Newswire December 2023

AUDIT & ACCOUNTING

FRC publishes latest review of corporate governance reporting

The Financial Reporting Council (FRC) has published its latest Annual Review of Corporate Governance Reporting which finds ongoing improvements in the quality of reporting against the UK Corporate Governance Code, but also identifies areas where many companies are still falling short.

FRC report looks at "materiality mindset" for better corporate reporting

The FRC has published a report looking at how companies can improve their corporate reporting by taking a more focused, strategic approach to assessing materiality.

ICAEW Audit Monitoring Report 2022/23 available

The ICAEW has published its Audit Monitoring Report 2022/23. This includes some early feedback on ISQM1 implementation and insights and guidance on where firms can improve the quality of their audit work based on the findings of our Quality Assurance reviews during 2022/23, especially in light of the challenges firms have faced attracting and retaining staff post pandemic.

CHARITIES

Charity Commission Regulations: Charitable Incorporated Organisations (Constitutions 2023)

The Charity Commission has published updated regulations and guidance setting out what should be included in the governing document of a Charitable Incorporated organisation (CIO). The update reflects changes introduced by the Charities Act 2022. All new CIOs are expected to use the new model constitutions immediately.

MONEY LAUNDERING

ICAEW 2022/23 AML Supervision report available

The ICAEW has published its 2022/23 anti-money laundering supervision report. This sets out the most common anti-money laundering findings from the ICAEW’s reviews, access to relevant resources and information about how they are evolving their supervisory approach.

ICAEW guidance on role of the MLRO

The ICAEW has published a thematic review of the role of the MLRO that seeks to understand who the money laundering reporting officer (MLRO) is and how they fulfil their responsibilities. The review considers the challenges they face, training, suspicious activity reporting, compliance monitoring and emerging risks within their client base.

Economic Crime and Corporate Transparency Act 2023

New legislation has been passed that aims to deliver reforms on tackling economic crime and improve transparency over corporate entities. The Act includes a range of new measures that aim to address the ability to use apparently legitimate businesses to conduct criminal activity.

FRC announces areas of supervisory focus for 2024/25

The Financial Reporting Council (FRC) has announced its areas of supervisory focus for 2024/25, including priority sectors, for corporate reporting reviews and audit quality inspections. Areas of focus include:

• Risks related to the current economic environment.
• Climate related risks, including TCFD disclosures.
• Cash flow statements.

FRED 85 Draft amendments to FRS 101 Reduced Disclosure Framework – 2023/24 cycle

The FRC has issued FRED 85 Draft amendments to FRS 101 Reduced Disclosure Framework – 2023/24 cycle. After considering the 2023/24 annual review of FRS 101, the FRC proposes minor amendments to FRS 101 for consistency with IAS 1 Presentation of Financial Statements. No other amendments are proposed to FRS 101.

UKEB adopts Supplier Finance Arrangements: Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures

The UKEB has adopted Supplier Finance Arrangements: Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures (the Amendments), issued by the IASB in May 2023. The Amendments complement the existing disclosure requirements in IFRS Accounting Standards and are aimed at providing users of financial statements with information to assess the effect of supplier finance arrangements on an entity’s liabilities, cash flows and exposure to liquidity risk. The Amendments are effective for annual reporting periods beginning on or after 1 January 2024, with early application permitted.

FRC publishes thematic review of audit sampling

The Financial Reporting Council (FRC) has published its thematic review of audit sampling. Audit sampling is a fundamental tool for auditors, allowing the auditor to draw conclusions about a population based on the sample selected. The review found all audit firms should:

• Ensure that they provide engagement teams with sufficient guidance and training to support their use of professional judgement in audit sampling; and
• Update their methodologies and guidance to drive better documentation of key professional judgements in this area.

For more on this issue you can read our blog here.

FRC publishes review of companies’ IFRS 17 disclosures

The Financial Reporting Council (FRC) has published its thematic review of companies’ first-time application of IFRS 17, a new and fundamental change in accounting for insurance contracts. The review aims to provide examples of better practice and details the FRC’s expectations for companies ahead of their more extensive, year-end disclosures.

ICAEW publishes Framework document for practitioners' report on grant claims (Tech 12/23 AAF)

The ICAEW has published guidance to assist accountants when asked to provide reports on grant claims, reflecting good practice principles for grant-paying bodies and grant recipients.

ICAEW 2022/23 Audit Monitoring Report: leveraging insights to improve performance

The ICAEW has published its Audit Monitoring Report for 2022/23. This outlines the QAD’s key findings and how they can be used to drive improvement.

IAASB issues new standard for audit of less complex entities

The IAASB has issued new standard: the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (known as the ISA for LCE). The ISA for LCE is a standalone global auditing standard designed specifically for smaller and less complex businesses and organizations but delivering the same level of assurance for eligible audits: reasonable assurance. The standard is effective for audits beginning on or after 15 December 2025; but it will not apply in the UK unless or until it is adopted by the FRC.

ICAEW

Updated CPD recording tool

The ICAEW has issued an updated CPD recording tool for members to help them more easily record their CPD. It is available via the dashboard which is visible after logging in to their website. Firms can also ask staff who are members to download this record to help with overall CPD monitoring.

ANTI-MONEY LAUNDERING

HM Treasury make update to Schedule 3ZA of the Money Laundering Regulations

The list of high-risk third countries was updated on 4 December 2023 in line with FATF statements in October 2023. The HM Treasury Advisory Notice explains which countries are included on the list of high risk third countries and the reasons for their inclusion.