Tech news in brief summer 2024

FRC supports government action on local audit backlog

30 July 2024

The Financial Reporting Council (FRC) has welcomed the Government’s proposed secondary legislation to set backstop dates for clearing the significant backlog in local authority audits. In support of the measures, the FRC has announced that it will pause inspections of major local audits for financial years up to and including 2022/23, unless there is a clear public interest case to do so. 

FRC publishes Annual Review of Audit Quality

30 July 2024

The Financial Reporting Council (FRC) has published its annual Tier 1 audit firm inspection results. Tier 1 firms have the largest share of the UK PIE market and include the Big Four plus Forvis Mazars and BDO. The results highlighted a widened gap between the Big Four – who showed a trend of general improvement over the last five years – and BDO and Forvis Mazars.   

FRC embarks on market study on NHS audit market

25 July 2024

Responding to growing concerns about difficulties NHS bodies are facing appointing and retaining auditors, the Financial Reporting Council (FRC) has launched a comprehensive market study into the audit market for NHS providers and Integrated Care Boards (ICBs). The study will explore the supply of auditors, demand for audit, the unique features of the NHS provider and ICB regulatory framework and capacity constraints. All interested parties are invited to submit comments and evidence on the NHS audit market by 17 October 2024. 

IAASB issues new ISA for LCE guidance on audit reporting

11 July 2024

The International Auditing and Assurance Standards Board (IAASB) has released supplemental guidance on the ISA for Audits of Financial Statements of Less Complex Entities (ISA for LCE). Featuring eight illustrative auditor’s reports, the guidance provides assistance to auditors about modifications to and other matters that may be highlighted in the auditor’s report when using the standard 

PCAOB approves update to its rule to strengthen accountability for those who put investors at risk

12 June 2024

The Public Company Accounting Oversight Board (PCAOB) has approved the adoption of an amendment of a rule governing the liability of an associated person for a registered accounting firm’s violation of laws, rules and standards. The updated rule requires that such a person must have contributed to a firm’s violation directly, substantially and negligently to be held liable. Previously this rule only allowed the PCAOB to hold associated persons liable if they contributed to a firm’s violation recklessly. 

PCAOB updates standards to address the auditor’s use of technology-assisted analysis

12 June 2024

The Public Company Accounting Oversight Board (PCAOB) has adopted amendments to two auditing standards, AS 1105 Audit Evidence, and AS 2301 The Auditor’s Responses to the Risks of Material Misstatement which aim to reduce the risk that auditors who use technology-assisted analysis in the audit may issue an opinion without obtaining sufficient appropriate audit evidence.

IESBA publishes 2023 annual report

4 June 2024

The International Ethics Standards Board for Accountants (IESBA) has released its 2023 annual report which highlights the Board’s achievements in the year such as the approval and launches of the Exposure Draft on the International Ethics Standards for Sustainability Assurance IESSA) and ethics standards for sustainability reporting and the final Ethics Standards for Tax Planning and Related Services.

IPSASB launches consultation on requirements for first-time adoption of accrual basis IPSAS

14 August 2024

The International Public Sector Accounting Standards Board (IPSASB) has issued for public comment a consultation on proposed limited-scope updates to IPSAS 33 First-time Adoption of Accrual Basis IPSAS. The amendments are aimed at making the standard easier to apply and encourage first-time adopters to comply with IPSAS in a planned way as soon as possible. The deadline for comment is 4 December 2024.

FRC launches discussion paper on the future of digital reporting in the UK

13 August 2024

The Financial Reporting Council (FRC) has launched a comprehensive discussion paper on the future of digital reporting in the UK. Stakeholder feedback will be sought on such areas as alternatives to the European Single Electronic Format taxonomy for UK regulated markets, proposed changes to structured digital reporting and considerations for mandatory assurance of digital tagging. The deadline for comment is 1 November 2024.

FRC report shows continued popularity of Wates Principles among large private companies

12 August 2024

The Financial Reporting Council (FRC) has published its second assessment of the quality of reporting from private companies who follow the 2018 Wates Principles. The report shows the Principles to be the most popular corporate governance code among large private companies. Over-reliance on boilerplate disclosures was among the quality issues highlighted by the report. 

FRC issues amendments to FRS 101 Reduced Disclosure Framework

9 August 2024

The Financial Reporting Council (FRC) has published minor amendments to FRS 101 Reduced Disclosure Framework. Amendments include a disclosure exemption from presenting certain comparative information and a conditional exemption for qualifying entities in respect of certain disclosures about supplier finance arrangements required by IAS 7 Statement of Cash Flows. 

FRC launches consultation on Going Concern Guidance

5 August 2024

The Financial Reporting Council (FRC) has issued for public comment a consultation on proposed revisions to its Guidance on the Going Concern Basis of Accounting and Related Reporting, including Solvency and Liquidity Risks. The draft guidance, bringing together provisions of relevant regulation including company law and accounting standards, will be non-mandatory for use by all companies within its scope including companies that apply the UK Corporate Governance Code. The deadline for comment is 28 October 2024. 

IFRS Foundation issues IFRS digital taxonomies guide

1 August 2024

The IFRS has published a guide to assist regulators and others to implement the IFRS digital taxonomies which comprise the IFRS Accounting Taxonomy and the IFRS Sustainability Disclosure Taxonomy. The aim of the guide is to support cross-border digital comparability and analysis of information prepared using IFRS Standards. 

IASB proposes examples illustrating how companies apply IFRS Standards when reporting on climate-related and other uncertainties 

31 July 2024

Responding to strong demand from investors, the International Accounting Standards Board (IASB) has issued for public comment proposed illustrative examples to improve reporting of climate-related and other uncertainties in financial statements. The non-authoritative examples aim to provide guidance on how the requirements in the Standards should be applied to provide investors with better information on these areas. The deadline for comment is 28 November 2024.

IASB proposes amendments to IFRS 19 to reduce disclosure requirements for eligible subsidiaries.

30 July 2024

The International Accounting Standards Board (IASB) has issued for public comment proposed amendments to IFRS 19 Subsidiaries without Public Accountability: Disclosures. IFRS 19 was issued in May 2024 but the IASB is consulting on whether and how to reduce disclosure requirements for eligible subsidiaries from new IFRS Accounting Standards and amendments with the aim that any such amendments will be effective at the same time as IFRS 19 itself. The deadline for comment is 27 November 2024.  

IASB proposes amendments for the translation of financial information into hyperinflationary currencies. 

25 July 2024

The International Accounting Standards Board (IASB) has issued for public comment proposed narrow-scope amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates. The proposals aim to address accounting issues that affect companies that translate financial information from a non-hyperinflationary currency to a hyperinflationary currency. The deadline for comment is 22 November 2024. 

FRC publishes Annual Report for 2023/24 

24 July 2024

The Financial Reporting Council (FRC) has published its 2023/24 Annual Report and Accounts which highlight the regulator’s proactive approach to using its regulatory toolkit to improve audit quality and corporate reporting in the UK while adapting to evolving market needs and protecting stakeholders. 

FRC announces significant updates to and enters new phase of revision of the UK Stewardship Code

22 July 2024

The Financial Reporting Council (FRC) has announced significant updates to the UK Stewardship Code application process to clarify areas of difficulty and allow for flexibility for signatories in defining how they undertake stewardship. The changes will apply for the next application window (31 October 2024). The FRC has also signalled its commitment to five priority areas of review as the Code revision process continues. These are Purpose, Principles, Proxy Advisors, Process and Positioning. 

IASB publishes annual improvements to IFRS Accounting Standards

18 July 2024

The International Accounting Standards Board (IASB) has issued its annual document, Annual Improvements to IFRS Accounting Standards – Volume 11 which includes clarifications, simplifications, corrections and changes aimed at driving consistency in the IFRS Accounting Standards. Amended Standards this year include IFRS 9 Financial Instruments and IAS 7 Statement of Cash Flows with amendments effective for annual periods beginning on or after 1 January 2026.

FRC hails draft government legislation to modernise its regulatory toolkit

17 July 2024

The Financial Reporting Council (FRC) has welcomed the Government’s announcement of draft legislation to put it on a statutory footing through the establishment of the Audit, Reporting and Governance Authority (ARGA). The Draft Audit Reform and Corporate Governance Bill was announced in the King’s Speech on 17 July 2024 with its aim to modernise the regulator’s powers and strengthen the transparency and integrity of the UK’s corporate governance, financial reporting and audit. 

UKEB consults on the IASB’s IFRS 18 Presentation and Disclosure in Financial Statements

16 July 2024

The UK Endorsement Board (UKEB) are seeking UK stakeholder views on the International Accounting Standard Board (IASB)’s IFRS 18 Presentation and Disclosure in Financial Statements, which is subject to adoption in the UK by the UKEB. Stakeholders are invited to complete a User and Preparer Survey with a deadline for submission of 6 September 2024.

FRC creates new Market Intelligence and Digital Reporting Functions

8 July 2024

The Financial Reporting Council (FRC) has announced the creation of two newly structured teams – Market Intelligence and Insights led by Laura Warren and Digital Reporting and Taxonomies led by Phil Fitz-Gerald. Laura’s team will focus on providing more comprehensive, evidence-based analysis and insights across the FRC’s policy development, monitoring and regulatory activities. Phil’s team will enhance the FRC’s thought leadership and policy work in the evolving digital reporting landscape. 

IASB concludes review of impairment requirements relating to financial instruments

4 July 2024

The International Accounting Standards Board (IASB) has published its Post-implementation Review of the impairment requirements in IFRS 9 Financial Instruments – Impairment. The Review has showed that the requirements provide useful information to financial statement users – particularly in relation to expected credit losses – and can generally applied consistently. The IASB will be exploring how targeted improvements and further clarification can be delivered.

IASB unanimously decides to move forward with the revision of the Management Commentary Practice Statement

19 June 2024

The International Accounting Standards Board (IASB) has unanimously agreed to finalise the revision of IFRS Practice Statement 1 Management Commentary. Responding to a demand for better investor-focused management commentary, the IASB’s revised Practice Statement is designed to align better with the management commentary reports required by many securities regulators. The project also aims to promote greater integration of sustainability disclosures in such reports. The revised Practice Statement is expected to be issued in the first half of 2025.

IASB invites academics to submit their papers for the 2025 IASB Research Forum

6 June 2024

The International Accounting Standards Board (IASB) has issued a call for papers for the 2025 IASB Research Forum with academics being invited to submit papers on a variety of topics including Statement of Cash Flows and Related Matters, Intangible Assets and any other emerging issues relevant to the IASB. The deadline for submission of papers is 31 March 2025.

IFC and IFRS Foundation partner up to support developing economies in the global shift towards sustainable finance

27 June 2024

The International Finance Corporation (IFC) and the IFRS Foundation have agreed to work together to strengthen capital markets by implementing programmes to promote and build capacity for the consistent application of the IFRS Sustainability Disclosure Standards across emerging markets and developing economies.

ISSB publishes Feedback Statement as it embarks on new two-year work plan

24 June 2024

One year after issuing two inaugural sustainability standards, the International Sustainability Standards Board (ISSB) has announced that it will deliver further harmonisation and consolidation of the sustainability disclosure landscape during the next two years. This includes supporting work to streamline frameworks and standards for disclosures about transition plans and understanding how initiatives to meet the information needs of investors can be built on.

IPSASB announces its first Sustainability Reporting Standard is in development

11 June 2024

The International Public Sector Accounting Standards Board (IPSASB) has announced that the first public sector Climate-related Disclosures standard is in development. With support from the World Bank, the standard aims to enable more informed decision-making about contributions towards addressing the climate emergency.