Technical Hub

Recent fraud cases, corporate failures and the pandemic’s impact have led Accountancy Europe to issue two publications with recommendations to strengthen the financial reporting ecosystem, respectively on:  Going concern  Fraud In the two publications Accountancy Europe explore how the main parties interacting in this ecosystem can improve dealing on those fronts: auditors, corporate boards and management, legislators, standard setters and regulators. 

Developments of interest this week are outlined. UK  A new FRC Lab report, Virtual and Augmented Reality in corporate reporting, considers how virtual and augmented reality are and might be used to expand the scope and audience for corporate reporting. The report includes examples of current practice and highlights some possible future uses. The report is the final deep dive from the Lab’s Digital Future series. Europe Accountancy Europe and the European Association of Cooperative Banks (EACB) invite you to join them as they debate how new rules on reporting non-financial information (NFI) might affect small and medium-sized enterprises (SMEs). With the help of EACB, Accountancy Europe is developing a checklist for accountants to help SME clients prepare for these new requirements, whether they stem from legislation, banks or supply chain partners. ESMA has submitted IFRS 9 and IAS 20 related questions to the IFRS Interpretations Committee. Find out more here. EFRAG has issued a Draft Endorsement Advice letter and a separate invitation to comment relating to the endorsement for use in the EU of Covid-19-Related Rent Concessions beyond 30 June 2021 ('the Amendments'). EFRAG's overall preliminary assessment is that the Amendments satisfy the criteria for endorsement for use in the EU and therefore recommends its endorsement. Comments are requested by 17 March 2021. EFRAG has issued a reminder in relation to its call for EFRAG TEG members. Candidates with an accountancy profession background with an EEA nationality (other than France, Germany, Italy and Spain) have until 28 February to send their applications to join EFRAG’s Technical Expert Group (EFRAG TEG) for the 2021 rotation. International The IFRS Foundation is holding a live webinar on the IASB’s consultation on regulatory assets and regulatory liabilities. The webinar, which will be held on Wednesday 24 February 2021 at 12:00 GMT, and will run for approximately an hour, will provide an overview of the proposals in the Exposure Draft Regulatory Assets and Regulatory Liabilities (published in January 2021). A recording of the webinar will be available after the live discussion. The IASB has recently issued narrow-scope amendments to IFRS Standards. Following feedback that more guidance was needed to help companies decide what accounting policy information should be disclosed, the Board has issued amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements. Separately, the Board has also issued amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. The amendments clarify how companies should distinguish changes in accounting policies from changes in accounting estimates.      

Developments of interest this week are outlined. Chartered Accountants Ireland Chartered Accountants Ireland has updated the Technical and business updates page on our COVID-19 Hub with updates on Financial Reporting implications of Coronavirus.  We have also updated our page on Other Regulator Updates for both ROI and NI / UK in response to COVID-19.   ROI The Department of Enterprise, Trade and Employment is developing legislation for the rescue of small companies. To inform development of the General Scheme of the Bill, the Department is seeking submissions from interested parties. UK  The UK Endorsement Board secretariat has published their draft comment letter on the IASB’s ED/2020/4 Lease Liability in a Sale and Leaseback. The draft comment letter is open for comment until 1 March 2021. Europe Accountancy Europe have published Going concern: recommendations to strengthen the financial reporting eco-system. International The IASB has published for consultation a proposal to extend by one year the application period of the amendment to IFRS 16 Leases issued in 2020 to help lessees accounting for covid-19-related rent concessions. The IASB has posted the recording of its recent webinar on iden­ti­fy­ing research op­por­tu­ni­ties by academics in IFRS 15 ‘Revenue from Contracts with Customers’. On 1 March 2021, EFRAG, EFFAS, ABAF/BVFA and the IASB offer a joint ex­plana­tory webinar to consider the views of users for the post-im­ple­men­ta­tion review on IFRS 10, 11 and 12.    

The International Accounting Standards Board (‘IASB’ or ‘the Board’) has published for consultation a proposal to extend by one year the application period of the amendment to IFRS 16 Leases issued in 2020 to help lessees accounting for covid-19-related rent concessions. In publishing the consultation, the Board note that ‘the original amendment was issued in May 2020 to make it easier for lessees to account for covid-19-related rent concessions, such as rent holidays and temporary rent reductions, while continuing to provide useful information about their leases to investors. The practical relief currently applies to rent concessions that reduce only lease payments due on or before 30 June 2021.’, and that ‘in response to calls from stakeholders and because the covid-19 pandemic is still at its height, the Board proposes to extend the relief to cover rent concessions that reduce only lease payments due on or before 30 June 2022.’ Due to the urgent nature of the proposal, the Trustees of the IFRS Foundation have approved a shorter-than-normal comment period of 14 days for this consultation, with the deadline for submitting comments on the Exposure Draft (ED) being 25 February 2021. In terms of next steps, the ED says ‘The Board will consider the comments it receives on the proposal in this Exposure Draft and will decide whether to proceed with the proposed amendment. The Board plans to complete any resulting amendment to IFRS 16 by the end of March 2021.’ The ED can be accessed here.

Developments of interest this week are outlined. ROI The Central Bank of Ireland will continue to accept annual financial reports from Irish issuers subject to the Transparency (Directive 2004/109/EC) Regulations 2007 (S.I. No. 277 of 2007) and ESEF Regulation in PDF format for financial years beginning between 1 January 2020 and 31 December 2020.  Europe Accountancy Europe have issued a paper as part of their SME risk management project series outlining some of the main insolvency risks and challenges faced by SMEs. The 20th edition of European Securities & Markets Authority (ESMA's) newsletter has just been issued. International In their January podcast Sue Lloyd, Vice-Chair of the International Accounting Standards Board (IASB), talks about the Board’s discussions at the meeting held virtually on 26 January 2021 as well as other relevant developments during the month. In a sup­ple­men­tary meeting held this week, the IASB discussed extending the practical relief in IFRS 16, which permits lessees not to assess whether par­tic­u­lar rent con­ces­sions occurring as a direct con­se­quence of the COVID-19 pandemic are lease mod­i­fi­ca­tions and, instead, to account for those rent con­ces­sions as if they were not lease mod­i­fi­ca­tions. IFRS Foundation Trustees have announced next steps in response to broad demand for global sustainability standards.  

The Financial Reporting Council (FRC) and the Financial Conduct Authority (FCA) have published updated guidance for companies and auditors to ensure high quality financial information continues to flow to users to support decision-making. The FCA and FRC joint statement reminding companies that extended financial information timelines continue to apply was published on 27 January 2021. In the news item announcing the guidance, the FRC’s Executive Director of Regulatory Standards, Mark Babington said: “As the busiest period of the year for the preparation and audit of financial accounts approaches, it is paramount that investors and users of financial information continue to receive high quality financial information.   While companies and auditors face increased challenges in preparing their accounts, the joint measures allow for additional time to ensure high quality reporting. Companies, auditors and investors should familiarise themselves with the latest guidance during these uncertain times to ensure they are managing reporting frameworks and stakeholder expectations appropriately.”   The updated guidance is available here.