Newswire October 2024

AUDIT & ACCOUNTING

FRC issues September 2024 editions of UK and Ireland accounting standards 

The FRC has issued new September 2024 editions of UK and Ireland financial reporting standards. 

This encompasses all amendments issued to date, including the ‘Periodic Review 2024 amendments’, and provides an up-to-date reference point for each publication. 

The documents issued are: 

• ‘Overview of the financial reporting framework’; 

• ‘FRS 100 Application of Financial Reporting Requirements’; 

• ‘FRS 101 Reduced Disclosure Framework’; 

• ‘FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland’; 

• ‘FRS 103 Insurance Contracts’; 

• ‘Implementation Guidance to accompany FRS 103 Insurance Contracts’; 

• ‘FRS 104 Interim Reporting’; and 

• ‘FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime’. 

The FRC remind stakeholders that some previously issued amendments are not mandatory until future reporting periods. Earlier editions, and separate details of each amendment, continue to be available on the FRC’s website. 

For more on this you can read our blog here. 

FRC publishes Annual Review of Corporate Reporting 

The FRC has published its Annual Review of Corporate Reporting setting out the findings of its monitoring of UK companies’ annual report and accounts alongside its expectations for the upcoming reporting season. 

The FRC comment that the report is an important resource for preparers and auditors of financial statements, investors and other stakeholders. 

For more on this you can read our blog here. 

FRC publishes key accountancy and audit facts and trends report for 2024 

The FRC has released the 22nd edition of its Key Facts and Trends (KFAT) report, offering a comprehensive overview of the UK accountancy and audit landscape. 

The FRC note that this year’s report features data from 33 firms with Public Interest Entity (PIE) clients out of a total of 41, representing a diverse range of company sizes: 11 firms with under 200 employees, 12 with 200-2000 employees and ten with over 2000 employees. It also provides data on the profession’s demographics, including age, gender and ethnic diversity across seniority levels and firm sizes, highlighting both progress and persistent disparities. 

FRC publishes ISQM (UK) 1 thematic review of Root Cause Analysis (RCA) 

The FRC has performed an ISQM (UK) 1 thematic review of Root Cause Analysis (RCA) at the Tier 1 audit firms. This thematic review looks at how RCA is planned, performed, and monitored for findings from individual audit engagements and firmwide processes. 

The FRC highlight that this review is intended to provide insight for all audit firms, by sharing key observations and good practice identified in the work for the Tier 1 firms and that it expects all audit firms to consider these insights proportionately in the context of their nature and circumstances. 

Big Four audit firms conclude transition period of operational separation 

The FRC has announced the four largest audit firms (Deloitte, EY, KPMG, PwC), have concluded the transition period of operational separation. 

The FRC comment that throughout the three-year transitional period, all four firms have made significant improvements to their governance to prioritise the delivery of audit quality. This includes the creation of independent audit boards chaired by Audit Non-Executives, improved transparency on financial transactions between the audit and non-audit business, and greater accountability at firm level for the delivery of operational separation outcomes. The firms have also developed audit specific cultures, with behaviours focussed on challenge, openness and professional scepticism. 

In addition, all four firms have met the 2024 deadline set by the FRC to implement the principles of operational separation. As set out in the Operational Separation Principles, the FRC will publish an assessment of the firms’ compliance each year, following the transition period. 

UKEB call for comments: Draft Endorsement Criteria Assessment on the Amendments to the Classification and Measurement of Financial Instruments 

The UKEB has published a Draft Endorsement Criteria Assessment (DECA) on the potential use in the UK of the IASB’s Amendments to IFRS 9 and IFRS 7 - the Classification and Measurement of Financial Instruments issued in May 2024. 

The UKEB invites stakeholders’ views on the DECA conclusions regarding potential UK adoption of the Amendments by 10 January 2025. 

ICAEW 

ICAEW publishes audit monitoring report 

ICAEW has published its audit monitoring report for 2023/24. 

The ICAEW reports that, overall, 71% of audits were deemed good or generally acceptable, the same result as in 2022/23. This included a strong performance by the larger audit firms with 88% of non-Public Interest Entity (PIE) audits carried out by larger firms considered good or generally acceptable. Outside of the larger firms, most firms reviewed this year were different to those reviewed last year due to most firms being on a six-year review cycle, which makes year on year comparisons very difficult.  

The results were based on nearly 500 audit monitoring visits carried out by ICAEW’s Quality Assurance Department in 2023/24. Reviewers were asked to select the audits considered to be the most complex and challenging so the overall result is not necessarily representative of average audit quality, which is likely to be higher. 

For more on this you can read our blog here. 

ICAEW updates Access to working papers guidance: regulation 3.13 

The ICAEW has updated its guidance supporting audit regulation 3.13 “access to working papers” following the UK’s exit from the EU, and to reflect some changes to FRC functions. The ICAEW comment that following Brexit, the regulation now applies to a registered auditor accessing another firm’s working papers where the other firm is based in a third country (ie. a country outside the UK including EEA member states). Previously the regulation only applied when accessing working papers from a firm outside the EEA. 

ICAEW publishes anti-money laundering supervision report 

ICAEW has published its anti-money laundering supervision report for 2023/24. 

The ICAEW comments that it recently refocused its monitoring methodology away from technical compliance to examine the effectiveness of firms’ policies and procedures. The updated monitoring methodology that focuses more on the three stages of customer due diligence (CDD) has identified that the least effectively performed stage is verification procedures. Often this is because the verification procedures designed have not effectively mitigated the identified risks. The most commonly occurring area of non-compliance is ongoing monitoring with 36.7% of non-compliant firms found to have ineffective ongoing CDD. The ICAEW add that this is an important area of the money laundering regulations and that firms must regularly update their CDD. 

For more on this you can read our blog here. 

ACCA 

ACCA publishes September 2024 Quarterly Update 

The ACCA has published its quarterly update which focuses on the International Standard on Quality Management 1 (ISQM 1), which applies to firms which perform assurance engagements such as audits and review engagements, and specifically on the requirements regarding monitoring and remediation, and the firm’s annual evaluation. 

TAXATION

Check you’re not missing State Pension payments

HMRC are urging tens of thousands of people to check if they are eligible to boost their State Pension. To read more, please click here.

New Child Benefit service

HMRC have launched a digital service allowing Child Benefit claimants to opt in or out of receiving payments. To read more, please click here.

Notifying HMRC of employees’ hours worked

According to the ATT, HMRC have confirmed that additional information on hours worked will now not be required until April 2026 at the earliest. To read more, please click here.

Chancellor unveils package to deliver on promises of new government

The Chancellor has unveiled a package of measures to deliver on the agenda of the new government. To read more, please click here.