Technical resource centre

Developments of interest this week are outlined. Chartered Accountants Ireland Technical Hub As previously advised, Chartered Accountants Ireland has launched a Technical Hub for members. This new resource replaces CHARIOT from 1 January 2021 and follows the “Hub-based” approach already in use elsewhere by the Institute. The Hub contains content on audit & assurance, financial reporting, insolvency, links to legislation, and a wide range of proprietary Institute content. The hub can be found on the Institute’s website here. A mapping document has been prepared which outlines where content previously found on CHARIOT can now be found on the Technical Hub. ROI IAASA has published summary information of its financial reporting enforcement activities undertaken during 2020. UK After the end of the tran­si­tion period on 31 December 2020, the UK ceased to apply EU law. IFRSs adopted by the EU at that point of time were in­cor­po­rated into Domestic UK law as IFRSs as adopted by the UK. The Secretary of State for Business, Energy and In­dus­trial Strategy (BEIS), who has been given the power of endorsing and adopting international accounting standards while the UK En­dorse­ment Board (UKEB) is still being es­tab­lished, has now adopted two amend­ments to IFRSs for use within the UK. The FRC has issued a podcast on Reflections from the Financial Reporting Lab Europe The endorsement by the European Commission of Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2 is now reflected in the updated EFRAG Endorsement Status Report. Ac­coun­tancy Europe has responded to the con­sul­ta­tion document on the ad personam mandate on potential need for changes to the gov­er­nance and funding of EFRAG in the context of possible changes to non-fi­nan­cial reporting by companies. International The IFRS Foundation has published educational material to support companies in applying going concern requirements. The IFRS Foun­da­tion is offering three webinars aimed at iden­ti­fy­ing how academics can con­tribute to the post-im­ple­men­ta­tion reviews of IFRS 9 'Financial In­stru­ments', IFRS 15 'Revenue from Contracts with Customers', and IFRS 16 'Leases'.  

The IFRS Foundation has published educational material intended to support companies in applying the going concern requirements of IFRS standards in the preparation of financial statements. Noting that companies preparing financial statements using IFRS Standards are required to assess their ability to continue as a going concern, they say that in the current stressed economic environment arising from the covid-19 pandemic, deciding whether the financial statements should be prepared on a going concern basis may involve a greater degree of judgement than usual. ‘Going concern – a focus on disclosure’ looks at going concern and related requirements in IAS 1 ‘Presentation of Financial Statements’ and IAS 10 ‘Events after the Reporting Period’, and applying the requirements. The Foundation note that the material is published to support consistent application of IFRS Standards and brings together the requirements in IFRS Standards relevant for going concern assessments - it does not change, or add to, existing requirements. For more information, and to access the material, see the press release on the Foundation's website.  

Developments of interest this week are outlined. Chartered Accountants Ireland Technical Hub Chartered Accountants Ireland has launched a Technical Hub for members. This new resource replaces CHARIOT from 1 January 2021 and follows the “Hub-based” approach already in use elsewhere by the Institute. The Hub contains content on audit & assurance, financial reporting, insolvency, links to legislation, and a wide range of proprietary Institute content. The hub can be found on the Institute’s website here. UK The Financial Reporting Council (FRC) has recently launched a consultation on the proposed revision of the standards for an audit firm’s responsibilities to design, implement and operate a system of quality management. The FRC has this week issued guidance for preparers using IFRS and their auditors. The Financial Stability Board (FSB) has submitted a comment letter on the IFRS Foun­da­tion Trustees’ con­sul­ta­tion paper on sus­tain­abil­ity reporting published in September 2020. The UK Endorsement Board (UKEB) is being set up as the body responsible for influencing the development and subsequently endorsing and adopting new or amended international accounting standards, issued by the International Accounting Standards Board (IASB), for use by UK companies, from 1 January 2021.  Europe EFRAG has published its Draft Comment Letter in response to the IASB's Exposure Draft ED/2020/4 Lease Liability in a Sale and Leaseback. Comments on the DCL are requested by 22 February 2021. International The International Auditing and Assurance Standards Board (IAASB) has released its three quality management standards. The standards promote a robust, proactive, scalable and effective approach to quality management and mark a significant evolution of the existing quality control standards.

The UK Department of Business, Energy and Industrial Strategy and the Financial Reporting Council recently published a letter addressing certain implications of the end of the Transition Period for companies' accounting, reporting and filing requirements. https://www.gov.uk/government/publications/uk-accounting-and-audit-framework-from-1-january-2021 As the end of the Transition Period for the exit of the U.K. from the EU also has implications for the availability of certain Irish Company Law exemptions, such as Companies Act 2014 Section 357 (exemption from filing), Section 299 (exemption from consolidation) and Section 1300 (Branches of UK companies), Irish subsidiaries and branches of UK parents to which these sections apply may wish to liaise with their UK parent companies and to consider whether any action may be taken to address these implications.

Developments of interest this week are outlined. UK The UK Department of Business, Energy and Industrial Strategy and the Financial Reporting Council recently published a letter addressing certain implications of the end of the Transition Period for companies' accounting, reporting and filing requirements.  Europe The European Union has published a Com­mis­sion Reg­u­la­tion endorsing 'Extension of the Temporary Exemption from Applying IFRS 9 (Amend­ments to IFRS 4)'. The European Par­lia­ment and the Council have agreed to an amendment of the Trans­parency Directive allowing Member States to delay by one year the ap­pli­ca­tion of the European Single Elec­tronic Format (ESEF) re­quire­ments for listed companies' annual financial reports, provided that they notify the Com­mis­sion of their intention to do so, and of their suf­fi­ciently justified reasons. International The Global Reporting Ini­tia­tive (GRI) has commented on the IFRS Foun­da­tion Trustees’ con­sul­ta­tion paper on sus­tain­abil­ity reporting published in September 2020. The International Fed­er­a­tion of Ac­coun­tants (IFAC) has commented on the IFRS Foun­da­tion Trustees’ con­sul­ta­tion paper on sus­tain­abil­ity reporting published in September 2020. Deloitte has released a com­pre­hen­sive 380-page pub­li­ca­tion focusing on some of the most common and sig­nif­i­cant dif­fer­ences that may affect financial state­ments when con­vert­ing from U.S. GAAP to IFRS Standards and vice versa. Focusing on the effective and consistent application of our standards, the IAASB is addressing issues and challenges related to complexity, understandability, scalability and proportionality. This communique details development plans for a separate standard for audits of less complex entities.      

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. ROI Following public consultation, IAASA has this week issued revised versions of: The Ethical Standard for Auditors (Ireland); certain International Standards on Auditing (Ireland) and the International Standard on Quality Control (Ireland); the Glossary of Terms, which defines the terms used in the Irish auditing framework UK The FRC has published consolidated covid-19 guidance for companies and auditors. The consolidated guidance supersedes all previous FRC guidance for companies and auditors. Europe The European Se­cu­ri­ties and Markets Authority (ESMA) has issued a draft amendment to the European Single Elec­tronic format (ESEF) to update the core taxonomy to the latest updates to IFRSs. International Mark Carney, UN Special Envoy for Climate Action and Finance, has commented on the IFRS Foun­da­tion Trustees' sus­tain­abil­ity con­sul­ta­tion and stresses that he endorses the creation of new IFRS Sus­tain­abil­ity Standards Board (SSB). International Standards on Auditing (ISAs) require auditors to exercise appropriate professional scepticism. But the most common finding in the Financial Reporting Council’s (FRC) audit quality reviews is that audit firms did not challenge the management of audited entities effectively on the significant judgements they had made. Given the prevalence of key findings in this area, the FRC has undertaken a new analysis of its audit quality inspection results to identify recurring themes requiring audit firms’ attention, examples of good practice and to correlate these results with root cause analysis undertaken by the largest UK audit firms. The International Accounting Standards Board (Board) is calling for feedback on the IFRS Standards for group accounting—IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities.

Following public consultation, IAASA has this week issued revised versions of: the Ethical Standard for Auditors (Ireland) certain International Standards on Auditing (Ireland) and the International Standard on Quality Control (Ireland) 1 the Glossary of Terms, which defines the terms used in the Irish auditing framework The main changes to the standards, which are designed to improve audit quality and enhance public confidence in audit in Ireland, are summarised in the feedback statement which is available here.

Developments of interest this week are outlined. UK Compelling new research commissioned by the Financial Reporting Council (FRC) has shown that the development of standards for audit committees would support a more consistent approach to promoting audit quality. The research, conducted by YouGov, involved interviews with Audit Committee Chairs (ACCs) on how they carry out their role. The FRC has issued FRED 77 Draft amendments to FRS 101 Reduced Disclosure Framework – 2020/21cycle which proposes amendments to FRS 101 as a result of its latest annual review. The FRC has launched a consultation on the proposed revision of its review standard for interim financial statements, International Standard for Review Engagement (UK) 2410 (ISRE (UK) 2410) Review of Interim Financial Information Performed by the Independent Auditor of the Entity. The revised UK Corporate Governance Code provides an opportunity for companies to report to their stakeholders in a way that allows them to communicate high-quality information about the way in which their governance functions to deliver a company’s purpose and strategy. Although some companies have embraced the opportunities the revised Code offers, the FRC has found in its Review of Corporate Governance Reporting that this was not consistent across the board. Europe  In their latest podcast, Accountancy Europe speaks to CEO, Olivier Boutellis-Taft, on the importance of corporate governance in paving the way for a sustainable economy. International The IASB has published an exposure draft 'Lease Liability in a Sale and Leaseback (Proposed amendment to IFRS 16)' that aims at clar­i­fy­ing how a seller-lessee should apply the sub­se­quent mea­sure­ment re­quire­ments in IFRS 16 to the lease liability that arises in a sale and leaseback trans­ac­tion. Comments are requested by 29 March 2021. The International Accounting Standards Board (Board) has launched a public consultation on possible new accounting requirements for mergers and acquisitions involving companies within the same group—business combinations under common control.  

Developments of interest this week are outlined. ROI IAASA has recently issued a paper discussing the audit of accounting estimates. IAASA has this week published an Information Note IFRS 8 Operating Segments – Identification of Chief Operating Decision Maker (CODM). UK Audit firms have implemented additional measures to enhance their evaluation of companies’ going concern assessments, since the start of the Covid-19 pandemic, according to a Review of completed audits by the Financial Reporting Council (FRC). The FRC has commended all the organisations that worked together to develop the recommendations of the Asset Management Taskforce’s Investing with Purpose report. The government and the FRC have this week published letters to the accounting and audit sectors setting out the UK framework for audit and reporting at the end of the transition period. International The IASB has published PTU/2020/5 IFRS Taxonomy 2020 — 'General Im­prove­ments and Common Practice — IAS 19 'Employee Benefits'. The IASB has issued an analysis of their work plan since it was last revised in October. The IFRS Foun­da­tion has released a pub­li­ca­tion that shows how existing IFRS re­quire­ments require companies to consider cli­mate-re­lated matters when their effect is material to the financial state­ments.