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News

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IFRS model financial statements 2021

11 Oct 2021

The model financial statements of International GAAP Holdings Limited for the year ended 31 December 2021 are intended to illustrate the presentation and disclosure requirements of IFRSs without the use of any actual numbers. They also contain additional disclosures that are considered to be best practice, particularly where such disclosures are included in illustrative examples provided within a specific Standard.

The publication includes:

  • Consolidated statement of profit or loss and other comprehensive income
  • Consolidated statement of financial position
  • Consolidated statement of changes in equity
  • Consolidated statement of cash flows
  • Notes to the consolidated financial statements
  • Independent auditor’s report
  • Appendix 1 – Areas of the model financial statements affected by climate change and COVID-19

Please click to download the publication here.

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FRC issues its 2022 suite of Taxonomies

11 Oct 2021

The Financial Reporting Council (FRC) has issued the 2022 suite of FRC Taxonomies.

The suite is updated for all FRC taxonomies and the key changes to the 2022 suite include:

  • The Streamlined Energy and Carbon Reporting (SECR) taxonomy containing the Task Force on Climate-related Financial Disclosures (TCFD) disclosures has been incorporated into the main body of the FRC suite.
  • The SECR and TCFD tags are now found in all the Directors’ Report section of the FRC Taxonomies (except for the Irish extensions and UKSEF).
  • The SECR Taxonomy has had its TCFD disclosures augmented to reflect expected enhanced disclosures from companies looking to provide such information to investors.
  • The UKSEF imports the most up-to-date version of the ESEF and can be used with tags from the rest of the FRC taxonomies suite (including tags for the Directors Report, SECR and TCFD disclosures) for UK reporting purposes to Companies House and the Financial Conduct Authority (FCA).
  • The FRC taxonomies now supports a Welsh label linkbase.
  • HMRC’s Detailed Profit & Loss (DPL) taxonomy extension is now part of the Directors’ Report.
  • Tags for Gender Pay Gap reporting have been included in the Directors Report for those who wish to tag these concepts.
  • A tag for Academies will be inserted into the Charity Accounts Taxonomy to enable Academies to be able to digitally report.

The 2022 suite represents the most up to date version of the FRC Taxonomies and as such should be used to comply with HMRC requirements to fully tag. It is expected that Companies House will have enabled this suite by 1 April 2022 and the FCA will have enabled the suite by 31 December 2021. The Charity Accounts Taxonomy may be used by all charities preparing accounts in accordance with the Charities FRS 102 SORP and is mandatory for large charities with income over £6.5m filing with HMRC.

The press release and updated taxonomies are available on the FRC website.

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FRC publishes thematic review findings on APMs

11 Oct 2021

The Financial Reporting Council (FRC) has published the results of its thematic review into the use of Alternative Performance Measures (APMs) by UK-listed companies. The review identifies areas of good practice, opportunities for improvement and areas to be avoided when using APMs.

A sample of 20 companies' annual reports from different industry sectors was selected for review.  It was found that, generally disclosures around the use of APMs were of good quality.  The FRC saw more companies providing reconciliations of APMs to their equivalent IFRS or UK GAAP measures and also some improvement in the labelling of APMs and in their definitions.  However, against these areas of improvement the FRC also found that companies in the sample:

  • provided greater prominence or authority to APMs over GAAP measures in some areas of reporting (c50% of the sample reviewed).
  • sometimes obscured relevant GAAP information by using large numbers of APMs.  The FRC encourages companies to consider the number of APMs that they present in this regard, for example removing those multiple variants of similar APMs or avoiding using APMs with only immaterial adjustments to IFRS measures.
  • adjusted for more costs than income when calculating profit-based APMs.  In the sample reviewed, 19 of the 20 excluded more expenses than income from their APMs with the result that they reported more favourable adjusted results than GAAP results.  The FRC reminds companies to be even-handed in the treatment of gains and losses when classifying amounts as adjusting items.
  • could have improved explanations for APMs by providing more granular information. 
  • provided reconciliations for the most commonly used APMs but there were examples where reconciliations for some APMs were omitted, where explanations for reconciling items could have been improved or where APMs were not reconciled to a GAAP number.
  • adjusted for the effects of significant multi-year restructuring programmes, but they did not disclose relevant information such as cumulative costs, total expected cash costs and expected durations of the programmes.
  • used terms such as 'underlying profit', 'non-underlying items' and 'core operations' without an explanation of what these terms meant.
  • did not provide disclosures about tax relating to individual categories of adjusting items
  • did not always disclose the cash flow implications of certain adjusting items such as restructuring and litigation costs.

The FRC expects companies to consider the better disclosures in the report in the forthcoming reporting season.  It expects preparers to:

  • Ensure that APMs are not presented in ways that give them greater prominence than amounts stemming from the financial statements.
  • Avoid comments that imply APMs have more authority than amounts stemming from the financial statements.
  • Provide specific, tailored explanations for the inclusion of individual APMs in their reports, as well as the basis for classifying amounts as adjusting items.
  • Explain terms such as ‘underlying profit' or 'core operations' and the basis for identifying adjustments as 'non-underlying' or non-core’.
  • Ensure that APMs are reconciled to the most directly reconcilable line items, subtotals or totals presented in the financial statements, and not to other APMs.
  • Disclose relevant information for any significant multi-year restructuring programmes that are classified as adjusting items.
  • Disclose the cash flow impact of material adjusting items and exceptional items.
  • Explain tax matters relating to APMs by:
    • Including tax matters in their accounting policies for APMs (including accounting policies for classifying material or unusual tax amounts as adjusting items).
    • Providing granular information on the effective tax rate on adjusting items, where necessary.

A press release and the full report is available on the FRC website.  A webinar to discuss the report will be held on October 20.  A press release including details of how to register for the webinar is available on the FRC website.  

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EFRAG survey on IASB’s project on disclosure requirements in IFRSs

08 Oct 2021

The EFRAG, in coordination with the IASB, is currently conducting field testing on the IASB’s Exposure Draft ED/2021/3, ‘Disclosure Requirements in IFRS Standards — A Pilot Approach’. As entities currently participating in the fieldwork activities are generally large entities, EFRAG has issued a questionnaire aimed at small and medium entities.

Completion of the questionnaire should take approximately 20-30 minutes. Please click for more information and access to the survey on the EFRAG website.

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EFRAG final comment letter on the IASB's proposed narrow-scope amendment to IFRS 17

08 Oct 2021

The European Financial Reporting Advisory Group (EFRAG) has issued its final comment letter on the International Accounting Standard Board's (IASB's) exposure draft ED/2021/8 'Initial Application of IFRS 17 and IFRS 9 — Comparative Information (Proposed amendment to IFRS 17)' ("the ED").

In its final comment letter EFRAG expresses its appreciation for the IASB’s swift response and delivery of the exposure draft.  EFRAG welcomes and supports the IASB's proposal as it will allow insurance entities to provide more useful information about their activities during the comparative period and also reduce operational challenges.  EFRAG also commends the IASB for addressing most of the comments raised by European constituents in this area.

Overall, EFRAG agrees with the IASB proposals in the exposure draft but does flag some remaining concerns that it would like the IASB to address when finalising the amendment.  For example, ​EFRAG recommends that the IASB aligns the scope of the classification overlay and the temporary exemption from applying IFRS 9 (which is under IFRS 4 Insurance Contracts) due to operational complexity and presentation inconsistencies in the consolidated financial statements.

Also, EFRAG suggests that the IASB states explicitly that the classification overlay may be applied from a date pre-dating the publication of the ED or the final amendment. 

The press release and the final comment letter are available on the EFRAG website. 

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Leaf - sustainability (green) Image

IFRS Foundation publishes webcast on the Technical Readiness Working Group

07 Oct 2021

The IFRS Foundation has published a webcast which provides an introduction of the Technical Readiness Working Group (TRWG) members, summary of its work programme, and an expected timeline of the TRWG.

The TRWG provides technical observations and proposals for consideration which supports early standard-setting activities for the International Sustainability Standards Board. For more information, see the press release on the IASB’s website.

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PRA publishes its thematic feedback from the 2020/2021 round of written auditor reporting

06 Oct 2021

The Prudential Regulation Authority (PRA) has published a letter to chief financial officers of selected deposit-takers which provides thematic feedback from the PRA’s review of written auditor reports received in 2021.

The letter includes thematic findings on IFRS 9 expected credit loss accounting (ECL) and thematic findings relating to the global benchmark reform.  It also sets out how the PRA intends to use next year’s round of written auditor reporting to explore risks related to climate change.

The full letter is available on the PRA website.

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European Lab publishes report on the business model, sustainability risks and opportunities

04 Oct 2021

The European Lab@EFRAG Project Task Force has published a report, ‘Towards Sustainable Businesses: Good Practices in Business Model, Risks and Opportunities Reporting in the EU’ and supplementary document, ‘Supplementary Document: Good Reporting Practices’.

The report discusses ‘the state of play and the drivers of current reporting practices, the application of technological solutions, and suggests a path to improvement in the reporting of sustainability risks, opportunities and their linkage to the business model’. The supplementary document provides selected examples of good or leading reporting practices by companies related to improvements to reporting sustainability risks, and opportunities.

For more information, see the press release on the EFRAG website. The report will be introduced in a webinar on 3 November 2021. Please click for more information here.

In addition, there is a podcast on the key findings of the report.

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European Lab publishes report on the business model, sustainability risks and opportunities

04 Oct 2021

The European Lab@EFRAG Project Task Force has published a report, ‘Towards Sustainable Businesses: Good Practices in Business Model, Risks and Opportunities Reporting in the EU’ and supplementary document, ‘Supplementary Document: Good Reporting Practices’.

The report discusses ‘the state of play and the drivers of current reporting practices, the application of technological solutions, and suggests a path to improvement in the reporting of sustainability risks, opportunities and their linkage to the business model’. The supplementary document provides selected examples of good or leading reporting practices by companies related to improvements to reporting sustainability risks, and opportunities.

For more information, see the press release on the EFRAG website. The report will be introduced in a webinar on 3 November 2021. Please click for more information here.

In addition, the EFRAG will introduce a series of three podcast on the report:

  1. Key findings of the report.
  2. Insights on the good reporting practices identified in the report.
  3. Coming soon.
EFRAG (European Financial Reporting Advisory Group) (dk green) Image

European Lab publishes report on the business model, sustainability risks and opportunities

04 Oct 2021

The European Lab@EFRAG Project Task Force has published a report, ‘Towards Sustainable Businesses: Good Practices in Business Model, Risks and Opportunities Reporting in the EU’ and supplementary document, ‘Supplementary Document: Good Reporting Practices’.

The report discusses ‘the state of play and the drivers of current reporting practices, the application of technological solutions, and suggests a path to improvement in the reporting of sustainability risks, opportunities and their linkage to the business model’. The supplementary document provides selected examples of good or leading reporting practices by companies related to improvements to reporting sustainability risks, and opportunities.

For more information, see the press release on the EFRAG website. The report will be introduced in a webinar on 3 November 2021. Please click for more information here.

In addition, the EFRAG will introduce a series of three podcast on the report:

  1. Key findings of the report.
  2. Insights on the good reporting practices identified in the report.
  3. Coming soon.

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