Technical resource centre

Chartered Accountants Ireland Chartered Accountants Ireland has updated the Technical and business updates page on our COVID-19 Hub with updates on Auditing implications of Coronavirus, Financial Reporting implications of Coronavirus and Information for insolvency practitioners.  We have also updated our page on Other Regulator Updates for both ROI and NI / UK in response to COVID-19.   UKThe Financial Reporting Council (FRC) has issued two Exposure Drafts proposing amendments to UK and Ireland accounting standards.  Both reflect topical issues. FRED 75 Draft amendments to FRS 104 – Going concern proposes to: clarify the requirement to assess the going concern basis of accounting; and require the disclosure of any related material uncertainties, when preparing interim financial statements in accordance with FRS 104. FRED 76 Draft amendments to FRS 102 and FRS 105 – COVID-19-related rent concessions proposes explicit requirements for accounting for temporary rent concessions for operating leases occurring as a direct consequence of the COVID-19 pandemic, and within a limited timeframe.  Both comment periods end on 1 September 2020.The IASB and the UK Endorsement Board invite you to a joint outreach event on 6 August 2020 to discuss the proposals in the IASB's General Presentation and Disclosures Exposure Draft.The FRC has issued a revision to its Technical Actuarial Standard for work supporting Funeral Plan Trusts (TAS 400). EuropeEFRAG, the Dutch Accounting Standards Board and the IASB invite you to an outreach event on 16 September to present and discuss the IASB Exposure Draft General Presentation and Disclosures.International The July 2020 IASB Update has been published and the work plan has been updated. The Board met remotely on 22–23 July 2020.  The IAASB invites interested stakeholders to complete an online survey sharing their experience with, and providing feedback relating to, the Auditor Reporting Standards that were issued in 2015. The Survey also asks for input on experiences with ISA 720 (Revised), The Auditor’s Responsibilities relating to Other Information.       

The Government has published the Companies (Miscellaneous Provisions) (COVID-19) Bill 2020 which proposes changes to the Companies Act 2014. The changes seek to address practical issues that have arisen for companies and industrial and provident societies because of Covid-19. Some of the main changes proposed include:Companies and industrial and provident societies will have until the end of 2020 to hold their annual general meetings, instead of within the timeframe required under the law, e.g. nine months from year-end for companies.Companies will be explicitly enabled to convene and hold virtual general meetings, both AGMs and EGMs.The Bill addresses the practical issue of sealing by companies where the company seal is in one location and the directors and secretary are in other locations.  In the same way, creditors’ meetings to commence a winding up and for examinerships will be able to be held by virtual means.The Court is to be given power to extend the period of protection for examinership to 150 days in certain circumstances, 50 days beyond the current 100 day limit.The amount claimed by a creditor to initiate a creditors’ voluntary winding up is to be increased to €50,000, an increase from the current levels of €10,000 for a single creditor and €20,000 for creditors acting together.A modification to the exemption to the general stay on legal action on a winding up to allow employees proceed with Workplace Relations Commission claims.Most of these amendments would only remain operative until 31 December 2020 with a potential extension to 30 June 2021.                        

Chartered Accountants Ireland  Chartered Accountants Ireland has updated the Technical and business updates page on our COVID-19 Hub with updates on Auditing implications of Coronavirus, Financial Reporting implications of Coronavirus and Information for insolvency practitioners.  We have also updated our page on Other Regulator Updates for both ROI and NI / UK in response to COVID-19.   The Audit and Assurance Committee has provided comments to IAASA on their proposals to revise the Ethical Standard for Auditors (Ireland), International Standards on Auditing (Ireland) and the Glossary of Terms. In addition to providing comments on the consultation questions, some key concerns were highlighted in the response.The Insolvency Technical Committee (Northern Ireland) has recently responded to the Joint Insolvency Committee’s consultation on the revision of SIPs 3, 7 and 9. Ireland The Government has published the Companies (Miscellaneous Provisions) (COVID-19) Bill 2020 which seeks to address practical issues that have arisen for companies and industrial and provident societies as a result of Covid-19.The constituency of IAASA’s Board includes two nominees of the Minister, and the Tánaiste and Minister for Enterprise, Trade & Employment, Leo Varadkar TD, is seeking expressions of interest in filling one of these roles. IAASA have noted the issuing of the ESMA public statement recommending co-ordination of supervisory action with regards to issuers’ accounting for COVID-19-related rent concessions (noted below).UK The Financial Reporting Council (FRC) has completed its first thematic review of company reporting since the onset of Covid-19 pandemic. The review of 17 interim and annual reports with a period end date of March 2020 found that although companies provided sufficient information to enable a user to understand the impact Covid-19 had on their performance, position and future prospects, some - particularly interim reports - would have benefited from more extensive disclosure. The FRC note that, building on the guidance contained in the joint regulators statement (published on 26 March), this review includes guidance and better practice examples for companies currently preparing their annual and interim accounts.The FRC has published its annual report, setting out progress to implement the recommendations for change of the FRC itself and in the activities it regulates.The FRC has issued a call for views on its draft response to the IASB’s Exposure Draft ED/2019/7 ‘General Presentation and Disclosures’. The response outlines the FRC’s tentative views on the Exposure Draft. The deadline for comments is 4 September 2020.The Financial Reporting Lab has released its second newsletter for 2020, which provides an update on the Lab’s recently released reports relating to the Reporting in times of uncertainty project, its upcoming reports on Video, Virtual & Augmented Reality and on a range of other activities. Additionally, a Call for Participants has been issued relating to a new project on corporate disclosures on stakeholders, including statements in response to section 172 of the Companies Act. Europe         ESMA, the EU’s securities markets regulator, has issued a Public Statement recommending coordination of supervisory action with regards to issuers’ accounting for COVID-19-related rent concessions.EFRAG has published a Discussion Paper (DP) to gather views on the accounting for crypto-assets (liabilities) from a holder and issuer perspective. Comments are welcome throughout a 12-month period until 31 July 2021. The DP is motivated by the ongoing evolution, growth potential and diversity of crypto-assets.EFRAG is seeking candidates to participate in the new European Lab Project Task Force on preparatory work for the elaboration of possible EU non-financial reporting standards, and has issued a call for candidates​ for its Technical Expert Group (EFRAG TEG) for the 2021 rotation. EFRAG is also seeking a full-time Financial Reporting Project Director with a nationality from an EEA country to provide leadership to its technical financial reporting activities, to work either as an employee or on basis of a secondment.International The Trustees of the IFRS Foundation are calling for candidates to fill vacancies occurring at the end of 2020 for membership to the IFRS Advisory Council. The IASB have issued the third in a series of webinars on the Exposure Draft ‘General Presentation and Disclosures’.    

Chartered Accountants Ireland Chartered Accountants Ireland has updated the Technical and business updates page on our COVID-19 Hub with updates on Auditing implications of Coronavirus, Financial Reporting implications of Coronavirus and Information for insolvency practitioners.  We have also updated our page on Other Regulator Updates for both ROI and NI / UK in response to COVID-19.   Ireland The Director of Corporate Enforcement has published his Annual Report for 2019. UK  The Financial Reporting Council has this week released its latest audit inspection results.  Europe  Accountancy Europe (AE) have issued their July Audit Policy Update  AE have issued a second paper in their SME risk management series ‘SME Risk Management – Sustainability’. EFRAG, Business Europe and the IASB are hosting a webinar on Tuesday, 1st September to discuss the application of the IASB proposals for preparers and the experiences of the field testing of the IASB Exposure Draft General Presentation and Disclosures (Primary Financial Statements). International The International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for Accountants (IESBA) have this week welcomed the Monitoring Group’s recently released Paper: Strengthening the International Audit and Ethics Standard-Setting System, aimed at enhancing governance arrangements of the two standard-setting boards.  The International Accounting Standards Board (IASB) has published 'Clas­si­fi­ca­tion of Li­a­bil­i­ties as Current or Non-cur­rent — Deferral of Effective Date (Amendment to IAS 1)' deferring the effective date of the January 2020 amend­ments to IAS 1 by one year. A con­sol­i­dated version of IFRS 17 in­cor­po­rat­ing the June 2020 amend­ments is now available freely on the IASB website. The amend­ments are effective for annual periods beginning on or after 1 January 2023 with earlier ap­pli­ca­tion permitted.  

Chartered Accountants Ireland Chartered Accountants Ireland has updated the Technical and business updates page on our COVID-19 Hub with updates on Auditing implications of Coronavirus, Financial Reporting implications of Coronavirus and Information for insolvency practitioners.  We have also updated our page on Other Regulator Updates for both ROI and NI / UK in response to COVID-19.   Ireland The Companies Registration Office (CRO) have published their 2019 Annual Report.  UK A SORP engagement process has begun as convenors are appointed to take forward discussions on the next SORP. The Charities Statement of Recommended Practice (SORP) sets out the framework for how larger charities prepare their annual report and accounts. The Financial Reporting Council (FRC) has announced its ‘principles for operational separation’ of the audit practices of the Big Four firms. The FRC has this week issued a revision of its standard for the identification and assessment of risks of material misstatement in an audit of financial statements. The revised standard (ISA (UK) 315 (Revised – July 2020) - Identifying and Assessing the Risks of Material Misstatement) adopts the revisions made to the underlying international standard issued by the International Auditing and Assurance Board (IAASB).    Europe Accountancy Europe have issued their June SME Update. The Eumedion Foun­da­tion based in the Nether­lands has published a position paper 'Towards a global, investor focused standard setter for corporate non-fi­nan­cial reporting' calling on the IFRS Foun­da­tion to establish such a stan­dard-set­ter. Following an EFRAG Board meeting earlier in the week, the European Financial Reporting Advisory Group (EFRAG) has issued final en­dorse­ment advice on ' Extension of the Temporary Exemption from Applying IFRS 9 (Amend­ments to IFRS 4)'. In February 2020, the European Com­mis­sion (EC) launched an ini­tia­tive to review the European Non-Fi­nan­cial Reporting Directive, One of the aspects of the review looks at whether to mandate the use of a common set of non-fi­nan­cial reporting standards and whether these should be es­pe­cially developed European standards. The EC has now sent two letters to EFRAG asking it to undertake prepara­tory work for the possible elab­o­ra­tion of such standards.  International The IFRS Foundation has appointed 21 new members and one observer to the SME Implementation Group (SMEIG) for a three-year term starting 1 July 2020. On 7 July 2020, IASB member Ann Tarca delivered a speech at the virtual annual con­fer­ence of the Accounting & Finance As­so­ci­a­tion of Australia and New Zealand (AFAANZ). She discussed digital reporting and included questions for prac­ti­tion­ers, stan­dard-set­ters and re­searchers.      

The Corporate Insolvency and Governance Act 2020 (the ‘Act’) received Royal Assent on 25 June 2020. It makes some significant changes to UK insolvency legislation and provides for new measures for companies in financial difficulty due to the economic impact of COVID-19. The Act also makes temporary changes to law relating to the governance and regulation of companies and other entities. This article highlights some of the key changes affecting corporate governance of an entity.  A summary of the key corporate governance aspects of the Act is also available here. The measures introduced in the Act were welcomed by Chartered Accountants Ireland who believe they will provide some confidence to struggling, but viable, businesses as they cope with the array of challenges presented by the Covid-19 pandemic crisis. Speed and impact were of the essence and the UK House of Commons, Department for Business, Energy and Industrial Strategy (BEIS) and the Insolvency Service must be commended on giving this emergency legislation priority. Some of the key changes affecting corporate governance are highlighted as follows: 1. Filing deadlines Missing a deadline for filing prescribed documents with Companies House automatically results in financial penalties and, in some cases, can result in criminal sanctions for the directors or the company being struck off the register of companies. However, the Act officially legislates for temporary extensions of these deadlines and enables the Secretary of State to make further extensions if necessary. The extended period for filing prescribed documents, including updates to the People with Significant Control (PSC) register in relation to beneficial ownership, must not exceed: 42* days, in a case where the existing period is 21 days or fewer, and 12* months, in a case where the existing period is 3, 6 or 9 months. Companies House website states that eligible companies do not need to apply for an extension and that they will update their filing deadline automatically. 2. Annual General Meetings (AGMs): Where companies are required to hold general meetings between 26 March 2020 and 30 September 2020*, they will have greater flexibility in how they hold such meetings, irrespective of the provisions of their company’s constitution and the Companies Act 2006. Companies that were due to hold their AGM within this period can delay it until 30 September 2020, without being in breach of Companies Act 2006 or the company’s constitution. To afford companies greater flexibility in how they hold their AGMs, while also conscious of the varying information and communication technology (ICT) capabilities, the Act includes temporary measures that: Removes obligation for meeting to be held at any particular place. Removes obligation for a quorum of those participating in the meeting to be together at the same place. Removes the right of a member/shareholder to attend in person, participate other than by voting, or to vote by particular means. Enables the meeting to be held, and any votes to be cast, by electronic means or any other means. 3. Wrongful trading: The Act temporarily suspend parts of insolvency law to support directors to continue trading through to 30 September 2020* without the threat of personal liability for wrongful trading and to protect companies from creditor action. It requires the High Court to assume that a director, in making any contribution that it is proper for a person to make, is not responsible for any worsening of the financial position of the company, or its creditors, that occurs during the period from 1 March 2020 to 30 September 2020*. It should be noted that this measure does not in any way excuse a Director from the offence of fraudulent trading (S993, Companies Act 2006) nor any other wrongdoing. Directors, whether organisation is in distress or not, are expected to exercise appropriate risk management and required to make decisions that promote the success of the company. In doing so, S172, Companies Act 2006 requires Directors to have regard to a wide range of factors including: the long-term consequence of decisions as well as the interests of the employees; the relationships with suppliers and customers; the impact of the decision on community and environment; the desirability of maintaining a reputation for high standards of business conduct; the need to act fairly as between members of the company, as well as introducing wider corporate social responsibility into a director’s decision-making process. Chartered Accountants Ireland jointly hosted a webinar on 30 June 2020 where we heard from key speakers Nick Bates (Head of corporate transparency, BEIS), Peter Swabey (Policy and Research Director, Chartered Governance Institute) and Mike Metcalf (Chair of ICAEW Company Law Panel and Partner, KPMG). The event can be viewed here. Níall Fitzgerald FCA Head of Ethics and Governance, Chartered Accountants Ireland * The Corporate Insolvency and Governance Act 2020 enables further changes to duration of certain temporary provisions to be made either by regulation or the Secretary of State.

Chartered Accountants Ireland Chartered Accountants Ireland has updated the Technical and business updates page on our COVID-19 Hub with updates on Auditing implications of Coronavirus, Financial Reporting implications of Coronavirus and Information for insolvency practitioners.  We have also updated our page on Other Regulator Updates for both ROI and NI / UK in response to COVID-19.     Ireland IAASA has this week published a further compendium of financial reporting decisions. These decisions include instances where the company voluntarily agreed to enhance its accounting treatment or disclosures in future financial reports to address matters identified in the course of IAASA’s examinations. The Charities SORP Making Body have recently issued ‘Information sheet 6: Irish Charities - Merger Accounting and Republic of Ireland Company Law’, the purpose of which is to clarify the position in relation to Republic of Ireland company law with respect to paragraph 27.4A of the Charities SORP (FRS 102) (second edition).   UK In a recently issued podcast Phil Fitz-Gerald, Director of the Financial Reporting Council (FRC) Lab, discusses two new reports on investor disclosures during the Covid-19 crisis. Audit firms in the UK have introduced a range of additional measures to enhance their evaluation of companies’ going concern assessments, since the start of the Covid-19 emergency, according to a review initiated and undertaken by the FRC. The Corporate Insolvency and Governance Bill received royal assent on 25 June and is now an Act.The measures in this Act will relieve the burden on businesses during the coronavirus (COVID-19) outbreak and allow them to focus all their efforts on continuing to operate. Europe Accountancy Europe have issued their May/June Sustainable Finance Update. International The International Accounting Standards Board (IASB) have issued in addition to 'Amend­ments to IFRS 17' also 'Extension of the Temporary Exemption from Applying IFRS 9 (Amend­ments to IFRS 4)'. The IASB is currently working on a research project on com­bi­na­tions of busi­nesses under common control as IFRS 3 'Business Com­bi­na­tions' only covers how to account for mergers and ac­qui­si­tions between unrelated parties. The June 2020 IASB podcast is now available. The IFRS Foun­da­tion has published its annual report and audited financial state­ments for the year ended 31 December 2019.        

Chartered Accountants Ireland Chartered Accountants Ireland has updated the Technical and business updates page on our COVID-19 Hub with updates on Auditing implications of Coronavirus, Financial Reporting implications of Coronavirus and Information for insolvency practitioners.  We have also updated our page on Other Regulator Updates for both ROI and NI / UK in response to COVID-19.     Ireland IAASA has extended its consultation period on its proposal to revise the Ethical Standards for Auditors (Ire) to Friday, 17 July at 5pm. IAASA has published its Annual Report 2019. Europe Accountancy Europe (AE) have issued their June Audit Policy Update which discusses the impact of the Coronavirus on ongoing audits and other EU/International developments. AE have produced a briefing paper titled ‘How do multidisciplinary teams contribute to audit quality’? AE have released a Joint statement via a group of stakeholders with an interest in sustainable finance on the revision of the non-financial reporting directive in the context of Covid-19. AE have recently published ‘Coronavirus’ impact on ongoing audits’ – Analysis of guidance for European auditors. International The International Accounting Standards Board (IASB) has issued amendments to IFRS 17 Insurance Contracts aimed at helping companies implement the Standard and making it easier for them to explain their financial performance. The International Federation of Accountants (IFAC) continues to speak out on behalf of the global accounting profession on the topic of non-financial reporting, most recently in response to the European Commission’s review of the Non-Financial Reporting Directive (NFRD). The staff of the International Public Sector Accounting Standards Board (IPSASB) has developed a Q&A document high­light­ing the relevant standards and guidance for the public sector in applying the Board’s current guidance to provide clear, com­pa­ra­ble, and relevant in­for­ma­tion on climate change. The IFRS Foun­da­tion has announced a virtual con­fer­ence which will combine the annual IFRS Foun­da­tion con­fer­ence with the annual World Stan­dard-set­ters con­fer­ence. The virtual con­fer­ence will be held on 28–29 September 2020.    

Chartered Accountants Ireland Chartered Accountants Ireland has updated the Technical and business updates page on our COVID-19 Hub with updates on Auditing implications of Coronavirus, Financial Reporting implications of Coronavirus and Information for insolvency practitioners.  We have also updated our page on Other Regulator Updates for both ROI and NI / UK in response to COVID-19.   UK Two new reports issued by the Financial Reporting Lab of the UK Financial Reporting Council (FRC) provide practical guidance to companies in areas of reporting that investors have high­lighted as being most critical in these times of un­par­al­leled economic un­cer­tainty. Europe Accountancy Europe has released three publications to shape the debate on non-financial information (NFI) reporting. Accountants have the skills and knowledge to lead this discussion. In December 2019 Ac­coun­tancy Europe published a paper de­scrib­ing and calling for a global solution to in­ter­con­nected stan­dard-set­ting that can meet the need for reliable, con­sis­tent in­for­ma­tion in non-fi­nan­cial reporting that is in­ter­con­nected with financial reporting. A follow-up paper has now been made available that analyses the feedback received, provides an update on the latest EU and global de­vel­op­ments, and reflects on a way forward. The European Securities & Markets Authority (ESMA) has published its 2019 Annual Report and updated 2020 Annual Work Programme International This week the International Auditing & Assurance Standards Board (IAASB) hosted two different webinars on consultations that are currently open for public comment.