance framework than more intrusive and prescriptive approaches required in other jurisdictions.

Other proposals being taken forward which boards should focus on

• Activities and outcomes - governance reporting should focus on board decisions and their outcomes in the context of a company’s strategy and objectives.
• Culture – Provision 2 has been amended to include that boards should not only assess and monitor culture, but also how the desired culture has been embedded.
• ‘Audit committees and the external audit: Minimum Standard’ - to avoid duplication, the updated Code removes those elements covering the work of the audit committee in relation to external audit and instead refers companies to the Standard.
• Diversity - Principle J has been amended to promote diversity, inclusion and equal opportunity, without referencing specific groups. The list of diversity characteristics has been removed to indicate that diversity policies can be wide ranging.
• Malus and clawback remuneration arrangements - strengthened reporting on the circumstances for, and use of, malus and clawback.
• The remuneration policy – existing Provision 40 setting out characteristics of effective remuneration policy and practices has been removed.

Proposals which have been dropped

A number of proposals included within the original consultation are not being taken forwards.  These are:

• Sustainability matters – the updated Code will not include wider responsibilities and considerations for the board and audit committee in relation to ESG objectives and other sustainability matters.
• The Audit & Assurance Policy (AAP) and the Resilience Statement – all references to the AAP and the Resilience Statement have been removed reflecting the withdrawal of the Statutory Instrument which would have introduced these statutory reporting requirements (existing Code provisions in relation to the viability statement and going concern reporting are retained).
• Shareholder engagement – active responsibility for Committee chairs to engage with shareholders has been removed (the current provision “to seek engagement” is retained).
• Director appointments – proposals to report on all significant director appointments in the annual report together with an explanation of how able to meet those commitments has been removed.
• Malus and clawback remuneration arrangements – proposed reporting on the use of malus and clawback provisions in the last five years has been removed.

The updated Code will apply to accounting periods commencing on or after 1 January 2025 with the exception of Provision 29 – the declaration on the effectiveness of the risk management and internal control framework – which will apply to accounting years commencing on or after 1 January 2026 to allow sufficient time for implementation. Until then, existing Provision 29 of the 2018 UK Corporate Governance Code applies.

The updated Code will be supported by updates to all supporting guidance: Guidance on Board Effectiveness, Guidance on Risk Management, Internal Control and Related Financial and Business Reporting and Guidance on Audit Committees.  The updated guidance will be issued on 29 January 2024.

The FRC stresses that the guidance should not be viewed as part of the Code and should not be seen as a requirement of the FRC. It is aimed at contributing helpful context to a board’s consideration of how they might go about complying with the Code. The FRC explains that, in preparing the guidance, it has drawn on the expert advice of its Stakeholder Insight Group which represents a cross-section of those with a keen interest in the Code such as preparers and investors.

The FRC will be hosting a webinar on the updated Code on 23 January with a further deep dive on internal controls on 30 January.

A press release and the 2024 Code are available on the FRC website.

A summary of the programme for the symposium is set out below:

Please click to access the event page on the IFRS Foundation website, which includes a link to the full agenda and an option to register for the event.

The following topics are on the agenda for both meetings:

Power purchase agreements: The staff will present its preliminary views on how to address accounting issues related to power purchase agreements. No decisions will be asked of the IASB.

Post-implementation review (PIR) of IFRS 15 Revenue from Contracts with Customers: The IASB will discuss the feedback received in response to the request for information on the PIR of IFRS 15 and a plan for the next phase of the project. The staff will not ask any decisions from the IASB.

Maintenance and consistent application: The IASB will discuss the finalisation of an agenda decision published by the IFRS Interpretations Committee and give IASB members the opportunity to comment on the most recent IFRIC Update.

Amendments to the classification and measurement of financial instruments: The IASB will decide on the staff recommendations to finalise proposals in the exposure draft Amendments to the Classification and Measurement of Financial Instruments with regard to the assessment of contractual cash flows, financial assets with non-recourse features and contractually linked instruments.

IFRS accounting taxonomy update—amendments to IAS 12, IAS 21, IAS 7 and IFRS 7: The IASB will discuss the feedback received on the proposed IFRS taxonomy update International Tax Reform—Pillar Two Model Rules, Supplier Finance Arrangements and Lack of Exchangeability. No decisions will be made.

Second comprehensive review of the IFRS for SMEs accounting standard: The IASB will continue its redeliberations on the proposals in the exposure draft Third edition of the IFRS for SMEs Accounting Standard. The staff developed recommendations with regard to liabilities arising from financing activities, bearer plants, impairment of financial assets and leases.

Disclosure initiative—subsidiaries without public accountability: disclosures: The IASB will decide on sweep issues with regard to some more judgemental changes to the disclosure requirements proposed in the exposure draft Subsidiaries without Public Accountability: Disclosures resulting from implementing the modified approach discussed in previous meetings.

Updating the Subsidiaries without Public Accountability: Disclosures standard: The IASB will discuss disclosure requirements that the staff recommends to propose in a catch-up exposure draft following the publication of the forthcoming IFRS accounting standard Subsidiaries without Public Accountability: Disclosures. The staff recommends disclosures relating to supplier finance arrangements, international tax reform—pillar two model rules and lack of exchangeability.

Feedback on ISSB consultation on agenda priorities (joint session with the ISSB): The boards will discuss the feedback received in response to the ISSB’s request for information Consultation on Agenda Priorities related to integrated reporting and connectivity to help decide which next steps should be taken by the ISSB and IASB respectively. The boards will also discuss the overlap that arose between the IASB’s management commentary project and the ISSB’s potential project on connectivity and integrated reporting, and the stakeholder interest in the boards working together in these areas.

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

A summary of the agenda is set out below:

Agenda papers for the meeting are available on the IFRS Foun­da­tion website.

The document illustrates the areas of interoperability between GRI 305: Emissions 2016 and IFRS S2 Climate-related Disclosures that an entity should consider when measuring and disclosing Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions in accordance with both standards.

The press release states that the requirements in GRI 305 and IFRS S2 are highly aligned as, for example, both standards draw on the GHG Protocol. The high degree of alignment will help entities that already disclose Scope 1, 2 and 3 GHG emissions using the GRI standards to report information about GHG emissions in accordance with IFRS S2. Entities can also align other GHG emissions disclosures, depending on the choices they make in applying GRI 305 and IFRS S2.

For more information and access to the document, please see the press release on the IFRS Foundation website.

The updates, which take into account the feedback received on the August 2023 consultation, include:

• Simplifying the existing ethical standard and providing additional clarity in a limited number of areas to respond to feedback from auditors.
• Changes to reflect recent revisions made to the International Ethics Standards Board for Accountants (IESBA) Code of Ethics. This aligns the UK with international standards and helps to ensure high standards of independence and ethical behaviour are applied consistently by UK audit firms and their networks.
• Adding a new targeted restriction on fees from entities related by a single controlling party. This is in response to issues identified through the FRC's audit inspection and enforcement cases.

In making the updates the FRC has also ensured that the requirements in the revised Ethical Standard are better targeted and proportionate.

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

Alongside the revised Ethical Standard, the FRC has also released guidance for auditors on the application of the Objective, Reasonable and Informed Third Party test, which forms a key part of many requirements in the Ethical Standard.

Click for (all links to FRC website):

• Press release
• Updated Ethical Standard
• Feedback statement and impact statement
• Summary of key changes
• Guidance for auditors on the application of the Objective, Reasonable and Informed Third Party test