Credit Union Amendment Bill
The underlying business model for credit unions is struggling and, while the recent increase in interest rates has improved the economic environment for an average credit union, there are still structural issues.
A new Bill currently progressing through the Dáil addresses some of the issues by making it easier for credit unions to co-lend and collaborate more, at a time when the mainstream banking sector is shrinking.
Options include allowing credit unions to come together to create corporate credit unions and to offer enhanced services, and potentially operate at a reduced cost.
The legislation places more emphasis on strategic planning and reduces the administrative burden
The Bill will amend section 43 of the 2012 Act to clarify that credit unions can invest in ventures supporting credit unions, and seek to improve members’ services by allowing credit unions to refer members to other credit unions and to participate in loans of other credit unions.
In addition, the bill will amend section 38 of the 2012 Act to allow the minister for finance to set a maximum interest rate, currently fixed at one per cent per month. This is intended to provide more flexibility for credit unions to price risk in a rising interest rate environment.
The legislation places more emphasis on strategic planning, allows the manager to be on the board, reduces the number of required board meetings, and reduces the administrative burden on the board. The board oversight committee will also only be required to meet every two months rather than the current monthly meeting requirement.
FRED 102
The Financial Reporting Council (FRC) has issued draft amendments to FRS 102. The proposed changes include a new model of revenue recognition in FRS 102 and FRS 105, and a new model of lease accounting in FRS 102.
The new draft standard replaces the existing section on Revenue Recognition with a new requirement based on a simplified version of IFRS 15, the international accounting standard on Revenue Recognition. This alignment will be welcomed by most accountants.
The new draft standard also replaces the section on lease accounting with a requirement similar to the requirement in IFRS, but simplified.
IFRS requires almost all leases to be finance leases. The exercise to convert operating leases to finance leases is time consuming, but this accounting will be welcomed by banks and other lenders, as they already do a calculation of capitalising operating lease payments when deciding on loan repayment capacity.
The UK regulator has published a report on what makes a good annual report and accounts
The proposed effective date of the amendments set out in the FRED is 1 January 2025. FRS 102 is based on the IFRS for SME standard issued by the International Accounting Standards Board and that standard is undergoing a regular update as well.
UK regulator
UK guidance is generally considered good practice in Ireland and therefore relevant in this jurisdiction.
The FRC has released details of its supervisory focus for 2023/24. Under the plans, the FRC’s Audit Quality Review team will pay particular attention to areas including going concern, fraud risks, climate-related risks, including the linkage between the audited financial statements and climate-related disclosures elsewhere in the annual report, and the application of the revised auditing standard on risk identification and assessment (ISA (UK) 315)
The Corporate Reporting Review team will conduct four thematic reviews during the next year, covering insurance contracts (IFRS 17), large private companies (Task Force on Climate-related financial Disclosures (TCFD)), and fair value measurement (IFRS 13).
The FRC will give priority to the following sectors, which it considers to be higher risk for corporate reporting and audit by virtue of economic or other pressures: travel, hospitality and leisure; retail and personal goods; construction and materials; and industrial transportation.
The UK regulator has also published a report on what makes a good annual report and accounts.
Working conditions
The Transparent and Predictable Working Conditions Directive has been implemented by Statutory Instrument No 686 of 2022. The new requirements include:
- more complete information on the essential aspects of the work, which is to be received early by the worker in writing
- a limit to the length of probationary periods at the beginning of a job (12 months for public servants and six months for others)
- the right to seek additional employment, with a ban on exclusivity clauses and limits on incompatibility clauses
- the right to know for a reasonable period in advance when work will take place
- anti-abuse legislation for zero-hour contract work
- the right for employees to request to be transferred to a form of employment with more predictable and secure working conditions where available, and receive a reasoned written reply
- the right to receive mandatory training, cost-free, that is required to carry out the work for which he or she is employed.
