Newsroom

Worldwide Update (March 2019)

March 12, 2019

Periodic roundup of recent and upcoming actions and activities by audit and accounting organizations throughout the world.

International

IASB – International Accounting Standards Board (www.ifrs.org)

No new developments.

IFAC – International Federation of Accountants (www.ifac.org)

  1. The International Auditing and Assurance Standards Board (IAASB) – Exposure Draft, International Standard on Quality Management 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, issued February 8, 2019, proposes “various enhancements to address firms’ systems of quality management, previously known as systems of quality control. This Exposure Draft includes a new proactive risk-based approach to an effective system of quality management that establishes the foundation for consistent engagement quality. Other enhancements include: increasing firm leadership responsibilities and accountability, and improving firm governance; modernizing the standard for an evolving and increasingly complex environment, including addressing the impact of technology, networks, and use of external service providers; and more rigorous monitoring of quality management systems and remediating deficiencies.” The comment period ends July 1, 2019.
  2. The International Auditing and Assurance Standards Board (IAASB) – Exposure Draft, International Standard on Quality Management 2, Engagement Quality Reviews, issued February 8, 2019, proposes “various enhancements to engagement quality reviews. This includes a new proposed standard on engagement quality reviews that includes enhancements regarding: the eligibility criteria to perform the engagement quality review; and the engagement quality reviewer’s performance and documentation. The requirements addressing the selection of engagements for review have also been strengthened…” The comment period ends July 1, 2019.
  3. The International Auditing and Assurance Standards Board (IAASB) – Exposure Draft, International Standard on Auditing 220 (Revised), Quality Management for an Audit of Financial Statements, issued February 8, 2019, proposes improvements to “highlight the importance of the public interest role of audits, and improve the emphasis on the importance of the appropriate application of professional judgment and exercise of professional skepticism; clarify the role and responsibilities of the engagement partner…; modernize ISA 220 for an evolving environment…; and clarify the relationship between ISA 220 and the International Standards on Quality Control/Management… The comment period ends July 1, 2019.
  4. International Public Sector Accounting Standards Board (IPSASB) – IPSAS 42, Social Benefits, issued January 31, 2019, “provides guidance on accounting for social benefits expenditure. It defines social benefits as cash transfers paid to specific individuals and/or households to mitigate the effect of social risk.” Effective generally in 2022 with early adoption permitted.
  5. International Public Sector Accounting Standards Board (IPSASB) – Exposure Draft 67, Collective and Individual Services and Emergency Relief (Amendments to IPSAS 19), issued January 31, 2019. “ED 67 forms part of the IPSASB’s broader non-exchange expenses project, proposing requirements for collective and individual services and emergency relief. The purpose of the IPSASB’s project on non-exchange expenses is to develop new or amended standards that provide recognition and measurement requirements applicable to providers of non-exchange transactions, except for social benefits.” The comment period ends May 31, 2019.
  6. International Public Sector Accounting Standards Board (IPSASB) – Long-term Interests in Associates and Joint Ventures (Amendments to IPSAS 36) and Prepayment Features with Negative Compensation (Amendments to IPSAS 41), issued January 30, 2019, “arise from consideration of the annual improvements and narrow scope amendments projects of the IASB.” Effective generally in 2022 with early adoption permitted.
  7. International Accounting Education Standards Board (IAESB) – IES 7, Continuing Professional Development (Revised), issued January 28, 2019, “clarifies the principles and requirements for how professional accountancy organizations measure, monitor, and enforce their continuing professional development systems. It makes it clear that all professional accountants must develop and maintain professional competence to perform their role.” Effective on January 1, 2020.

ACCA – Association of Chartered Certified Accountants (www.accaglobal.com)

  1. Integrated reporting in Turkey – current situation, stakeholders’ perceptions and expectations, research report published February 7, 2019, in conjunction with the Center for Finance, Governance and Sustainability (CFGS) and KPMG Turkey, “aims to reveal views of the Turkish business world regarding integrated reporting and corporate reporting practices.”

CIMA – Chartered Institute of Management Accountants (www.cimaglobal.com)

  1. Re-inventing finance for a digital world, research report released January 30, 2019, discusses the new competencies emerging in the digital world that need to be embraced by finance professionals.
  2. Agile Finance Unleashed: The Key Traits of Digital Finance Leaders, research report released January 17, 2019, in conjunction with Oracle and the AICPA, “shows a strong correlation between digital finance and organizational success.”

IIRC – International Integrated Reporting Council (www.theiirc.org)

  1. Integrated reporting in Turkey – See ACCA above.

World Economic Forum – (www.weforum.org)

  1. Seeking Return on ESG: Advancing the Reporting Ecosystem to Unlock Impact for Business and Society, white paper released January 24, 2019, that “captures the findings of an extensive consultation process, uncovering opportunities for collective action between the complex and diverse set of stakeholder groups that influence ESG reporting, and highlighting where greater action is needed to accelerate system-level progress.”

 

Africa, Europe, India, and the Middle East (AEIME)

FRC – Financial Reporting Council of the UK (www.frc.org.uk)

  1. FRED 70 Draft amendments to FRS 101 – 2018/19 cycle and FRED 71 Draft amendments to FRS 102 – Multi-employer defined benefit plans, issued January 29, 2019. “FRED 70 proposes that insurance entities shall not be permitted to apply FRS 101 if IFRS 17 Insurance Contracts is part of EU‑adopted IFRS.” FRED 71 proposes “new requirements in FRS 102…for presenting the impact of transition from defined contribution accounting to defined benefit accounting.” The comment period for FRED 70 ends April 30, 2019, and for FRED 71 ends March 31, 2019.
  2. Artificial Intelligence – How does it measure up? – report issued January 21, 2019, that “explains what artificial intelligence is, where its use might make sense in corporate reporting, and explores some of the possible and current use cases for the technology. See first article in this issue.

ICAEW – Institute of Chartered Accountants in England and Wales (https://www.icaew.com/)

  1. Brexit and financial reporting: preparing FRS 102 accounts for 2018/19, guide issued February 19, 2019, looks “at the typical areas in the accounts that would be affected in times of uncertainty, the need to provide for additional costs, and the extent to which companies should take account of additional information that comes to light after the balance sheet date. We also look at the disclosures required and those that might be useful to provide, particularly for those applying FRS 102 Section 1A Small Entities.”

EFRAG – European Financial Reporting Advisory Group (www.efrag.org)

No new developments.

 

Americas, Asia, Australia and New Zealand (AAANZ)

AICPA – American Institute of Certified Public Accountants (www.aicpa.org)

  1. Assurance Services Executive Committee (ASEC) – Exposure Draft: Proposed Description Criteria for a Description of an Entity’s Production, Manufacturing, or Distribution System in a SOC for Supply Chain Report, issued December 31, 2018. “The description criteria are to be used when preparing and evaluating a description of an entity’s production, manufacturing, or distribution system (description) in a SOC for Supply Chain examination.” The comment period ends February 28, 2019.
  2. Assurance Services Executive Committee (ASEC) – A CPA’s Introduction to AI: From Algorithms to Deep Learning, What You Need to Know, White Paper issued February 7, 2019, “developed by Chartered Professional Accountants of Canada (CPA Canada) and the American Institute of CPAs (AICPA) to be used as a foundational resource. It will explain the buzzwords and terms you have likely been hearing, discuss the evolution of data, AI and computing power and help you to begin to think about AI and how it might impact your work.”

FASB – Financial Accounting Standards Board (www.fasb.org)

  1. Exposure Draft – Business Combinations (Topic 805) Revenue from Contracts with Customers— Recognizing an Assumed Liability, issued February 14, 2019, “clarifies when acquiring organizations should recognize a contract liability in a business combination. In the proposal, an organization should recognize deferred revenue from acquiring another organization if there is an unsatisfied performance obligation for which the acquired organization has been paid by the customer.” The comment period ends April 30, 2019.
  2. Exposure Draft – Targeted Transition Relief for Topic 326, Financial Instruments—Credit Losses, issued February 6, 2019, proposes to “ease transition to the credit losses standard by providing the option to measure certain types of assets at fair value.” The comment period ends March 8, 2019.
  3. Exposure Draft – Leases: Intangibles—Goodwill and Other (Topic 350), Business Combinations (Topic 805), and Not-for-Profit Entities (Topic 958) Extending the Private Company Accounting Alternatives on Goodwill and Certain Identifiable Intangible Assets to Not-for-Profit Entities, issued December 20, 2018. The proposal is intended to “reduce the cost and complexity of accounting for goodwill and measuring certain identifiable intangible assets for not-for-profit organizations.” The comment period ends February 18, 2019.

GASB – Governmental Accounting Standards Board (www.gasb.org)

  1. Exposure Draft – Fiduciary Activities – Proposed Implementation Guide, issued December 17, 2018, proposes to “provide guidance that clarifies, explains, or elaborates on the requirements of Statement No. 84, Fiduciary Activities.” The comment period ends February 28, 2019.

COSO – The Committee of Sponsoring Organizations of the Treadway Commission (www.coso.org)

  1. 2013 COSO Integrated Framework: An Implementation Guide for the Healthcare Provider Industry, published February 20, 2019, “introduces healthcare organizations to COSO’s widely used “Internal Control – Integrated Framework,” and provides a roadmap to implementation to help strengthen their overall governance and internal control structures.”

PCAOB – Public Company Accounting Oversight Board (www.pcaob.org)

No new developments.

SASB – Sustainability Accounting Standards Board (www.sasb.org)

No new developments.