The International Accounting Standards Board has cleared its staff to issue a Request for Information document seeking constituents’ views on the content and direction of the board’s project agenda. IASB members approved the decision by 13 votes.
A total of 12 board members backed a 120-day comment period on the document amid concerns from board member Nick Anderson that some constituents had complained of “consultation overload”. The consultation document is expected to be published next month.
In September 2019, the board cleared staff to consult with stakeholders on the best approach to the agenda consultation process.
During the board’s October 2020 meeting round, staff reported that constituents were keen for the board to add two potential pensions-accounting projects to its work plan to address hybrid pension plans and the prohibition on recycling so-called plan remeasurements through other comprehensive income.
The IASB is formally required to consult the public on its agenda every five years.
Meanwhile, the UK Financial Reporting Council has launched a consultation on proposals for a 6.8% increase in its budget to cover the cost of increases in its audit supervision and enforcement activities over the coming year.
Defined benefit (DB) plans, sponsors and preparers, as well as audit and accounting professionals will all see their contribution to the FRC’s activities increase.
The budget proposal also covers the cost of operating a new UK Endorsement Board to endorse individual new IFRSs for use in the UK. The UK endorsement mechanism will replace functions that were previously carried out by European Union institutions.
The FRC explains in the draft document that its projected spend for the coming year amounts to £52.2m (€60.7m). DB schemes are expected to contribute £1.2m to the watchdog’s budget under the pension scheme levy.
The levy is currently voluntary although the FRC said the Secretary of State for Business, Energy and Industrial Strategy has the legal power “to impose the levy “[s]hould the system of voluntary payments prove unsustainable.”
Preparers can also expect to stump up a 16% increase in their payments to the FRC to offset the effect of recent falls in the market capitalisation of FTSE 100 companies.
The watchdog plans to increase its headcount by roughly one-third from 291 at the end of 2020 to 396 by March 2022.
Separately, the consultation document also revealed that the audit watch is on track to transfer its functions to a new Audit, Reporting and Governance Authority.
In a preamble to the document, the FRC’s chair, Keith Skeoch, and chief executive officer, Jonathan Thompson, said the transformation programme is moving forward “with vigour, implementing change not dependent on legislation, and developing the policy and resourcing options where legislation is required.”
The UK audit profession, together with the FRC, has been the subject of three external reviews in recent years:
- Sir John Kingman’s review of the FRC;
- Competition and Markets Authority’s (CMA) study into audit; and
- Sir Donald Brydon’s probe into UK audit standards.
In addition, the high-profile collapse of services firm Carillion and allegations of accounting misconduct at bakery firm Patisserie Valerie have attracted scrutiny from politicians. The FRC chair and CEO said they were confident that they could make progress working toward implementing the findings of the three inquiries.
The timeline for finalising the reform agenda remains “uncertain”, the consultation document explains, although the FRC said it was “confident that the government’s consultation will set a clear direction of travel and provide support for an increase in the scope and volume of many of our existing activities, as well as new or enhanced functions.”