Accounting standards
The International Accounting Standards Board (IASB) has proposed a new accounting standard helping companies whose income can be changed by rate regulations to give a clearer picture about their financial performance. Sectors covered include utilities and public transport, whose charges are often capped by governments. When these rules change close to accounting deadlines it can create ambiguity in accounts. The change would require such companies to report assets and liabilities affected by these regulations.
The IASB has amended international accounting standard IAS 1 on financial statements so that companies disclose how accounting policies have changed their books (material accounting policy information), rather than defining their significant accounting policies as guidance. This shift has been debated since 2019.
In conjunction with the above, the IASB has also amended International Financial Reporting Standards (IFRS) Practice Statement 2 on making materiality judgements about declaring how accounting policies affect financial statements.
Separately, the IASB has amended IAS 8 on accounting policies, changes in accounting estimates and errors, and clarifying how companies should distinguish changes in accounting policies from those to accounting estimates. When accounting policies change, past financial statements must take account of them, but revised accounting estimates only affect predicted future transactions. That means clarity is needed in definitions.
The International Public Sector Accounting Standards Board (IPSASB) has proposed aligning its rules on accounting for leases with those written into IFRS. The new system would utilise a right-of-use model (the values of using the leased asset), replacing a system where the risks and rewards of leasing are compared to ownership. The board argued the new system would improve transparency.
Covid-19
The International Ethics Standards Board for Accountants (IESBA) and the UK Financial Reporting Council (FRC) have released guidance on how accountants should aid clients and employers applying for help from government-backed business support programmes, notably those released during the Covid-19 pandemic. It explains how accountants should protect their independence when drafting financial information and disclosures for support applications, ensuring they are accurate.
Sustainability
The International Integrated Reporting Council has published revisions to its International <IR> Framework, the first changes since the system was launched in 2013. They focus on simplifying a required statement of responsibility for the integrated report; improved insight into the quality and integrity of underlying reporting; a clearer distinction between outputs and outcomes; and more balanced reporting of outcomes, plus value preservation and erosion.
The trustees of the IFRS Foundation are to create a Trustee Steering Committee to oversee the next stage of discussions about potentially forming a new board to authorise global sustainability accounting standards. This follows a three-month consultation into the issue, which indicated ‘growing and urgent demand to improve the global consistency and comparability in sustainability reporting’, stated a foundation note.
Compliance
The International Organisation of Securities Commissions (IOSCO) has proposed nine ‘sound practices’ helping its members develop and improve complaint handling procedures and systems, enabling retail investors to gain redress for errors and bad service. They include ensuring accurate data is available to assess complaints and pass fair judgements.
