Newswire December 2022

AUDIT & ACCOUNTING

FRC publishes letter on insurance company audits under IFRS 17

The FRC has published a letter to the Insurance Business Unit leaders on IFRS 17 becoming effective for annual reporting periods on or after 1 January 2023, replacing the interim standard IFRS 4.

FRC to introduce new support measures for smaller audit firms as their market share grows

The Financial Reporting Council (FRC) has announced new supervision measures to support smaller audit firms seeking to grow their share of the audit market without compromising audit quality. Tier 2 and Tier 3 firms audit a minority of listed companies and other public interest entities (PIEs) within the FRC’s regulatory scope. However their share of the market has recently grown from 9% to 13%, partly as a result of the larger Tier 1 firms de-risking their audit portfolios.

UK Endorsement Board adopts three narrow-scope amendments

The UKEB has adopted three narrow-scope amendments on 30 November 2022, which were published by the IASB in 2021 (effective date: 1 January 2023) as follows:

• Disclosure of Accounting Policies (Amendments to IAS 1 Presentation of Financial Statements and to IFRS Practice Statement 2 Making Materiality Judgements).
• Definition of Accounting Estimates (Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors).
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12 Income Taxes).

These amendments are effective for annual periods beginning on or after 1 January 2023, with early application permitted.

FRED 81 FRS 101 Reduced Disclosure Framework – 2022/23 cycle

The FRC has issued FRED 81 FRS 101 Reduced Disclosure Framework – 2022/23 cycle which proposes no amendments to FRS 101 as a result of its latest annual review. Comments on FRED 81 are requested by 28 February 2023.

Mandatory registration of Public Interest Entity audit firms comes into force

From 5th December onwards, all audit firms and responsible individuals (RIs) who undertake statutory audit work for Public Interest Entities (PIEs) must be registered by the Financial Reporting Council. The PIE Auditor Register can be found at www.frc.org.uk/pie-auditor-register

FRC publishes what makes a good environment for auditor scepticism and challenge

The Financial Reporting Council (FRC) has published a new report setting out examples of good practice to improve auditor scepticism and challenge. A critical attribute of an auditor’s mindset and behaviour is exercising professional scepticism and challenge when performing audits. The most significant quality issues identified by the FRC over a number of years involve the inconsistent application of professional scepticism and challenge, resulting in the poor application of professional judgement.

ICAEW publishes guidance on how inflation impacts accounting

Guidance published by ICAEW’s Financial Reporting Faculty explores the impact of high inflation on accounting and considers the financial reporting implications and related uncertainties that entities will need to think about.

New UK Audit Regulations now in effect

New UK Audit Regulations and Guidance are now in effect. The regulations primarily take account of the new registration arrangements with the FRC for firms that audit PIE entities. Click here to read a summary of the changes.

ANTI-MONEY LAUNDERING

Santander slapped with £107m fine by FCA for anti-money laundering failures

Santander has been fined more than £107m by the Financial Conduct Authority for anti-money laundering failures. FCA found that between 31 December 2012 and 18 October 2017, it didn’t properly oversee and manage its systems to prevent money laundering, which impacted oversight of over 560,000 business customers.

CHARITIES

Update on investment guidance following Butler-Sloss case

Commenting on the decision the Charity Commission for England & Wales have stated that the judgment offers welcome clarification of how existing legal principles should be interpreted by trustees in a modern context, but that it does not fundamentally alter those principles. They go on to confirm that charities can continue to rely on the legal position in their published guidance Charities and investment matters: a guide for trustees (CC14) when making investment decisions.

Check for signs of labour fraud in construction

HMRC has released guidance on out what checks to complete and how to report potential fraud for employers or workers in the construction industry.

Report a business that is not registered for money laundering supervision

HMRC has released guidance on how to find out if a business has registered with HMRC under the Money Laundering Regulations and report them if they have not. 

Changes to the advisory fuel rates from 1 December 2022 

The advisory fuel rates have been issued with effect for all journeys undertaken on or after 1 December 2022.

The advisory fuel rate for fully electric cars is 8p (5p).

For more information