The IASB has decided to add to its work plan by including an accelerated project proposing narrow-scope amendments to IAS 12, Income Taxes.
The Pillar Two model rules, published by the Organisation for Economic Co-operation and Development (OECD), provide a template for the implementation of a minimum corporate tax rate of 15% that large multinational companies would pay on income generated in each jurisdiction in which they operate, an IFRS news release said.
The minimum tax rate of 15% for multinational enterprises (MNEs) will be introduced from 2023, the OECD publication said.
"The IASB's project responds to stakeholders' concerns about the potential implications of the imminent implementation of these rules on the accounting for income taxes," the news release said.
The IASB has tentatively decided to introduce a temporary exception from accounting for deferred taxes arising from the implementation of the rules and targeted disclosure requirements for affected companies.
The IASB expects to publish an exposure draft in January and aims to finalise any amendments, which would be effective immediately, in the second quarter of 2023, the news release said.
UKEB endorses 2021 amendments
The set of three amendments to international accounting standards published in 2021 by the IASB, with an effective date of 1 January 2023, was approved for adoption by all members of the UK Endorsement Board (UKEB) on 30 November 2022, a UKEB publication said.
The 2021 amendments adopted are 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); and Deferred Tax Related to Assets and Liabilities Arising From a Single Transaction (amendments to IAS 12, Income Taxes).
The effective date of the amendments is 1 January 2023, with earlier application permitted, the publication said.
UK FRC launches audit support initiative
From 5 December 2022 onwards, all audit firms and responsible individuals who undertake statutory audit work for public-interest entities (PIEs) must be registered by the UK's Financial Reporting Council (FRC), an FRC news release said.
The FRC has published a Feedback Statement in relation to the audit quality indicators (AQIs) consultation report published in June 2022. The regulator has decided to progress with all except one of the 11 AQIs initially proposed. The statement lists the final set of AQIs.
"The proposals were intended to provide users of audit services with more information regarding factors that contribute to audit quality at the firms," the statement said. "In summer 2025, firms will be asked to provide FRC with AQI data, segmented between all audits, PIE audits, and non-PIE audits where possible (for consistency checking)."
The FRC also announced new supervision measures to support smaller audit firms seeking to grow their share of the audit market without compromising audit quality, in a news release on 7 December.
"Recognising the challenges smaller firms have in conducting high-quality PIE audits and the need for a more resilient audit market, the FRC is extending the scope of its supervision activities at these firms and intends to launch a new initiative," the news release said, "an 'Audit Firm Scalebox' which will include bespoke measures to help smaller firms taking on PIE audits and those scaling up the number or complexity of PIEs they audit."
The Scalebox will:
- Help new PIE audit firms better understand regulatory expectations;
- Help firms develop robust quality control systems as they grow; and
- Provide smaller firms with direct and immediate access to the regulator.
A report titled Tier 2 and Tier 3 Audit Firms: Audit Quality Inspection and Supervision Report from the FRC said that high-quality audits comply both with the spirit and the letter of auditing regulations and standards.
"The FRC defines high-quality audits as those that provide investors and other stakeholders with a high level of assurance that financial statements give a true and fair view," the report said. "[They] are driven by a robust risk assessment, informed by a thorough understanding of the entity and its environment."
EU law sets gender balance targets
In November, the European Parliament formally adopted the new EU law on gender balance on corporate boards.
By 2026, companies will need to have 40% of the underrepresented sex amongst nonexecutive directors or 33% amongst all directors, a press release from the European Commission said.
"There are plenty of women qualified for top jobs, and with our new European law, we will make sure that they have a real chance to get them," President Ursula Gertrud von der Leyen, Vice-President Věra Jourová, and Commissioner Helena Dalli said in a statement.
The adopted directive aims to ensure that gender balance in corporate boards of large, listed EU companies is established across the EU and appointments to board positions are transparent and that candidates to board positions are assessed objectively based on their individual merits, irrespective of gender, the press release said.
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