Interested listeners have the ability to dial into the conference call.  Please click link for details of the registration on the EFRAG website.  The agenda can also be downloaded from the EFRAG website.  

Patricia McBride, who is a citizen of both the UK and Australia, has previously held technical roles supporting the standard-setters in Australia, New Zealand and Hong Kong on IFRS issues. Part of her career was also spent in academia. She will succeed Pieter Dekker who will leave EFRAG in early April, after four years with the organisation.

The current reform of EFRAG's governance and mandate as result of the Maystadt review will probably also lead to enhanced responsibilities of EFRAG's Technical Director.

Please click for access to the press release on the EFRAG website.

The IASB uses the annual improvements project to make necessary, but non-urgent, amendments to IFRSs that will not be included as part of another major project.  The ED proposes amendments to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, IFRS 7 Financial Instruments: Disclosures, IAS 19 Employee Benefits and IAS 34 Interim Financial Reporting. 

ESMA’s main comments are: 

• That the International Accounting Standards Board (IASB) should ensure that the notions ‘held for distribution to owners’ and ‘cost for distribution’ are added/amended to all relevant parts of IFRS 5 to avoid potential diversity in practice and to achieve consistent application of the standard.
• That in relation to the proposed amendment to IAS 19, ESMA would like clarification “on whether the IAS 19 requirements for regional markets sharing the same currency also apply in the case where a currency is pegged to another currency”.
• That in relation to the proposed amendment to IAS 34, although ESMA are “broadly supportive” they believe that it is important that the interim financial report remains readable and understandable as a whole and that it should be safeguarded “from a potential excessive use of cross-referencing”.
• That the amendments in respect of IFRS 5 should be applied retrospectively, consistent with the comments made by the European Financial Reporting Advisory Group (EFRAG). 

The full comment letter can be downloaded from ESMA’s website below. 

Click for: 

• Full comment letter (link to ESMA website).
• Our UK Accounting Plus project page on the Annual Improvements to IFRSs 2012–2014 Cycle.
• Our previous story on the Exposure Draft ED/2013/11 Annual Improvements to IFRSs 2012–2014 Cycle. 
• Deloitte's 'Need to know' newsletter on the Annual Improvements exposure draft.

We have previously posted Deloitte observer notes from the meeting.

Highlights from the meeting include:

• IPSASB governance review.  Whilst there was broad consensus that public sector accounting was in need of improvement, it was not considered feasible, at least in the short term, to extend the remit of the IFRS Foundation and Monitoring Board to encompass the IPSASB.  Discussion included funding issues, undesirable organisation impacts and the risk of increased political pressure and influence
• Leases project.  There was overwhelming support for including all leases 'on balance sheet', but there was a feeling that convergence with US GAAP, whilst very important, should not interfere with the completion of the project
• Future of corporate reporting. There was strong support for the current approach of involvement of the IASB with Integrated Reporting (<IR>), under which the IASB does not aim for being the owner of the developments but rather collaborates with the International Integrated Reporting Council (IIRC) and other standard-setters and stakeholders, while continuing its focus on its competencies. In relation to digital reporting, the Council advised the IASB to 'stay current on technological developments'. More broadly, the possibility of research projects on non-GAAP measures and further enhancements on management commentary were raised.

The next meeting of the IFRS Advisory Council is scheduled for 9-10 June 2014 in London.

The full IASB report on the IFRS Advisory Council meeting is available on the IASB web site.

The Committee will:

• Continue discussions on issues related to IAS 1, IAS 12, IAS 34 and IFRS 11
• Consider the finalisation of tentative agenda decisions on IAS 8, IAS 17, IAS 39, IFRS 10 and IFRIC 21
• Consider new issues on IAS 16, IAS 19 and IFRIC 17.

The full agenda for the meeting, as of 17 March 2014, can be found here.  We will update this page for any changes to the agenda, and our Deloitte observer notes from the meeting as they become available.

When FRS 101 was issued, the Accounting Council advised the FRC to update FRS 101 at regular intervals to ensure that it maintains consistency with EU-adopted IFRS. FRED 53 Draft Amendments to FRS 101 Reduced Disclosure Framework (2013/14) is the first such proposed update.

Our key comments include:

• We agree with the proposed introduction of paragraph 4A, which clarifies that FRS 101 accounts are Companies Act accounts and not IAS Accounts into the standard; the proposed changes to paragraph 6, which clarify the disclosures required by the Companies Act when a company recognises certain financial instruments at fair value, and the proposed changes to paragraph 8(l), which provide relief for qualifying entities from certain new requirements of IAS 36 Impairment of Assets. 
• Although the issue raised by the proposed addition of paragraphs AG1(gA) and AG1(gB) regarding when an entity preparing Companies Act consolidated accounts may exclude a subsidiary from consolidation is a valid one, we do not believe that it is necessary to amend IFRS 10 in the manner proposed.  In our view the appropriate way to deal with it is to add a paragraph to the scope section of FRS 101 highlighting this issue to users of the standard. This is due to the fact that an entity may not apply FRS 101 to any consolidated financial statements that it is required to or chooses to prepare, and so this issue is only indirectly relevant to preparers of FRS 101 financial statements.

Further comments and a full response to all questions raised in the invitation to comment are contained within the comment letter.

The draft plan and budget and levy proposals which were issued for consultation in December 2013 identify a number of priority areas for the FRC to focus on in 2014/15. 

We welcome the inclusion of key effectiveness indicators with regard to the FRC’s 2014/15 priorities – a request that we flagged last year – and the plan to conduct thematic reviews on narrative reporting and cutting clutter. 

However we make a number of recommendations including:

• That the draft plan and budget should explicitly show a direct comparison between what the FRC hoped to achieve and what they actually achieved over the last year.
• That the draft plan and budget should include some reference to FRC proposed actions/next steps in furthering the ‘prudence debate’ with the International Accounting Standards Board (IASB) and others.
• That work on an XBRL taxonomy for areas of the annual report other than the financial statements (for instance narrative reporting) should be on a longer-term horizon of the FRC.  We suggest that a project on how to ‘tag’ such information in a way that does not stifle innovation in reporting would be a good project for the Financial Reporting Lab. 
• That the FRC should consider setting a target for smaller companies in line with the 80% target on reporting for FTSE 350 companies regarding the latest Corporate Governance Code changes.
• That in seeking evidence for improvement in the clarity of explanations, the FRC should consider both smaller as well as FTSE 350 companies.

Our full comment letter can be obtained here.

The IASB’s Conceptual Framework sets out the concepts that underlie the preparation and presentation of financial statements.  The Conceptual Framework identifies the principles for the IASB to use when it develops and revises International Financial Reporting standards (IFRSs).  The DP was published in July 2013 and contained proposals for topical areas where it considered that amendments to the existing Conceptual Framework were necessary. Included in the DP were proposals to revise the definitions of an asset and a liability, to introduce guidance on derecognition, to clarify the objective and purpose of other comprehensive income and to set a framework for presentation and disclosure. 

EFRAG published their draft comment letter in September 2013 and the final comment letter was published in February 2014. 

The feedback statement (link to EFRAG website) provides an analysis of the EFRAG tentative position expressed in the draft comment letter, describes the comments received from constituents and then highlight how these comments were considered by the EFRAG Technical Group (EFRAG TEG) in reaching their final position on the IASB DP set out in their final comment letter to the International Accounting Standards Board (IASB).  The feedback statement also provides an overview of the outreach events conducted by EFRAG together with the National Standard Setters of Germany, The Netherlands, Denmark, Austria, Lithuania, Poland and Luxembourg.

Click for:

• EFRAG press release (link to EFRAG website).
• Feedback statement in full (link to EFRAG website).
• Our previous UK Accounting Plus story on the IASB Discussion Paper: DP/2013/1: ‘A Review of the Conceptual Framework for Financial Reporting’.
• Our UK Accounting Plus project page in the Conceptual Framework.

The vote follows a trilogue agreement of the European Parliament, the Council and the Commission reached in early December 2013.

The regulation passed by the Parliament today will form the legal basis for the continuation of financing the IFRS Foundation and PIOB for the period 2014-2020 and of EFRAG for the period 2014-2016. The agreement limits the financing period of EFRAG to three years in view of prospective reforms that might arise from the Maystadt Report.

In financial terms, the regulation proposes to contribute annually approximately the following sums:

• 4.3 million euro to the IFRS Foundation (17% of its budget),
• 3.4 million euro to EFRAG (43% of its budget), and
• 0.3 million euro to PIOB (22% of its budget).

Internal Market and Services Commissioner Michel Barnier welcomed the vote in a press release:

Please click for access to the full press release on the European Commission website. The full text adopted by the Parliament today is available on the Parliament's website (please refer to Part 2, pp 146-177).

Exploring a number of possible scenarios, the research paper, ‘Accountants and Strategic Leadership’, indicates that <IR> “has the potential to bring about transformational changes” and highlights that the future role of the finance professional will be dependent upon how the profession responds to <IR>. 

To help explore the range of possible outcomes, the research paper develops two grids with four generic scenarios based upon the role of the finance professional (either entrepreneurs or gatekeepers) and the scope of the accountant’s role within their organisation (the finance function contributes to <IR> or the finance function owns and leads <IR>).  The four possible scenarios identified for the future role of the finance professional are: 

Changemaker.  In this scenario, many in the profession have succeeded in balancing the ownership and lead of their business’s <IR> and taking a more entrepreneurial stance within the firm. The need to ensure sound and ethical practice has been maintained in the gradual assumption of a wider remit by the CFO and accountancy function. There is widespread acknowledgement among stakeholders that the profession has succeeded in providing rigorous integrated reports while enabling the entrepreneurial spirit to flourish. Finance professionals are able, therefore, to build on their reputation as a trusted pair of hands to develop greater influence across their organisations and external stakeholders.

Embedded accountant.  Here finance is seen as a business partner and spends a lot of time ‘in the business’. A close alignment exists with the business’s strategy function to ensure that financial resources are optimally aligned with strategic priorities. Accountants are keen to own corporate reporting while acquiring new skills that enhance their report-writing capability to ‘tell a story’. Accountants build key relationships and partnerships in their business to ensure appropriate content can be identified for corporate reporting. At the same time, accountants are leading the debate at executive-level on the developments in corporate reporting.

Coerced accountant.  Here many accountants deliberately maintain a focus on the largely technical elements of the role while seeking to ensure compliance with regulatory requirements of the law, but are ‘coerced’ to play a more central role. In this scenario, accountants are the ‘fallback’ option when there is no one in the organisation to take the lead and they are obliged to take this role.   

Reluctant accountant.  In this scenario accountants are ‘followers’. Change is not embraced and the accountant is devoted to provide outputs according to prescriptive guidelines/requirements. In this approach, accountants make the minimum change necessary to meet the new requirements. Accountants have no qualms for <IR> to be owned outside of finance and only want to contribute ‘their bit’ to the report. Accountants in this situation are only making the necessary adjustments to meet the financial capital aspects of <IR> and they take a passive role while other parts of their business take the lead in their organisation’s <IR> efforts. 

The ACCA believe that the finance profession “needs to realign itself and that accountants should aspire to be changemakers”.  Although recognising that there is a risk that the finance function may lose its influence over corporate reporting “as a consequence of the increased role of other actors in the production of financial statements compliant with <IR> guidelines”, the ACCA consider that <IR> is an opportunity for the profession to lead the initiative and show strategic leadership in corporate reporting. 

Further impacts of <IR>, such as the changing role of internal auditors and how the provision of assurance may need to develop are also highlighted in the research paper.     

The full research paper can be obtained from the ACCA website.