This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

News

China Image

IFRS 17 adoption progresses around the world

30 Dec 2020

China, the second largest insurance market in the world, has decided to adopt IFRS 17 over a three year transition period. Saudi Arabia has adopted the IFRS 17 amendments issued in June 2020 and India is consulting on the adoption of them.

The Ministry of Finance of the People's Republic of China has issued CAS 25 (revised) to be part of the IFRS-converged accounting standards for Chinese entities (Chinese Accounting Standards or CAS). The text of the new regulation is converged with IFRS 17 as issued by the IASB except for the mandatory effective date that is staggered over two stages: 1 January 2023 for all Chinese listed insurers and 2026 for all other Chinese insurers. The Chinese text of CAS 25 (revised) is available here.

The Saudi Organization for Certified Public Accountants (SOCPA) has adopted Amendments to IFRS 17 that the IASB issued in June 2020 to address concerns and implementation challenges that were identified after IFRS 17 Insurance Contracts was published in 2017. The SOCPA adoption also includes Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4). Announcements in Arabic regarding the adoption of the IFRS 17 amendments and the IFRS 4 amendments are available on the SOCPA website.

On 24 December 2020, the Institute of Chartered Accountants of India (ICAI) issued for comment an exposure draft of amendments to Ind AS 117 Insurance Contracts that is intended to keep the IFRS-converged accounting standards for Indian entities (Indian Accounting Standards or Ind AS) aligned with IFRSs as issued by the IASB. Comments can be submitted by 24 January 2021. Following receipt of any comments, the ICAI will issue the amended Ind AS 117 for the Ministry of Corporate Affairs to consider its inclusion in the legally mandated Ind AS. The press release on the ICAI website offers access to the exposure draft.

EFRAG (European Financial Reporting Advisory Group) (dk green) Image

EFRAG publishes December 2020 issue of 'EFRAG Update'

28 Dec 2020

The European Financial Reporting Advisory Group (EFRAG) has published an 'EFRAG Update' summarising public technical discussions held and decisions made during December 2020.

The update reports on the EFRAG Board webcast meeting on 17 December 2020, the EFRAG TEG webcast meeting on 2-3 December, the EFRAG webcast meeting on 16 December and the EFRAG TEG and EFRAG CFSS webcast on 2 December. The publication also covers the activities of the European Reporting Lab.

The update also lists EFRAG publications issued in December 2020 including EFRAG’s draft comment letter on the IASB exposure draft ED/2020/4 'Lease Liability in a Sale and Leaseback (Proposed amendment to IFRS 16).

Please click to download the December EFRAG Update from the EFRAG website.  Update from the EFRAG website.  

Christmas tree (dk green) Image
2015 New Year (asterisk green) Image

Season's greetings

24 Dec 2020

We wish all our readers a healthy and happy festive season and all the best for the New Year!

We look forward to seeing you again after the holidays and to continue to be your preferred accounting website in 2021.

IOSCO (International Organization of Securities Commissions) (dark gray) Image
Leaf - sustainability (green) Image

IOSCO responds to the IFRS Foundation's sustainability consultation

24 Dec 2020

The International Organization of Securities Commissions (IOSCO) has submitted its response to the IFRS Foundation's consultation on sustainability reporting.

IOSCO sees an urgent need to improve the completeness, consistency and comparability of sustainability reporting and notes:

Together, the IFRS Foundation’s consultation and a parallel collaborative initiative of an alliance of sustainability reporting organizations can further efforts to facilitate comparable high-quality international standards that provide the content that capital markets need, within a transparent standard-setting architecture with a robust and inclusive governance structure.

IOSCO also believes that robust sustainability reporting standards, interconnected with financial reporting standards, would also support audit and assurance – enhancing the market’s trust in sustainability disclosures, and laying the foundations for mandatory corporate reporting on sustainability internationally.

Please click to access the full comment letter on the IOSCO website.

FRC Image
UKGAAP Image

FRC amends FRS 102 for IBOR phase 2

22 Dec 2020

The Financial Reporting Council (FRC) has issued ‘Amendments to FRS 102 – Interest rate benchmark reform (Phase 2)’.

Interest rate benchmarks such as the London Interbank Offered Rate (LIBOR) are being reformed, and it is anticipated that LIBOR will not be available after 2021. In response to the uncertainty about the long-term viability of interest rate benchmarks, the FRC published Amendments to FRS 102 – Interest rate benchmark reform, referred to as Phase 1 of the interest rate benchmark related amendments to FRS 102.

Amendments to FRS 102 – Interest rate benchmark reform (Phase 2) represent the second and last phase of the FRC’s standard-setting response to the financial reporting issues arising from the replacement of interest rate benchmarks and are referred to as Phase 2 amendments.

Amendments to Section 11 Basic Financial Instruments provide a practical expedient for the accounting for financial assets and financial liabilities when contractual cash flows change because interest rate benchmarks are being replaced. There are new requirements for disclosure of the nature and extent of risks arising from the interest rate benchmark reform. Amendments to Section 12 Other Financial Instruments Issues give more flexibility regarding the redocumentation of hedging relationships and provide other reliefs that avoid disruption to hedge accounting. A consequential amendment has been made to Section 20 Leases resulting from the changes made to Section 11.

The amendments are intended to adapt and simplify accounting requirements in the context of interest rate benchmark reform and thereby minimise reporting costs for preparers of financial statements compliant with FRS 102 and enable them to provide useful information to the users of their financial statements.

The amendments are effective for accounting periods beginning on or after 1 January 2021, with early application permitted.

A press release and the amendments are available on the FRC website.

FSB (Financial Stability Board) (lt green) Image
Leaf - sustainability (green) Image

FSB responds to the Trustees' sustainability consultation

22 Dec 2020

The Financial Stability Board (FSB) has submitted a comment letter on the IFRS Foundation Trustees’ consultation paper on sustainability reporting published in September 2020.

The FSB supports the recommended approach by the Trustees of the IFRS Foundation to initially focus on standards for climate-related financial disclosures, as an important initiative to promote globally consistent disclosures and avoiding fragmentation. The FSB strongly encourages the IFRS Foundation to build on the work of the TCFD, by using the TCFD’s recommendations as the basis for standards for climate-related financial disclosures.

The FSB notes that the TCFD recommendations set out a comprehensive framework that has been developed by, and is directly responsive to the needs of, users and preparers of financial filings across a range of financial and non-financial sectors around the world. They have attracted widespread support from users and preparers.

In its comment letter, the FSB also strongly encourages other national or regional authorities that are developing requirements or guidance for climate-related disclosures to consider using the TCFD recommendations as the basis. Such consistency in approach would help to avoid the risk of market fragmentation, both across jurisdictions, and between requirements and guidance being developed today and international standards that may be introduced in the future.

Please click to access the full comment letter on the FSB website.

EFRAG (European Financial Reporting Advisory Group) (dk green) Image

EFRAG draft comment letter on the IASB's proposed amendment to IFRS 16

22 Dec 2020

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB exposure draft ED/2020/4 'Lease Liability in a Sale and Leaseback (Proposed amendment to IFRS 16)'.

The proposed amendment aims at clarifying how a seller-lessee should apply the subsequent measurement requirements in IFRS 16 Leases to the lease liability that arises in a sale and leaseback transaction.

EFRAG supports the proposals in the exposure draft as they provide practical guidance on an area not currently addressed by IFRS 16 while relying on existing measurement principles. However, EFRAG encourages the IASB to reconsider the matter more broadly as part of the future post-implementation review of IFRS 16.

Comments on EFRAG's draft comment letter are requested by 21 February 2021. For more information, see the press release and the draft comment letter on the EFRAG's website.

FRC Image
UKGAAP Image

FRC amends UK Standards to reflect changes in the law as a result of the UK’s withdrawal from the EU

22 Dec 2020

The Financial Reporting Council (FRC) has published amendments to UK accounting standards to reflect changes in UK company law following the UK’s exit from the European Union that come into effect at the end of the Transition Period.

In January 2020 the UK exited the European Union. As a result, changes were required to UK company law to ensure that it continues to operate effectively. Some of these changes also lead to consequential amendments to accounting standards so that the standards remain in line with the law.

Amendments to UK and Republic of Ireland accounting standards – UK exit from the European Union amends five accounting standards, the FRC’s pronouncement on interim reporting and the implementation guidance accompanying FRS 103 Insurance Contracts.

As these amendments reflect changes in UK company law, they are not expected to introduce changes in financial reporting other than when required by law. There should be no practical impact on entities in the Republic of Ireland.

The effective date for these amendments is accounting periods beginning on or after 1 January 2021. Early application is permitted in some circumstances to provide UK entities with the option to use International Accountinf Standards (IASs) that are adopted for use within the UK after 31 December 2020, in addition to International Financial Reporting Standards (IFRSs) that have been adopted in the EU as at this date. This is consistent with the transitional arrangements provided in UK company law for entities preparing ‘IAS accounts’.

A press release and the amendments are available on the FRC website.

FCA Image
TCFD Image

FCA introduces new Listing Rule to enhance climate-related disclosures

22 Dec 2020

The Financial Conduct Authority (FCA) has published a Policy Statement (PS20/17) and final rule and guidance promoting better climate-related financial disclosures for UK premium listed commercial companies.

The proposals which were first consulted on in March 2020, introduce a new rule in LR 9.8 that will require commercial companies with a UK premium listing (including sovereign-controlled commercial companies) to include a statement in their annual financial report setting out:

  • Whether they have made disclosures consistent with the Task Force on Climate-related Financial Disclosures (TCFD’s) recommendations and recommended disclosures in their annual financial report.
  • Where they have not made disclosures consistent with some or all of the TCFD’s recommendations and/or recommended disclosures, an explanation of why, and a description of any steps they are taking or plan to take to be able to make consistent disclosures in the future – including relevant timeframes for being able to make those disclosures.
  • Where they have included some, or all, of their disclosures in a document other than their annual financial report, an explanation of why.
  • Where in their annual financial report (or other relevant document) the various disclosures can be found.

The rule is accompanied by guidance to help listed companies determine whether their disclosures are consistent with the TCFD’s recommendations and recommended disclosures. The guidance also clarifies the limited circumstances in which the FCA would expect in-scope companies to explain rather than disclose.

The FCA is also introducing a Technical Note clarifying existing disclosure obligations set out in EU legislation and in its Handbook, that may already require issuers to disclose information on climate-related (and other environmental, social and governance matters) in certain circumstances.

The new Listing Rule will apply for accounting periods beginning on or after 1 January 2021. The first annual financial reports including disclosures subject to the new rule would then be published in spring 2022. The finalised Technical Note will apply with immediate effect.

The FCA aims to publish further consultation papers to extend the application of TCFD disclosures in early 2021. Its planned next steps were recently set out as part of a Roadmap to mandatory TCFD-aligned disclosures, released by a joint government and regulator taskforce in November.

A press release and the full Policy Statement and Technical Note are available on the FCA website.

FRC Image
Auditing Image

FRC publishes responses to its discussion paper on the use of technology to enhance audit quality

21 Dec 2020

The Financial Reporting Council (FRC) has published its analysis of the responses received to its recent consultation, Technological Resources: Using Technology to enhance audit quality.

Through issuing the discussion paper, which built on the FRC’s recent thematic review, The use of technology in the audit of financial statements, the FRC sought to gain further insight into the use of technology and its potential impact on audit quality.

The analysis incorporates discussion of the responses the FRC received as a direct result of its consultation, as well as discussion of other matters that have arisen throughout additional outreach and engagement with stakeholders.

Almost all those that responded agreed that the use of technology could significantly improve audit quality, when deployed at the right time in the audit process and, crucially, by those with the right training. Respondents also agreed that, whilst additional application material and guidance would be beneficial, the current assurance model and audit standards do not represent a significant impediment to the development and deployment of technology in audit.

Training and skillset were identified as many respondents’ primary concerns. A significant majority of respondents saw the recruitment of staff members with the right skillsets alongside the development of appropriate training for current staff (both trainees and experienced), as a priority.

Respondents also described significant challenges in accessing high-quality client data in a reliable and consistent format, meaning that the application of technological resources to improve audit quality can be practically challenging to deploy, requiring substantial work on the data itself before analysis can be conducted.

Where a consensus around a specific action that the FRC can take to address concerns has been identified, or where the FRC has determined that no action is currently necessary, this has been laid that out within the individual sections of the paper.

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

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.