The report sets out to address what it sees as the principal challenge facing the audit profession today - the need to win back public trust following the financial crisis and a series of perceived audit failures. It argues that the unprecedented organisational and informational complexity of the modern world will lead to an ever greater public demand for transparency, which the audit profession is ideally placed to deliver. However, in order to do this it needs to move away from reliance on its foundation stone, the statutory audit report on historic financial information, and respond to the challenges of a business world where fortunes can fluctuate overnight on the basis of a tweet or a negative news story, and shareholding periods are measured in days, not months or years.

The authors set out the view that audit needs to develop away from being a service consisting almost exclusively of external investigation and towards a more co-productive process, with the auditor’s role expanding to include that of an expert convenor willing to share the tools of enquiry. Instead of focussing on the audit report as a trust-producing product, the profession should instead focus on making the audit process a trust-producing practice, bringing into consideration all aspects of an organisation’s value.

To make this change, the audit profession would need to adjust the focus of its training process, to include not just technical rigour but also qualities like empathy, imagination and moral reasoning.

The report is based on interviews and comment from over 200 professionals, both from within and outside the audit profession. It has been produced by RSA 2020 Public Services, a practice-research and policy development hub which is part of RSA’s Action and Research Centre, and AuditFutures, a programme run by the Finance Innovation Lab (a partnership between ICAEW and the World Wide Fund for Nature) and the ICAEW's Audit and Assurance Faculty.

Click here for details of the release of this publication on the AuditFutures website and here for similar details on the RSA site. 

The report itself can be downloaded here (link to the AuditFutures site).

Although financial statements and other financial information are presented in accordance with applicable financial reporting frameworks which should result in relevant and reliable information, there sometimes seems to be a demand from users or a desire from issuers for other information that is intended to lead to a better understanding of a company's position and performance. This information is often included in financial statements or documents accompanying the financial statements and normally consists of either re-calculated information already provided or new metrics designed to improve the understanding of that information.

ESMA acknowledges the importance of APMs to assist users in making investment decisions and only recently even the IASB Chairman admitted in a speech that preparers and analysts "may need non-GAAP measures to fine-tune their presentation or assessment of an entity". However, ESMA is concerned about widely diverse additional financial data which in some cases cannot be easily derived from or reconciled back to financial statements. Also, this additional information is often not defined and comparatives are lacking in many cases.

ESMA has therefore developed draft guidelines that address the concept and labels of APMs, guidance for the presentation of APMs and consistency in using APMs. The key requirements of the proposed guidelines are:

1. Issuers should define the APM used and its components as well as the basis of calculation adopted.
2. APMs should be given meaningful labels reflecting their methodology and basis of calculation in order to avoid conveying misleading messages to users.
3. Issuers should disclose all APMs used and their definition in an appendix to the publication.
4. APMs should be reconciled to the most relevant amount presented in the financial statements, separately identifying and explaining each reconciling item.
5. Issuers should explain the context of any APM disclosed so that users can understand what information the APM concerned is meant to provide them with.
6. APMs that are presented outside financial statements should be displayed with less prominence, emphasis or authority than measures directly stemming from financial statements prepared in accordance with the applicable financial reporting framework.
7. When an issuer chooses to present APMs, it should also provide comparatives for corresponding previous periods. 
8. The definition and calculation of the APM should be consistent over time. If that is not the case, an issuer should explain the reasons why the definition and/or calculation of the APM has changed.
9. If an APM is redefined, a prior period is corrected, or the calculation of the APM changes, an issuer should provide additional information to explain those changes, the effect of the change compared to the former APM and restated comparative figures.
10. If an APM ceases to be used, the issuer should explain its removal and the reasons for which any newly defined APM replacing the previous one provides more reliable and relevant information on the financial performance compared with the previous one.

The closing date for responses to the ESMA consultation is 14 May 2014. ESMA expects to publish the final guidelines in the fourth quarter of 2014.

Please click for additional information on the ESMA website:

• Press release
• Proposed ESMA Guidelines on Alternative Performance Measures

ED/2013/10 proposes to change IAS 27 Separate Financial Statements to:

• Permit the equity method as one of the options to account for an entity's investments in subsidiaries, joint ventures and associates in the entity's separate financial statements.
• Require applying the change retrospectively when an entity elects to change to the equity method.

Whilst supporting the proposed amendments, EFRAG “believes that the IASB should better articulate the reasons for re-introducing the equity method in the separate financial statements”.  The comments of EFRAG are consistent with those expressed in the draft comment letter in January 2014.  The key comments of EFRAG are: 

• Consequential amendment to IAS 28 Investments in Associates and Joint Ventures — EFRAG encourages the IASB to better explain why it is necessary in the Basis for Conclusions and “how it improves the quality of financial  reporting in the separate financial statements”.
• Retrospective application — EFRAG thinks that "relief should be provided from full retrospective application to entities that opt to use the equity method to account for subsidiaries in their separate financial statements".
• EFRAG believes that the IASB “should introduce a transitional relief for first-time adopters”.
• Objective of separate financial statements — EFRAG would like the IASB to clarify the objective of separate financial statements in this project and in the future.
• EFRAG encourages the IASB to clarify the accounting for how to account for an investment that changes status and where the entity has elected a different measurement option for each category of investments “to ensure consistent application in practice”.

The full comment letter can be accessed from the EFRAG website below. 

Click for:

• Press release (link to EFRAG website).
• EFRAG full comment letter (link to EFRAG website).
• Our previous UK Accounting Plus story on the IASB’s Exposure Draft. ED/2013/10 'Equity Method in Separate Financial Statements (proposed amendments to IAS 27)'.
• Our IAS 27 — Equity method in separate financial statements project page
• Deloitte's 'Need to know' newsletter explaining the ED's proposed amendments

IFRIC 21 was issued on 20 May 2013 and has a stated effective date of annual periods beginning on or after 1 January 2014.  The updated report indicates final endorsement is currently expected in the second quarter of 2014.

The endorsement status report, dated 11 February 2014, is available here.

The CMAC, formerly called the Analyst Representative Group (ARG), consists of a number of professional financial analysts who meet at least three times a year with members of the IASB to provide the views of professional investors on financial reporting issues.

A summary of the agenda for the meeting is set out below:

Agenda papers for the meeting are available on the IASB's website.

Ms Paul currently serves as the Executive Vice-President and Chief Financial Officer of the Caisse de Dépôt et Placement du Québec. Her appointment to the IFRS Advisory Council begins immediately.

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

Under the IFRS Foundation Constitution, there are 22 IFRS Trustees, which are required to broadly reflect the world’s capital markets and have a diversity of geographical and professional backgrounds. Trustees are appointed for a three year term (with one possible renewal) and oversee the IFRS Foundation and the International Accounting Standards Board (IASB). For the 2015 vacancies, the IFRS Foundation is seeking Trustees from Europe, North America and for one "At Large" position.

Those interested in applying for the positions are asked to respond by 16 March 2014. More information for applicants is available through the press release on the IASB website.

Interested listeners have the ability to dial into the conference call.  Please click link for details of the registration on the EFRAG website. 

COSO has two frameworks, the Internal Control – Integrated Framework (2013) and Enterprise Risk Management – Integrated Framework (2004). These frameworks provide guidance on effective controls and proficient risk management. This paper integrates concepts from the COSO frameworks with a general business model and describes how applying key elements of the COSO frameworks can enhance the governance, strategy setting, and management processes.

For more information, see the press release and Thought Paper, Improving Organizational Performance and Governance: How the COSO Frameworks Can Help, on COSO’s Web site.

The agenda for the meeting (as at 11 February 2014) is summarised below:

Agenda papers for the meeting are available on the IASB's website.