Technical Roundup 1 December

Welcome to this edition of Technical Roundup.

Read more on these and other developments that may be of interest to members below.

Financial Reporting

The International Accounting Standards Board (IASB) has launched a consultation on improved accounting requirements for financial instruments with characteristics of debt and equity. In the exposure draft, the IASB proposes;

• to clarify the underlying classification principles of IAS 32 to help companies distinguish between debt and equity;
• to require companies to disclose information to further explain the complexities of instruments that have both debt and equity features; and
• to issue new presentation requirements for amounts—including profit and total comprehensive income—attributable to ordinary shareholders separate to the amounts attributable to other holders of equity instruments.

The IASB has also released a webcast which gives an overview of the forthcoming standard for Subsidiaries without Public Accountability.

The IASB has issued its November 2023 update which highlights preliminary decisions made by the board during their meetings on 13^th to 15^th November. In their November podcast, members of the IASB Board provided some insights from the recent meetings, including discussions on the progress and direction of the following projects;

• Business Combinations under Common Control;
• Post-implementation Review of IFRS 9—Impairment; and
• Provisions

The IFRS Foundation has published a video which explains how IFRIC, the IFRS Interpretations Committee helps maintain and support consistent application of IFRS Accounting Standards; what happens when the Committee receives an application question; and how it works with the International Accounting Standards Board.

EFRAG, the European Financial Reporting Advisory Group has issued its updated Endorsement Status Report which now reflects the European Commission’s endorsement of the amendments to IFRS 16 (Lease Liability in a Sale and Leaseback).

The UK Endorsement Board has published its 2022/23 Annual Report.

The UK Endorsement Board has also adopted Supplier Finance Arrangements: Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures, issued by the International Accounting Standards Board in May 2023.

The International Accounting Standards Board’s (IASB) Research Forum hosted 85 participants at the IESEG Management School in Paris 2–4 November. Key highlights and findings from this event are now available to view online.

In a recently uploaded video, IASB Member Ann Tarca explains proposals in the IFRS Accounting Taxonomy—Proposed Update 2 Common Practice for Financial Instruments, General Improvements and Technology Update currently out for consultation.

The International Forum of Accounting Standard Setters met on 26^th to 27^th September to discuss matters of relevance to National Standard Setters across the globe. A report which discusses the key messages has been published.

Olivier Boutellis-Taft, CEO of Accountancy Europe has announced that he will step down from his role at the end of 2024.

Assurance and Auditing

FRC

The Financial Reporting Council has published its thematic review of audit sampling. The aim of the review is to identify common practice, concerns and good practice across 7 (Tier 1) firms.

The publication shares findings to educate the wider market as audit sampling has been an area of repeated Audit Quality Review (AQR) findings for smaller firms. It will also be useful for Audit Committees in understanding the approach taken by audit teams. 

Key observations include:

• Audit sampling is still prevalent.
• Most firms base their methodology on similar statistical models but with their own methodologies. This leads to substantial variation.
• Professional judgement is key.
• Sufficient training is vital.

You can read the full report here.

IAASA

In the years 2020 to 2022 IAASA’s Audit Quality Unit completed 90 audit file inspections across firms. In November IAASA published a report outlining its key messages and recommendations for auditors relating to the area of audit evidence and procedures performed on the financial statement disclosures.

The report highlights the key findings from the inspections, in particular:

• the number of PIE audit file inspections resulting in findings and recommendations in this area;
• the number of findings and recommendations relating to this area; and
• the common auditing standard requirements relating to the respective findings and recommendations raised in this area.

IAASA’s YouTube channel includes a video that outlines the key messages and recommendations of the thematic review.

Sustainability

Climate Finance Week

Ireland’s 6^th annual Climate Finance Week took place from Monday 20^th to Friday 24^th November.

This year’s theme was ‘Exploring a Sustainable and Just Economic Transition’ and the agenda featured

the AIB Sustainability Conference; Biodiversity Finance Day; Innovation in Sustainable Funds and Asset Management and Skills & Expertise Day – Empowering Finance Climate Practitioners.

IAASA has issued a letter to the CEOs of Recognised Accounting Bodies (RABs) setting out their expectations for the initial approval of existing statutory auditors to be Sustainability Assurance Service Providers ( SASPs).

Accountancy Europe and EFRAG are jointly hosting a webinar on Supporting High Quality ESRS Implementation on Tuesday, 12 December.

Accountancy Europe, in collaboration with Ecopreneur.eu and supported by the European Association of Co-Operative Banks has published “5 Reasons why Sustainability Matters for SMEs” which sets out some reasons why SMEs should not wait to start transitioning to more sustainable business models.

The International Sustainability Standards Board has issued its November 2023 update and Podcast.

The Financial Conduct Authority has confirmed that will introduce a package of measures designed to protect consumers by helping them to make more informed decisions when investing and to enhance the credibility of the sustainable investment market.

Other News

IAASA has launched a Stakeholder Perceptions Survey to gather insights into how its stakeholders perceive IAASA, it focuses on IAASA achievement of its mission of upholding quality corporate reporting and an accountable profession.

The Charity Commission for Northern Ireland is writing to around 7,000 charities in preparation for the roll out of the new traffic light display on the register of charities. The new display, expected to go live later this year, will indicate if a charity has submitted their accounts and reports to the Commission on time or late, and by how many days they are overdue if not submitted at all.

The European Council have adopted a regulation creating the European Single Access Point (ESAP) - a platform that will make information easier for investors to consult.  The European Single Access Point will give companies more visibility towards investors and open up more financing opportunities, especially for small companies in small capital markets.

The Minister for Enterprise, Trade and Employment recently published the First Update Report on the White Paper on Enterprise Implementation Plan 2023-2024, which was published in May of this year. This report details the work undertaken to progress the 40 initiatives identified in the Implementation Plan and also provides an update on the 15 key target metrics identified in the White Paper. Please click here for the press release and here for the report.

The Department of Enterprise, Trade and Employment is holding a free business event in Dublin which will focus on the opportunities and challenges presented by the green economy and digital transformation. The event is on Thursday 7 December.

The Director of Financial Regulation, Policy and Risk at the Central Bank of Ireland spoke recently at a conference about the EU’s new Digital Operational Resilience Act or DORA. He delved into some of the detail including the challenges faced when trying to design and implement a framework to address digital operational resilience in the financial sector. He also referred to the work being done by the European Supervisory Authorities (the ESAs) on the implementation of the new framework. Please click here for full details.

Private sector organisations with 50 employees or more will shortly be in scope of obligations under protected disclosures legislation to have internal reporting channels and procedures for the making of protected disclosures. Also, this week the Minister for Public Expenditure, NDP Delivery and Reform has issued new statutory guidance on the Protected Disclosures Act 2014. Read more in the Institute’s recent news item.

Accountancy Europe discussed the attractiveness of the accounting profession, including how younger generations can be attracted into the profession in their recent article.

A reminder again this week of the CRO deadlines for Christmas filing. The CRO writes that processing before the Christmas break of submissions received after the dates below cannot be guaranteed:     

For further technical information and updates please visit the Technical Hub on the Institute website.