The International Ethics Standards Board for Accountants (IESBA) has revised its guidance on public interest entities (PIE), originally issued in March 2023, to support global implementation and adoption, a news release said.
One update includes addressing, in a new question-and-answer publication, the scenario in which a jurisdiction has no PIE definition or has excluded one or more of the mandatory categories in the IESBA PIE definition, the release said.
The IESBA and the International Auditing and Assurance Standards Board (IAASB) are working closely together throughout their respective projects. “Track 1 of the IAASB’s project was completed in June 2023,” another release said. The ongoing track 2 “aims to achieve convergence to the greatest extent possible between the boards’ PIE definitions and key concepts”.
Such coordination is critical to ensure the interoperability of both boards’ standards. According to the release, the publication is designed to highlight, illustrate, or explain aspects of the PIE revisions in the IESBA’s Code of Ethics and intends to outline the considerations and conclusions reached in the final pronouncement.
The guidance aims to assist national standard setters, professional accountancy organisations, and firms in adoption and implementation, the release said. The PIE revisions are effective for audits of financial statements for periods beginning on or after 15 December.
New IESBA and IAASB handbooks available
The boards released their handbooks for 2024 detailing new and revised standards, provisions, and guidance for the year ahead.
For the first time, the handbook from the IAASB comprises four volumes to improve user experience and accommodate new as well as revised standards, a news release said. It will be available in digital and print form.
According to the IESBA, the back of its 2024 handbook contains the IESBA-approved revisions to the Code of Ethics addressing tax planning and related services, which will become effective after June 2025.
FRC reports common issues from offsetting
From its review into the quality of UK company reporting in offsetting, the Financial Reporting Council (FRC) has set out the most common issues found in financial statements, a news release said.
“Offsetting contributes to a number of the FRC’s top ten reporting findings,” the release said. “Companies are reminded that inappropriate use of offsetting can mask the full extent of the risks relating to a company’s assets and liabilities, income and expense, and cash flows.”
Errors in relation offsetting in the financial statements are commonly found in the areas of the cash flow statement, financial instruments and provisions, the release said.
According to the release, accurate use includes the following:
- Cash flows should be presented gross, unless otherwise required or permitted.
- Bank overdrafts and positive bank balances that form part of a cash pooling arrangement are offset in the statement of financial position only when there is an intention to exercise a legally enforceable right to set off period-end bank balances.
- High-quality disclosures are important where financial instruments have been offset or are subject to a master netting arrangement or similar agreement.
- A reimbursement asset is required to be separately presented from the associated provision. Any reimbursement rights that satisfy the contingent asset requirements of IAS 37 should also be appropriately disclosed.
The regulator also reviewed company disclosures against IFRS 17, Insurance Contracts, following the first full year of reporting, the release said. Overall, the FRC found that reporting was of good quality with some areas for improvement.
“The FRC recognises that this is a new accounting standard, with a significant impact on the insurance sector, and that practice will continue to develop and improve over time,” the release said.
— To comment on this article or to suggest an idea for another article, contact Steph Brown at Stephanie.Brown@aicpa-cima.com.