Mr Hoogervorst opened his speech reflecting on the early years of the national standard setter meetings; the goal of that era being to simply to reduce the differences in their respective sets of accounting standards. Now, more than 20 years later, the goal has evolved to achieving a single set of high quality, global accounting standards. He emphasised that "a single set of standards does not mean a single accounting standard-setter. IFRS has long been a joint effort by the worldwide standard-setting community".

After a brief discussion of the recently-released jurisdictional profiles, Mr Hoogervorst described cooperative efforts between the International Organization of Securities Commissions (IOSCO) and IFRS Foundation, noting the importance of consistency in the implementation of IFRS globally. He also mentioned the creation of the Accounting Standards Advisory Forum (ASAF) and highlighted its benefits: (1) the ability to give multilateral feedback, (2) allowing members to engage with each other and (3) participants having a better understanding of competing views. The increased quality of feedback has a positive impact on IASB deliberations as well.

Mr Hoogervorst then spoke about the 'paradox of standard-setting', which is making improvements to transparency and protecting investors while considering legitimate technical or practical concerns of constituents, and standing up to lobbyists with vested interests.

Please click for access to the full text of the speech on the IASB website.

The ACCA report, ‘Understanding investors: the road to real-time reporting’, explains that, for internal management teams, “real-time” data analysis is “becoming a reality” but notes that, for an investor, they are still only able to access “periodic” corporate reporting information in line with the defined reporting cycles of companies. The report comments that this periodic information is not enough to satisfy the needs of the investors who “want companies to provide greater transparency and a faster flow of information”. The report identifies that companies are already coming under pressure from regulators and investors to speed up the reporting process.

Results of the survey of 300 investors and “leading figures from the investment community” highlight that there is a demand for companies to disseminate information “in a continuous manner, rather than at set time intervals, as at present”. The report comments:

A move towards real-time reporting would increase investor returns and enhance the level of confidence in corporate reporting. Companies that provide information on an “as needed” basis would be perceived as having better corporate governance and would attract investment more easily.

The key findings of the survey were:

However, against these benefits to investors, the report also notes a number of investor concerns with “real-time” reporting. Two-thirds of investors believed that real-time reporting “would create further financial instability and lead to an increased tendency to short-termism in financial markets” and the majority of those surveyed believed that it would “lead to an increase in market volatility”.

Additional concerns are raised in the report that “real-time” information may not be as reliable and accurate as it will be “raw” and will not have gone through “lengthy review” and other assurance processes. The report comments that as information is required at a faster rate it will impact upon the assurance processes that can be carried out which, by their nature, are provided to instil confidence that the information being reported is [materially] accurate and in accordance with accounting standards. Results suggest that investors require different levels of assurance depending upon the type of information commenting that “investors are more likely to express a strong preference for assurance over speed when it comes to general financial information over liquidity” but faster information “when it comes to emerging opportunities and, to a lesser extent, profit warnings”.

The ACCA comment that “a trend to faster closing will be difficult to resist” but there are a number of challenges that must be met, not least the debate of speed versus accuracy, before it becomes a reality and the gap between internal operational reporting and external investor reporting shortens.

Click for the press release and ACCA survey ‘Understanding investors: the road to real-time reporting’ (links to ACCA website).

The two earlier report in the series, Understanding investors: direction for corporate reporting and Understanding investors: the changing landscape were published in June 2013. Not part of the series but also investor focused is the ACCA survey What do investors expect from non-financial reporting? published in July 2013.

Click through for direct access to the notes:

Wednesday, 18 September 2013

• Financial instruments — Limited reconsideration of IFRS 9 (classification and measurement)(IASB-FASB)
  • Definition of principal
  • De minimis
  • Components of interest
  • Time value of money
  • Contingent features
  • Contingent features resulting in cash flows that are not solely principal and interest
  • Nature of the contingent trigger event
  • Prepayment features resulting in cash flows that are not solely principal and interest

You can access the preliminary and unofficial notes taken by Deloitte observers for the entire meeting.

In her opening speech Baroness Hogg noted that the “primary task of the FRC is to help capital markets operate effectively by ensuring that investors in the capital markets have what they need to place their money”.  This would include: 

• Effective boards who communicate well;
• Useful annual reports and accounts, robust and easily comparable accounting standards; and
• Effective audit and actuarial standards. 

She described that the FRC has been working hard to produce guidelines and codes to help preparers meet new regulatory requirements and also emphasised the “better coordination” that has been secured with key players such as the Bank of England, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). 

Stephen Haddrill then discussed the work of the FRC during the past year. 

Key highlights include: 

• The revision of the UK Corporate Governance Code in 2012 which, among other things includes the requirement that companies should state their policies in relation to diversity, including gender diversity and to also ensure that the board present a fair, balanced and understandable assessment of the company’s position and prospects in their annual report. 
• Revised guidance for Audit Committees.
• Guidance on conducting effective audit tenders.
• The introduction of the Stewardship Code to ensure that investors are paying attention to the explanations provided by companies in meeting the requirements of the UK Corporate Governance Code.
• The introduction of “new” UK GAAP.
• Progress made during consultations to implement Lord Sharman’s proposals on going concern. 
• The success of the Financial Reporting Lab which has created a number of reports to “help companies to identify better ways of reporting”.
• The opening of an office in Brussels which will allow the FRC to operate more efficiently on an international stage. 

He also expressed a view on the current status of corporate reporting in the UK.  He noted that “much of the quality of corporate reporting is good” but “poorer accounting” was being carried out by smaller companies.  Stephen Haddrill identified these “poorer accounting” areas as: 

• Accounting in relation to revenue recognition.
• The impairment of financial instruments.
• Cash flow statements.
• Too much “clutter” in annual reports. 

To address these issues, the FRC would like smaller listed companies to “focus on this with their auditors”.  It is hoped that through this dialogue it will prevent such “mistakes in the accounts”. 

The current strategic priorities of the FRC were also highlighted and include: 

• Monitoring and enforcing our codes and standards;
• A focus on stewardship and the importance of trying to encourage investor engagement with companies;
• Continuing to monitor corporate reporting to ensure that it is fair, balanced and not overburdened with clutter;
• Building confidence in the value of audit (on which we have a specific project from which we will be publishing some views later in the autumn);
• Implementing the new role of actuarial regulation; and
• Getting a better understanding of the economic and market context of our work. 

It was noted that a draft of the next plan, as part of the FRC three year strategy, will be published in mid-December. 

Please click here for a link to the FRC website and the full transcript.

In October 2012, the IOSCO Board and the IFRS Foundation agreed to further progress their interactions on IFRSs, focusing on the practical application of IFRS to improve financial statements. Today, the IOSCO and IFRS Foundation announced that they have agreed on a set of protocols to improve consistency in the implementation of IFRS. The Statement of Protocols for Cooperation on International Financial Reporting Standards reiterates the current relationship between the two organisations, and identifies four new areas for mutually supportive work:

• Use of IFRSs within jurisdictions around the world — IOSCO and IFRS Foundation will periodically share information to maintain current and accurate data on the progress of global IFRS adoption.
• How securities regulators will be affected by IASB standards — The IFRS Foundation will identify and explain implementation aspects of the IASB’s new or significantly amended standards that are of interest to securities regulators.
• Discussion of IFRS enforcement matters — The IOSCO will organise an annual IFRS enforcers’ discussion session for its members to discuss issues, standards and other IFRS enforcement matters with IASB members or staff .
• Providing critical and timely input — The IFRS Foundation will solicit IOSCO member opinions on any time-sensitive IFRS implementation matters needing urgent input from securities regulators. 

The Statement of Protocols is available on the IASB website.

In accordance with the IASB's current practice of releasing editorial corrections prior to the publication of its major publications, the editorial corrections precede the expected publication of a revised edition of A Guide through IFRS ('Green Book').

The editorial corrections affect the following individual pronouncements:

• IFRS 2 Share-based Payment (issued in February 2004)
• IFRS 3 Business Combinations (issued in January 2008)
• IFRS 9 Financial Instruments (issued October 2010)
• IFRS 13 Fair Value Measurement (issued May 2013)
• IAS 39 Financial Instruments: Recognition and Measurement (issued December 2003)
• Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) (issued June 2012)
• Exposure Draft ED/2012/4 Classification and Measurement: Limited amendments to IFRS 9 (Proposed amendments to IFRS 9 (2010)) (issued November 2012)
• Exposure Draft ED/2013/3 Financial Instruments: Expected Credit Losses (issued March 2013)
• Exposure Draft ED/2013/7 Insurance Contracts (issued June 2013)

In addition, the corrections will, to the extent relevant, impact the IASB's publications A Guide through IFRS 2012 ('Green Book'), 2013 IFRS (official pronouncements applicable on 1 January 2013, the 'Blue Book'), 2013 IFRS (all pronouncements issued as at 1 January 2013 even if not applicable at that date, the 'Red Book').  Further editorial corrections are also made to these publications to reflect errors made in their compilation.

Editorial corrections do not change the meaning or application of pronouncements, but instead correct inadvertent errors.  Full details of the editorial corrections is available on the IASB website.

The research papers are sourced from Accounting and Business Research, Accounting Education, Accounting in Europe, European Accounting Review, Accounting History Review, Review of International Political Economy, New Political Economy, Total Quality Management and Business Excellence, Public Money & Management, and Quantitative Finance.

Among the articles are contributions by distinguished researchers: Christian Leuz (University of Chicago Booth School of Business), Thorsten Sellhorn (WHU - Otto Beisheim School of Management ), and Katherine Schipper (Duke University).

Access to the collections of research papers is available through the links below (all links to Taylor & Francis Online). Please note that free access expires at the end of 2013.

• Accounting Regulation (15 papers)
• International Accounting (16 papers)
• 20th Century Accounting (15 papers)
• Auditing (18 papers)

The free access to four earlier collections on accounting research (on the topics 'International Financial Reporting Standards', 'Sustainability in Accounting', 'The Financial Crises', and 'Accounting Education') was originally intended to end at the end of July 2013. However, for the time being these continue to be freely accessible.

On UK Accounting Plus, we offer a dedicated subpage on Research and education and a collection of research papers on financial reporting.