Technical update - September 2017

Sep 01, 2017
A round-up of recent announcements in the world of accountancy.

FRC issues Non-Financial Reporting Directive Factsheet

The Financial Reporting Council (FRC) has published a factsheet on non-financial reporting that provides an overview of the new regulations implementing the EU Directive on non-financial and diversity information. The regulations apply to companies and qualifying partnerships with financial years beginning on or after 1 January 2017. Download the factsheet here.

New IFAC guidance helps organisations navigate the complicated terrain of accountancy regulation

Navigating the national regulatory environment is a crucial part of establishing and developing an effective professional accountancy organisation (PAO). The right accountancy regulation model is vital to ensuring a well-functioning profession that produces high-quality financial information, supports economic growth and development, and is relevant to professional accountants and their clients. In light of regulatory evolution in recent years and the ongoing need for PAOs to adapt to, and actively influence, their environment, the International Federation of Accountants (IFAC) has released new guidance to support PAOs in these efforts. “There is no ‘one-size-fits-all’ solution for accountancy regulation; there are many different models in place around the world that work effectively,” said IFAC Executive Director, Alta Prinsloo. “Understanding the key principles of accountancy regulation, and how they function in practical terms, helps PAOs and their key constituents ensure the profession’s long-term sustainability, and their ability to continue to function in the public interest.” Download the guidance here.

IAASA publishes feedback paper on consultation on Proposal to Revise ISA (Ireland) 250 Section A

On 31 March 2017, IAASA published its consultation on Proposal to Revise ISA (Ireland) 250 Section A – Consideration of Laws and Regulations in an Audit of Financial Statements, the purpose of which was to obtain the views of stakeholders with regard to IAASA’s proposal to issue a revised version of ISA (Ireland) 250 Section A – Consideration of Laws and Regulations in an Audit of Financial Statements. IAASA has noted the points raised in the responses to its consultation and has published a feedback paper. The revised ISA (Ireland) 250 Section A (effective for the audits of financial statements for periods commencing on or after 15 December 2017) will be published when finalised on www.iaasa.ie.

Integrated thinking and reporting helps SMEs drive value

Thinking beyond the financial elements of an organisation to other key areas of value creation can help small- and medium-sized entities (SMEs) develop a better understanding of their business and provide key insights for the future. Today, it is critical for organisations to think broadly about performance and strategy, and improve communication to shareholders, investors, customers and suppliers on what drives value for the organisation. Creating Value for SMEs through Integrated Thinking: The Benefits of Integrated Reporting, published by IFAC and the International Integrated Reporting Council (IIRC), highlights how SMEs — and the professional accountants serving them — can benefit from integrated thinking and reporting. “As the engines of economic development, SMEs are critically important to the world’s economy,” said Sylvia Tsen, IFAC Executive Director. “They have significant value beyond the financial, which integrated thinking and reporting helps uncover. An integrated approach can help SMEs, including not-for-profits, increase their impact because it encourages an inclusive view of operations, risks and opportunities, and future outlook.”

FRC notes evidence of improving audit quality

Leadership of audit firms’ focus on, and investment in, improving audit quality, together with promoting a culture of continuous improvement, is beginning to pay off – particularly for audits of larger companies where the FRC has targeted improvement. In the audit regulator’s second annual Developments in Audit report, the FRC sets out evidence from its own and delegated audit quality reviews, thematic reviews and from audit committee and investor feedback. However, the picture is not consistent across all firms, market sectors and audit procedures. High profile accounting failures, as well as the results of audit monitoring, continue to highlight cases where auditors have not met expectations. While there is evidence of greater professional scepticism, this is also the area where the FRC finds the greatest number of issues. Download the Developments in Audit report here or alternatively, download a summary of the report here.