Corporate Enforcement Authority
The Irish Auditing & Accounting Supervisory Authority has published updated guidance on auditors reporting category 1 and 2 offences to the Corporate Enforcement Authority. This reflects the Companies (Corporate Enforcement Authority) Act 2021, updated ISAs and other relevant legislation.
Fair value measurement
The Financial Reporting Council (FRC) has published its thematic review of fair value measurement.
The regulator points out that many IFRS Standards require or permit fair value measurements. The current challenging economic environment and the risks posed by climate change may increase the degree of estimation, uncertainty and management judgment in this area, making clear and transparent disclosures likely to become increasingly important.
The review highlights the need to:
- use market participants’ rather than the company’s own assumptions. While the transaction price usually reflects fair value, there may be circumstances where this is not the case – for example, in transactions with related parties. Companies should ensure that appropriate adjustments are made to ensure the transaction price reflects fair value in such cases
- improve disclosures of the mythologies and assumptions used, with the transparency of reporting about the valuation approach, underlying assumptions, management judgement and estimation uncertainty seen as key
- consider using third-party advice when valuing a material item and where there is no internal expertise.
Hyperinflation
For most accountants, hyperinflation is something they read about but don’t usually have to account for. However, Haiti became hyperinflationary as of 31 March 2023, and Ghana and Sierra Leone are projected to follow suit during 2023. They will join Argentina, Ethiopia, Iran, Lebanon, South Sudan, Sudan, Suriname, Turkey, Venezuela, Yemen and Zimbabwe, and will need to apply IAS 29, Financial Reporting in Hyper-inflationary Economies.
Country-by-country tax reporting
The European Union (Disclosure of income tax information by certain undertakings and branches) Regulations 2023 transpose Directive 2021/2101/EU. The regulations require multinational enterprises with turnover exceeding €750m in each of the past two consecutive financial years to publicly disclose corporate tax information separately for each member state and each third country on the EU list of non-cooperative jurisdictions, and an aggregate figure for all other third countries.
The first two global sustainability standards have been released
The reporting obligations only apply where the net turnover of a branch exceeded €12m for the past two consecutive financial years. The reporting will take place within 12 months of the date of the balance sheet for the financial year in question. The first reporting will be for accounting periods beginning on or after 22 June 2024, with 2025 the first potential year for reporting, to be published in 2026.
Audit improvements
The Financial Reporting Council has published its report on audit quality in the UK. Tier 1 firms are reported to show improved results and the results for the audit of FTSE 350 companies were ‘strong’. While results for BDO (UK) and Mazars’ (UK) continue to fall below their peers, FRC notes that they are improving.
Sustainability resources
The UN Global Compact is inviting SMEs to sign up to Small Business, Big Impact: A Six-Step Journey to Drive Sustainability and Business Growth. The resource includes five short, on-demand courses, one day of virtual live peer-exchange sessions and a toolkit. Registration is open and free of charge to all SMEs.
Meanwhile, the first two global sustainability standards from the International Sustainability Standards Board (ISSB) have been released. ACCA has support for members with a series of bite-sized video explainers on the new standards.
