The project, expected to last 18 months, will be undertaken by the Financial Reporting Lab and will look into: 

• how companies are currently using digital media (websites, videos, apps, social media blogs etc) to report externally to investors, how investors are using the digital media produced by companies and areas that companies should focus their attention on;  
• barriers to the use of digital media in corporate reporting; and
• how companies may use digital media and technology to report to investors in the future. 

The FRC invites listed companies, investors and analysts to express their interest in taking part in the project by 30 May.  The first part of the project (first bullet above) will be undertaken in the summer with a report of findings expected to be published “towards the end of this year”.

 A press release with further details can be obtained from the FRC website.

FEE welcomes the consultation as the Eurostat report on the suitability of IPSASs for EU Member States had shown that the lack of oversight is an area of significant concern and a reform of the IPSASB governance could promote a more widespread adoption of the IPSASB standards.

The consultation paper contained a number of possible options for strengthening the IPSASB's governance arrangements:

• Monitoring and oversight of the IPSASB by the IFRS Foundation’s Monitoring Board and Trustees
  FEE believes that this option could add to the credibility of acting in the public interest and could ensure the independence of the IPSASB. However, it would need to be developed in co-operation with the IFRS Foundation and would need a review of the IFRSF constitution, so it does not seem to be available as a near term solution.
• Separate monitoring and oversight boards for the IPSASB, while it remains under the auspices of the IFAC
  This option is regarded as a practical and straightforward solution that would require limited investments of resources and time. However, FEE believes that it would not address concerns over accountability, independence and conflicts of interests.
• Re-establishing the IPSASB outside of IFAC with its own monitoring and oversight bodies
  This is seen as the optimal solution by FEE as it would create a truly independent standard-setter, however, questions of financing, staffing and the need to reform the IPSASB governance within a reasonable time frame would make this solution impracticable.

Given the challenges associated with all of the options, FEE believes that other approaches should be investigated. According to FEE, one possible solution might be a hybrid model that would combine expanding the responsibilities of the IFRS Foundation's Monitoring Board and establishing a new IPSASB oversight body within the remit of IFAC. FEE argues that a monitoring body and an oversight body do not have the same objectives and could therefore well be located in different structures where the expertise on the matters is already available:

Please click for the full consultation response on the FEE website.

The European Commission's expert group is intended to advise and assist the EC in conducting the retrospective evaluation of the IAS Regulation. The Commission currently envisages that it would have a public consultation and possibly targeted workshops. It will seek to draw on the expertise of the group to advise it in respect of such activities and others as required by the Commission.

The evaluation of the IAS Regulation is also intended to integrate the recommendations of the special advisor Mr Maystadt on how the EU's contribution to International Financial Reporting Standards (IFRSs) can be reinforced and how the governance of the European bodies involved in developing these standards can be improved. The evaluation is designed to to complement Mr Maystadt's recommendations by providing factual data about the IFRS experience in Europe so far.

The expert group will be composed of approximately 18 members drawn from organisations reflecting interests from preparers of financial statements, investors, financial analysts, accountants, auditors, and other stakeholders (companies, associations, non-governmental-organisations, trade unions, universities, research institutes, civil society, Union agencies, Union bodies and international organisations) and Member State authorities, including supervisors and national standard-setters. The call for applications was published with a view to selecting members of the group from organisations. Selection of Member State authorities follows a different procedure.

Please click for access to the call for applications on the EC website.

Note: The deadline for application for the expert group on the evaluation of the IAS Regulation has been extended to 3 June 2014.

The Regulations permit companies qualifying as micro-entities to prepare and file ‘abridged’ accounts for periods ending on or after 30 September 2013 (provided that accounts for such periods have not been filed).  This means that they can use simplified formats for the balance sheet and profit and loss account and are only required to provide notes to the financial statements concerning guarantees and other financial commitments and certain transactions with directors.  

The FRC amendments to the FRSSE enable micro-entities to state compliance with the FRSSE whilst taking advantage of the exemptions contained within the Regulations.  The amendments also avoid the potential conflict with the law under which the accounts are deemed to give a true and fair view without supplementary information. 

The amendments reflect the new primary statement format available in the Regulations and permit micro-entities to disapply all presentation and disclosure requirements of the FRSSE except those that are required by the Regulations. 

The FRC expects a more comprehensive revision to the FRSSE when the EU Accounts Directive (2013/34/EU) has been incorporated into UK law and highlights that the changes published today “represent an interim solution”.  The FRC comments that in response to the EU Accounts Directive it is reviewing the FRSSE and “expects to issue revised accounting requirements for small entities, which will be effective from the same date as the legal changes”.

The amendments are effective for periods ending on or after 30 September 2013 for companies filing their accounts on or after 1 December 2013.

Click for:

• Press release (link to FRC website).
• Amendments to the FRSSE - Micro-entities (link to FRC website).
• FRSSE: Impact assessment and Feedback statement - April 2014 (link to FRC website).
• UK Accounting Plus earlier story on the Regulations.

The main objective of the IFRS Advisory Council is to provide a forum in which the IASB and the Trustees can consult with individuals and representatives of organisations that work with and are interested in the development of IFRS.

As a result of expiring terms at year end, the IFRSF Trustees are inviting applications for membership to the Advisory Council. Candidates for membership to the Advisory Council are expected to have knowledge of and practical experience in the application of IFRS. Advisory Council members are expected to attend up to three two-day meeting annually. Initial terms are either two or three years and are renewable once for an additional three year term.

Those interested in applying for the positions are asked to respond by 31 July 2014.

Please click for the corresponding press release on the IASB website.

Due to the integration of XBRL into the IASB standard-setting process and the creation of a new IASB staff group for the Disclosure Initiative, the IASB conducted a review of the IFRS Taxonomy Due Process. As a result, IFRS Taxonomy Consultative Group was created. The group replaces the XBRL Advisory Council (XAC) and the XBRL Quality Review Team (XQRT). The XAC is no longer operational, while the XQRT will only remain in existence until the new IFRS Taxonomy Consultative Group is up and running. In addition, the IFRS Advisory Council has taken on some of the general strategic responsibility of the XAC that specifically relate to how technology may impact standard setting and future corporate reporting.

An overview of the membership is available in the press release on the IASB website.

The survey ‘Improving confidence in the value of audit – a research report commissioned by the Financial Reporting Council’ (“the survey”) was undertaken by the FRC to “take stock of where audit is exactly” as the FRC was of the view that “confidence may have been on the decline for a number of years amongst key groups”.  A number of interviews were held across three groups reflecting the varying levels of direct involvement that stakeholders have in the audit process – from policy makers/influencers to auditors and accounting bodies.  Findings indicate that “the level of confidence that stakeholders have in audit has a very close relationship to their experience of the day to day audit process”. 

The survey indicates that “broadly speaking those stakeholders that are most closely involved with the day to day process of audit (financial directors, CFOs, audit firms, some accounting bodies and audit committee chairs) possess the highest confidence in audit and are least likely to advocate large-scale structural reform”.  This group is “confident in the quality of audit” and has a “high confidence in the audit service and auditor qualities” but understands the expectations gap that exists between “what the public understands and expects and what audit is actually designed to do”.  This group of stakeholders would “like to see a more competitive audit market and a better public understanding of the role of audit and its purpose”.   

That level of confidence is not shared by “those with a direct interest in the outputs of audit, but with less involvement in the day to day audit process” such as regulators and investors.  The survey highlights that these groups “have less confidence in the current audit arrangements and are likely to propose changes to the process, culture and competitive environment”.  The concerns of this group focus around auditor objectivity and independence which they see “as a significant issue” and these support measures to increase the “independence and transparency of the audit process, such as mandatory rotation, mandatory retendering or limiting non-audit fees”.     

Those such as journalists and academics are “the least confident group of stakeholders and are more likely to demand large-scale conceptual and structural re-assessment of audit”.  This group of stakeholders would like audit to be “redesigned to refocus on delivering more public protection”.     

In part response to the survey and to improve the quality of audit the FRC has announced: 

In the near to medium term, the FRC will focus on the expansion of its audit inspection work in line with recommendations from the Competition Commission, the implementation of the new EU Directive on statutory audit and enhancing the quality of bank audits, including through its thematic review of audits in this sector. It will also develop best practice guidance for audit committees on assessing audit quality; assess whether the ethical standards for audit remain fit for purpose; and review audit firm governance including whether the declining proportion of audit in the total business of the major audit firms poses unacceptable risk to audit quality and capacity. 

On a longer term horizon, the FRC will “assess whether any change to the scope of audit is necessary to meet investor expectations”.  Such examples may include considering the auditor’s role in connection with narrative reporting and non-GAAP measures. 

The FRC highlights that their measures are intended to:

• Enhance transparency of audits;
• Enhance the transparency of audit quality;
• Enhance the relevance to users of the auditor’s role;
• Manage auditor conflicts of commercial self-interest;
• Address threats to audit quality from close auditor relationships with companies; and
• Address public confidence in the audit of banks. 

The FRC has recently published their ‘Plan and Budget and Levies 2014/15’ which includes measures aimed at achieving these objectives during the next year. 

Click for:

• Press release (link to FRC website).
• ‘Improving confidence in the value of audit – a research report commissioned by the Financial Reporting Council’ (link to FRC website).
• Our previous UK Accounting Plus news item on the FRC ‘Plan and Budget and Levies 2014/15’.