European Single Electronic Format
The European Parliament and the Council 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.
ESEF requirements were initially for annual financial reports published by issuers whose securities are admitted to trading on a regulated market in the European Union for financial years beginning on or after 1 January 2020. They impact the format, rather than the content, of annual reports.
IFRS consolidations
The International Accounting Standards 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.
Small company audit
The International Auditing and Assurance Standards Board (IAASB) has set out plans to develop separate auditing standards for audits of less complex entities. This must be seen as a win for auditors who have argued that standards are too complex for a small company audit.
For many years, the prevailing argument was that ‘an audit is an audit’ and only one set of standards should be in issue, with application notes for small entities where needed. Although the IAASB project is to report in 2021, it may be many years before we see small company audit standards being promoted in Ireland.
Public sector
The International Public Sector Accounting Standards Board has issued Non-Authoritative Amendments to IPSAS 41, Financial Instruments, to clarify the requirements for classifying, recognising and measuring a range of important public sector specific financial instruments.
The document includes guidance on monetary gold, currency in circulation, IMF quota subscriptions and IMF special drawing rights.
The IAASB’s plans to develop separate standards for audits of less complex entities must be seen as a win for auditors who have argued that standards are too complex for a small company audit
Audit quality
The UK’s Financial Reporting Council has concluded that the use of technology could significantly improve audit quality when deployed at the right time in the audit process and, crucially, by those with the right training. Read the full report.
Investment limited partnerships
The Investment Limited Partnerships (Amendment) Act 2020 amends the 1994 act of the same name, the Irish Collective Asset-management Vehicles Act 2015, the Investment Funds, Companies and Miscellaneous Provisions Act 2005, and the Partnership Act 1890.
An investment limited partnership (ILP) is a partnership between one or more general partners and one or more limited partners. A general partner has unlimited liability for the debts and obligations of the ILP, while a limited partner is not liable beyond the amount of their capital contribution.
The structure is used frequently to manage pension fund investments and ILPs are regulated by the Central Bank of Ireland.
The act imposes substantial additional requirements on ILPs and Irish collective asset-management vehicles, including a requirement to maintain a register of beneficial owners, and inserts a number of additional offences and penalties for non-compliance into the legislation.
These types of legal entities have been used in other jurisdictions to facilitate money laundering, and the amendments will deter their use for this purpose in Ireland. The act, which extends to 90 pages, also tidies up and modernises the legislation for this type of investment vehicles.
Partnership regulations
The European Union (Qualifying Partnerships: Accounting and Auditing) Regulations 2019 require Companies Act-like financial statements and public filing in CRO for limited partnerships (Partnerships Act 1907) where the general partner is limited, or in normal partnerships (Partnership Act 1890) where all the partners are limited. However, solicitors may trade through a limited liability partnership (LLP) which itself will enjoy limited liability. If all the partners of the LLP are natural persons, then the European Union (Qualifying Partnerships: Accounting and Auditing) Regulations 2019 does not apply. If any of the partners in the LLP are corporate entities or non-natural persons, then the regulations should apply.
Harassment legislation
The Harassment, Harmful Communications and Related Offences Bill has hit the headlines as the effect of this legislation is that ‘revenge porn’ is now illegal, with punishments of up to seven years’ imprisonment.
However, the legislation also makes it an offence to send ‘any threatening or grossly offensive communication to another person’ which ’causes alarm or distress to the other person’. The offence extends to the acts of body corporates or persons with the ‘functions of management’ in a company.
Social media users should beware that they may not be just banned from the platform; some posts may now actually be illegal.
