The main changes that have been made, following a consultation in December 2015, are:

• Acknowledgement that different entities would be subject to different regulatory frameworks. Revision of definitions referring to the PRA realistic capital regime and the Prudential Sourcebook for Insurers (INSPRU) have been made to the extent that the entity’s regulatory framework has changed with the commencement of the Solvency II Directive. A mention is also made that with the changes in regulatory framework most entities will not be required to recognise an equalisation provision from 1 January 2016.
• Clarification around establishing a benchmark accounting practice for long term insurance business as at 1 January 2015 before considering changes in accounting policies. The benchmark accounting practice can be the requirements of Section 3 of FRS 103, the Regulations and relevant parts of FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. Any changes from these policies must result in information that is either more relevant not less reliable or more reliable not less relevant. Alternatively, the benchmark accounting policies can be based on the Solvency II rules, but the entity then would need to make appropriate adjustments to ensure the resulting information is both reliable and relevant. The Accounting Council’s advice makes suggestions of the factors the entity may need to consider.
• Clarification that entities that have changed their accounting policies in accordance with the standard, so that the new policies are not consistent with the requirements of Section 3, need not apply those requirements of Section 3 that are not consistent.
• Clarification that entities should be permitted to continue to apply established accounting practice in their financial statements by referring to the realistic value of liabilities measured under INSPRU rules as at 31 December 2015 and hence are not required to change their accounting policies.
• Clarification of the scope of the Standard for with-profits businesses and with-profits funds in paragraph 3.1b.  

The amendments are effective for accounting periods ending on or after 1 January 2016.

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

As explained before, the report will not be legally binding but has been submitted as motion for a EP resolution and would serve as guidance and reference in future EU law-making processes.

Please click to access the report on the EP website.

In June 2015, ESMA published its final Guidelines on Alternative Performance Measures (APMs) for listed issuers that are effective from 3 July 2016.  Through these Guidelines, ESMA aims to promote the usefulness and transparency of APMs presented to investors.  

The publication covers:

• What is an APM?
• Are APMs prohibited or required?
• Do the Guidelines apply to all APMs?
• What APMs should be provided?
• How should APMs be presented?
• What disclosures should be given about APMs?
• How will the FRC monitor compliance with the Guidelines?

The Financial Conduct Authority (FCA) and the FRC are the UK Competent Authorities responsible for monitoring the compliance with the Guidelines.  The FRC has indicated that it will consider the Guidelines when reviewing company reports and accounts in assessing whether they are fair, balanced and comprehensive. 

Please click to access the questions and answers on the FRC website.

Our Need to know — Alternative performance measures: A practical guide is also available to assist you.

This publication aims to assist the preparers of local authority financial statements to prevent the main messages of local authority financial statements being obscured by the detail required by International Financial Reporting Standards (IFRSs). It focuses on how clarity can be improved in four specific areas:

• comparisons with budgets;
• general Fund and HRA performance;
• reserves position; and
• cash flows.

CIPFA have updated this publication following a consultation by CIPFA/LASAAC (made up of CIPFA and the Local Authorities (Scotland) Accounts Advisory Committee) last year.

The full version of how to tell the story is available on the CIPFA website.

The Discussion Paper, published in October 2015, aimed to “look at the key issues, to identify suggestions for good practice and, more specifically, to examine how the nomination committee can play its role effectively”.  It was published in response to calls from stakeholders and also to address the recommendations of the Parliamentary Commission on Banking Standards which provided recommendations to the FRC around director nomination.

The Discussion Paper explored six areas that the FRC considers are important to succession planning:

• how effective board succession planning is important to business strategy and culture;
• the role of the nomination committee;
• board evaluation and its contribution to board succession;
• identifying the internal and external ‘pipeline’ for executive and non-executive directors;
• ensuring diversity; and
• the role of institutional investors.

The feedback statement summarises the responses received under these six areas.   The FRC comments:

An active nomination committee is key to promoting effective board succession. Committees should consider carefully the future membership of their boards and ensure that this is aligned to company strategy, both current and future.

Feedback indicated that there was “some support” for further guidance, particularly in the areas of the role of the nomination committee and reporting on succession planning.  The FRC, as part of its Culture Coalition Project, will consider providing such guidance as part of the revision of the Guidance on Board Effectiveness.  The FRC will also provide comments on its reviews, performed during the current reporting season, of nomination committee disclosures (including board evaluation reporting for the FTSE 350) in its 2016 Developments in Corporate Governance and Stewardship report.

Click for:

• Press release (link to FRC website)
• Feedback Statement: UK Board Succession Planning Discussion Paper (link to FRC website)
• Our previous UK Accounting Plus news item on the Discussion Paper

An agenda and details on how to register for the meeting can be found on the EFRAG website.

The agenda is available here; it does not reveal more than that there will be a hearing followed by an exchange of views and a vote.

The Global Reporting Initiative (GRI) held its 5th GRI Global Conference last week. Quite a few developments were announced, discussed and commented on. Among other things, the UN Global Compact and GRI announced a renewed Memorandum of Understanding outlining continued collaboration over the next three years and GRI announced the launch of a Digital Reporting Alliance. There is a dedicated GRI website with all press releases issued in connection with and during the three day conference.

The United Nations Environment Programme (UNEP) and GRI have jointly published their annual report on regulation on sustainability reporting offering an overview of global trends and develoipments. Please click to access the 2016 edition of Carrots & Sticks (external link).

The Financial Stability Board (FSB) has announced the names of additional members of its Task Force on Climate-related Financial Disclosures (TCFD) for the second phase of the work of the task force. Among the new members is Eric Dugelay, Global Leader of Sustainability Services at Deloitte. Please click for more information of the FSB website.

On 6 April, the The Federation of European Accountants (Fédération des Experts-comptables Européens, FEE) and the International Integrated Reporting Council (IIRC) held a joint event "Enhancing transparency and value: From the Non-Financial Information Directive to Integrated Reporting". A report from that event is now available on the IIRC website.