Paul Druckman has served as CEO for almost five years and oversaw the development of the International Integrated Reporting Framework, which was released in December 2013.  He has also raised awareness of and overseen the adoption of Integrated Reporting in over 25 countries. 

No date has yet been set for his departure.  A further announcement will be made when the Board appoints a successor.

The press release is available on the IIRC website.

ESMA supports the proposed amendment addressing whether a property under construction or development that was previously classified as inventory could be transferred to investment property when there is an evident change in use.  ESMA also supports retrospective application of the amendment.

The full comment letter is available on the ESMA website.

The EU NFR Directive was approved by the council of the European Union in September 2014. It requires large public-interest companies with more than 500 employees to disclose relevant and material environmental and social information in their annual report. Public interest companies are those with securities admitted to a regulated market in the EU together with credit institutions and insurance undertakings.

Those within scope will also be required to provide information on their diversity policy, covering age, gender, geographical diversity, and educational and professional background. Disclosures shall set out the objectives of the policy, how it has been implemented, and results.

The European Commission has recently launched a public consultation to collect views from stakeholders on the form and content of non-binding guidance for reporting non-financial information.

The new rules complement the narrative reporting regulations in the UK.  Through complying with the narrative reporting regulations UK quoted companies will already be disclosing specific information on the company’s strategy, business model, human rights and gender diversity in their strategic report and disclosing information on greenhouse gas emissions in their directors’ report.  The new NFR Directive will extend the level of disclosures required on diversity (for example policies on age, gender, educational and professional background and professional background) and will specifically require reporting on bribery and corruption matters for the first time.  However, for some large non-quoted UK companies that fall within the definition of a Public-interest entity, the Directive may bring about significant new disclosures in their annual reports that were previously not required by regulation. 

The BIS consultation asks for views on the following:

• whether an option should be available to allow companies to disclose non-financial information in a separate report, outside the annual report;
• what options should be considered regarding implementation. Specifically BIS has asked for views on the options to update the existing UK reporting framework for the disclosure requirements for large PIEs, or, to reduce the scope of the existing UK reporting requirements for all quoted companies and limit it to those required by the EU NFR Directive; and
• whether companies should be required to verify the non-financial information in their annual report by an independent assurance service provider.

In addition, BIS has used the consultation to “take a wider, strategic look at reporting in the UK”, particularly focusing on the scope for deregulation. The main topics of consultation are:

• whether non-financial information could be published in solely electronic format on a company’s website and wider considerations in respect of electronic publication;
• guidance on the definition of the term ‘senior manager’ for the purposes of numerical disclosures on gender diversity, which as currently defined in the Companies Act 2006 has “proved challenging” in compliance;
• whether any existing UK or EU reporting requirements could be repealed in order to remove any unnecessary reporting; and
• the cost of preparing an annual report, as well as the expected costs and benefits of adopting the EU NFR Directive.

The EU NFR Directive must be incorporated into UK law by 6 December 2016, with a view to these regulations applying to reporting years beginning on or after 1^st January 2017.

Comments are requested by 15 April 2016. 

• Press release (link to BIS website)
• The consultation issued by BIS (link to BIS website)
• Our news story on the European public consultation
• Our Need to know newsletter
• Full text of the Directive in the Official Journal (link to EU website)

The amendments were published by the International Accounting Standards Board (IASB) in December 2015 and propose to amend IFRS 4 Insurance Contracts to address the concerns expressed about the different effective dates of IFRS 9 Financial Instruments and the new insurance contracts standard.  The amendments are intended to provide two options for entities that issue insurance contracts within the scope of IFRS 4:

• an option that would permit entities to reclassify, from profit or loss to other comprehensive income, some of the income or expenses arising from designated financial assets; this is the so-called overlay approach; and
• an optional temporary exemption from applying IFRS 9 for entities whose predominant activity is issuing contracts within the scope of IFRS 4; this is the so-called deferral approach.

EFRAG welcomes the IASB proposals. EFRAG believes that the temporary exemption from applying IFRS 9 addresses all the concerns relating to the misalignment of IFRS 9 and the new insurance contracts standard, while the overlay approach would only address the accounting mismatches. Nevertheless, EFRAG supports both approaches as complementary solutions.

While EFRAG believes the temporary exemption to address all concerns, EFRAG is also convinced that the exemption should be available to as many entities that are significantly impacted by the interaction between IFRS 9 and IFRS 4 in order to avoid an uneven playing field in the insurance sector.  EFRAG also believes that the temporary exemption from applying IFRS 9 should not be extended to banking activities that are material at the reporting entity level.  In relation to the temporary exemption EFRAG proposes that:

• the issuance of a significant amount of insurance contracts within the scope of IFRS 4 be a necessary condition to apply the temporary exemption from applying IFRS 9;
• entities should be allowed to apply either a widened predominant activity criterion or a regulated entity criterion to identify whether the temporary exemption from applying IFRS 9 can be applied; and
• the temporary exemption from applying IFRS 9 can be applied either at or below reporting entity level.

Finally, EFRAG agrees with the expiry date set for the temporary exemption from applying IFRS 9.

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

The Charity Commission wants charities to be able to file their accounts digitally with Companies House in line with many other companies.  The taxonomy will make it easier and quicker for those charities that have to file with both the Charity Commission and Companies House and will also enhance the quality and accessibility of such accounts.

The taxonomy supports iXBRL tagging of accounts and is designed to align with the new Charities Statement of Recommended Practice (SORP) (Financial Reporting Standard (FRS) 102)) issued in July 2014 and the modifications included within the Update Bulletin 1 which updates the SORP for changes to FRS 102 since the initial SORP was published.  It replaces the existing Charity Taxonomy issued in 2009 under the previous Charity SORP 2005.

Click for:

• FRC press release (link to FRC website)
• FRC taxonomies page including links to the Charities FRS 102 SORP taxonomy (link to the FRC website)
• Charity Commission press release (link to Charity Commission website)
• Our UK Accounting Plus news item on the original consultation

The paper, published in July 2015, discusses the usefulness of the statement of cash flows for financial institutions and possible alternatives.

ESMA welcomes the paper “as an important contribution to the discussion on how to improve the information to enable investors to assess prospects for future net cash inflows of financial institutions”.  ESMA also shares EFRAG’s concerns regarding the relevance and usefulness of the statement of cash flows prepared by financial institutions under IAS 7 Statement of Cash Flows especially when using the indirect method.    

ESMA supports an approach that “retains the requirement to present the statement of cash flows for all entities but improves its content and presentation and accompanies it by a set of disclosures that provide relevant information for a particular type of entity”.

ESMA comments that the Discussion Paper is “a good starting point” in the debate around how existing requirements could be changed to provide more relevant information to users of the financial statements.  ESMA “acknowledges the analysis EFRAG has made in identifying potential improvements to the requirement to present the statement of cash flows by financial institutions and possible additional disclosure requirements that could provide relevant information to users”.  However ESMA encourages EFRAG to undertake further work in this area “in order to identify the information that would be most relevant about various types of entities”. 

In its comment letter, ESMA provides a number of approaches for the preparation of the statement of cash flows by certain financial institutions that EFRAG could further analyse.

The full comment letter is available on the ESMA website. 

In December 2015, the IASB published Effective Date of Amendments to IFRS 10 and IAS 28 (“the 2015 Amendments”) which deferred indefinitely the effective date of Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) (“the 2014 Amendments”) by removing the original effective date of 1 January 2016 and indicating that a new effective date would be determined at future date when the IASB finalises the revisions, if any, that would result from the research project on equity method.  The 2015 amendments continued to allow earlier application of the September 2014 amendments.

In its letter, EFRAG comments:

the original intent of the 2014 Amendments was to reduce diversity in practice by eliminating conflicts between standards. However, allowing an early application of the 2014 Amendments in Europe without specifying an effective date is opposite to the original objective of the amendments. This is because the conflicts between standards identified as a source of diversity will remain as long as there is no effective date for the amendments. Moreover, enabling the early application of the 2014 Amendments as an option would potentially give rise to renewed diversity in practice within the IFRS community by bringing a special focus on this issue. EFRAG notes that without these amendments, management will continue to use judgement in developing an accounting policy for these specific transactions, taking into account IFRS as endorsed in European Union. In many cases an accounting policy will already have been developed and, in those cases, it is unlikely that there will be any reason to amend that policy.  Finally, EFRAG highlights that whether the amendments are endorsed or not in Europe, entities will still be able to claim compliance with IFRS as issued by the IASB.

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

In its comment letter, EFRAG agrees the guidance proposed in the draft interpretation “as it will remove the existing inconsistencies in accounting for uncertain tax treatments”.

However, the EFRAG also believes that the proposals “may, in certain circumstances, lead to accounting for uncertainties arising on other taxes or positions which may be viewed as economically similar to income taxes, on different bases”.  EFRAG suggests that the International Accounting Standards Board (IASB) considers whether and how to address these differences.

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

The latest consultation follows a consultation in July 2015 (“the July consultation”) which consulted on how to address the discrepancy between the average earnings of men and women employed by the largest UK employers (referred to as the 'Gender Pay Gap').  The government response to the July consultation has been published summarising the feedback received and should be read alongside the consultation launched today in order to understand the content of the draft regulations.

Key aspects of the draft regulations include:

• The regulations will apply to employers with 250 or more ‘relevant employees’.  A ‘relevant employee’ is defined as “someone who ordinarily works in Great Britain and whose contract is governed by UK legislation”.
• They will come into force from 1 October 2016 although employers will not be expected to publish the required information immediately.
• Employers will have 18 months (from 1 October 2016) to publish the required information for the first time and then must publish the information annually thereafter. 
• Employers will need to publish:
  • Their overall mean and median gender pay gaps.
  • The difference between the mean bonus payments paid to men and women.
  • The number of men and women in each quartile of their pay distribution.  Employers will need to calculate their own salary quartiles based upon their overall pay range.

This information will be required to be published on the employer’s website and will be required to retain the information online for three years.  Such information must also be uploaded to a government sponsored website to evidence compliance.

The government has announced that supporting guidance to help employers implement the regulations will be published later this year.

Click for:

• Press release (link to Government Equalities Office website)
• Full consultation Mandatory Gender Pay Gap Reporting (link to Government Equalities Office website)
• Government response to the July consultation (link to Government Equalities Office website)
• Our previous UK Accounting Plus news item on the July consultation
• Our previous UK Accounting Plus news item on the Government Equalities Office report into closing the gender pay gap
• Our related Governance in brief publication

For more in­for­ma­tion, see the press release on the IASB’s website.