Pandemic accounting
The Irish Auditing & Accounting Supervisory Authority (IAASA) has issued an information note on accounting during Covid-19. This deals with reporting the effects of the pandemic on the financial performance, financial position, cashflows and risks; the critical judgments, sources of estimation uncertainty, sensitivities to and changes in the assumptions underpinning assets, liabilities, income, expenses and cashflows; and the actions taken to mitigate the impact of the pandemic.
IFRS 16
IAASA has published a review of the disclosures on initial application of IFRS 16, Leases. Findings include a lack of detail on disclosures of accounting judgments and estimation uncertainty, variable lease payments and lease maturity analysis.
EU enforcement priorities
The European Securities and Markets Authority has published its common enforcement priorities.
Financial Reporting Council
In the UK, the Financial Reporting Council (FRC) has issued guidance on preparing strategic reports, otherwise known as reports made under section 172(1)(a) to (f) of the UK Companies Act 2006.
The FRC also announced changes to UK and Irish accounting standards. The main change is to mirror the IFRS 16 Covid-19 rent concessions changes in FRS 102 and 105, confirming that Covid-19 rent concessions can be reflected in gains and will not require recalculation of the lease creditor.
The FRC has issued results for its inspection of what is known in Ireland as local government audit, as well as highlighting the decline in non-audit fees in the UK’s Big Four.
The annual end-of-year letter to CEOs, CFOs and audit committee chairs sets out the FRC’s reporting expectations for preparers of reports and accounts for the year ahead.
The FRC has issued a guidance document on where company reporting needs to improve, making particular reference to Covid-19.
The FRC’s Financial Reporting Lab has produced a newsletter looking at its recent reports on video in corporate reporting and reporting in times of uncertainty.
Audit reports
IAASA has reviewed the application of ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report.
IAASA has also issued a Compendium of Illustrative Auditor’s Reports. This shows the most commonly used auditor’s reports for non-listed entities in Ireland, including private companies, private groups, micro companies and qualifying partnerships. Also included are example reports for abridged financial statements and revised financial statements.
Common Travel Area
Dating back to the Aliens Order 1925, Irish and UK citizens have enjoyed the right to travel, work, healthcare, social protection and education in each other’s country on the same basis as citizens of that country. This agreement was reaffirmed on 8 May 2019 and will continue irrespective of Brexit.
For employers looking at secondments or overseas working for staff, this means that they need not worry about travel for work for staff who are Irish citizens as they can work in the UK and EU freely. But employers may have to consider any restrictions that apply to UK citizens who may not be allowed work in other EU states or non-Irish EU citizens who may not be able to work in the UK.
Brexit
Preparation for Brexit is at an advanced stage for most accountants. Resources that might help include:
- Irish government’s Brexit readiness plan
- Irish government’s Northern Ireland information
- Enterprise Ireland’s online training on customs
- Enterprise Ireland’s Brexit Readiness Checker
- UK government’s Brexit readiness checker
- EU Brexit checklist for traders
Accrual accounting
Governments and government entities around the world are starting to adopt accrual accounting and International Public Sector Accounting Standards (IPSAS). This is to replace cash accounting or modified cash accounting still used in many countries, including Ireland.
To assist the change to accrual accounting and IPSAS, the International Federation of Accountants has developed a package of training materials.
Climate change
The FRC has just published a climate thematic review. This states that reporting should set out how the company has taken into account the resilience of the company’s business model and its risks, uncertainties and viability, in both the immediate and longer term, in light of climate change.
