AUDIT & ACCOUNTING
Proposed revisions to FRC Ethical and Auditing Standards
The FRC has issued two Exposure Drafts (EDs) that propose a number of reforms aimed at enhancing confidence in audit and strengthening auditor independence ahead of the more sweeping changes that could come about following recent reviews.
The first ED addresses proposed revisions to the Ethical Standard which involve some restructuring and redefinitions. Revisions include a new limited list of permitted services that an auditor of a public interest entity can perform and a re-defined 'third-party test'. The second ED proposes amendments to ISQC(UK) 1 and to ten ISAs. These cover a broad range of topics including group audit procedures, auditor reporting, fraud, and work performed relating to 'other information' in the accounts.
The comment period is open until the end of September 2019 and changes are expected to apply for audits of periods beginning on or after 15 December 2019. The background and Exposure Drafts can be read here.
FRC report on large audits
The FRC has issued the results of its latest audit inspections, focused on audits of public interest entities. The results were not particularly positive, with 25% of audits being assessed as below an acceptable standard. A key area of criticism of all firms was failure to sufficiently challenge management judgements. This was also one of the themes in the last ICAEW quality review, as mentioned in our June Newswire.
Amendments to FRS 101 and draft amendments to FRS 102
The FRC has issued very limited scope amendments to FRS 101 changing the definition of a qualifying entity to restrict insurers from applying FRS 101 once IFRS 17 (the international standard on insurance accounting) becomes effective for periods on or after 1 January 2021.
It is also proposing amendments to FRS 102 which are again of niche interest. They cover the effect of the reform of interest rate benchmarks on hedge accounting, so that there will not be any unnecessary discontinuation of hedge accounting. The proposals would be effective from 1 January 2020 and are contained in FRED 72 which can be accessed here.
ICAEW financial reporting essay
ICAEW has issued an essay, Financial reporting: who does what? as part of its project on the future of audit.
With the opening call that "financial reporting needs to improve", it aims to set out the main responsibilities of the key parties involved, including emphasising the need for investors and audit committees to engage properly. It is the directors' responsibility to prepare true and fair financial statements, and the auditor's responsibility to issue an opinion on these, but other parties have a stake too and need to understand the scope of work performed, its limitations and the judgements and assumptions used in preparing the financial statements. The document also links to other essays in the series.
New Structures and Buildings Allowance finalised
After much delay the new Structures and Buildings Allowance legislation has now been finalised. To read more, please click here.
HMRC has released draft legislation for FA 2020. This includes the draft rules for the new IR35 rules. To read more, please click here.
Review of WLTP and vehicle taxes: summary of responses July 2019
Following changes to vehicle emission testing, the Government has decided to:
- Reduce company car benefit rates by 2% in 2020/21 before returning to planned rates over the following two years, increasing by 1% in 2021/22 and 1% in 2022/23. This applies to company cars first registered from 6 April 2020. There are no changes for cars registered before this date.
- All zero emission company cars will attract a reduced appropriate percentage of 0% in 2020/21 and 1% in 2021/22, before returning to the planned 2% rate in 2022/23.
To read more, please click here.
Our new website
We are delighted to say that we are in the final stages of our work on our new website www.mercia-group.com to allow you to access all Mercia and SWAT training, manuals and products from your 'My Account' area.
This will make it easier than ever for you book, purchase and review your products and services.
Once all the work has been completed we will be removing the SWAT website www.swat.co.uk. If you have not received a communication from us about accessing your Mercia website account or have any questions, please email firstname.lastname@example.org.
Please look out for further updates that will be emailed to you with any website updates.
To find out answers to our most commonly asked website questions, please visit our FAQs page.
We held our annual communications day this month, on the hottest day of the year! We were delighted to welcome Mark Milner, the new CEO of Wilmington plc to join us for the afternoon of business announcements and updates. This was followed by our first Mercia Summer party with cocktails, BBQ, drinks, a session by Mercia's own resident ex Ministry of Sound DJ Nilesh Parmar and a live performance by the Mercia Session Band.
All in all, a fun day for everyone and a great opportunity for teams from different locations, to meet, to share ideas, to catch up and great team building.