IAASA
Revised definition of a listed entity
IAASA has published a consultation on its intention to amend the definition of ‘listed entity’ in its Glossary of Terms, which defines the terms used in the Irish auditing and assurance standards. IAASA considers that it is in the public interest to ensure that the requirements of the standards relating to listed entities are applied to all entities listed on a market of the Irish Stock Exchange, including special purpose vehicles (SPVs). The consultation response is due by Friday 3rd December 2021. IAASA consultation can be found here:
https://www.iaasa.ie/News/2021/IAASA-issues-consultation-on-the-definition-of-lis
European Single Electronic Format (“ESEF”) Regulation
In advance of December 2021 year ends, IAASA reminded issuers in scope of the ESEF regulations that their statutory financial statements must be prepared in accordance with the requirements of ESEF regulation. It is important that entities consider the impact of these requirements on reporting timelines and engage with auditors early in this regard also. IAASA announcement can be found here:
https://www.iaasa.ie/News/2021/European-Single-Electronic-Format-(ESEF)-Update
Enforcement decisions taken by EU accounting enforcers
IAASA published the ESMA compendium of enforcement decisions taken by the EU accounting enforcers. The decisions cover a number of topics including: (a) Measurement of expected credit losses (b) Presentation of expenses related to COVID-19 (c) Presentation of current/non-current liabilities in the balance sheet (d) Reconciliation of net debt (e) Disclosures of financial risk (f) Deferred tax assets related to a change in accounting policy due to first application of IFRS 9 The ESMA publication is available here:
Compliance with market abuse regulations.
IAASA published the Central Bank of Ireland’s findings and expectations from a review of regulated firms, issuers and advisors who act on behalf of issuers. The review examined their compliance with market abuse regulations obligations. The Central Bank of Ireland report can be found here:
Financial Reporting Council (FRC)
Developments in Audit
The FRC published its edition of Developments in Audit, which sets out the FRC’s annual assessment of UK audit and ongoing expectations for how audit firms should deliver audit quality improvements to deliver a more effective audit market in the public interest. The FRC Developments in Audit can be found here: https://www.frc.org.uk/news/november-2021/frc-publishes-latest-edition-of-developments-in-au
Structured annual reports for issuers with transferrable securities admitted to trading on a UK regulated market.
Originating as an EU regulation, the FCA has implemented the ESEF rules requiring issuers with transferable securities admitted to trading on UK regulated markets to publish their annual financial reports in a structured XHTML web browser format. The requirements have been included within the Disclosure Guidance and Transparency Rules. The FRC wrote to CEOs and CFOs to remind them of the requirements. The FRC letter can be found here: https://www.frc.org.uk/getattachment/e06c3ef7-1a75-49ad-ae55-4638cd299d17/Structured-reporting-for-issuers-with-transferable-securities-admitted-to-trading-on-a-UK-regulated-market.pdf
FAQs on International Sustainability Standards Setting
The FRC a FAQs on International Sustainability Standards Setting. The purpose of the FAQs is to inform UK company stakeholders of developments in sustainability standard setting by the International Financial Reporting Standards Foundation. The FAQ can be found here: https://www.frc.org.uk/getattachment/77d8d1ad-f115-4890-b79f-d63f6dfda2ac/FRC-International-Sustainability-Standard-Setting-FAQs_September-2021.pdf
Viability and going concern disclosures
The FRC published their findings on company’s viability and going concern disclosures. In particular the review found that the disclosure of inputs and assumptions used in forecast scenarios to support the viability and going concern assessments often lacked sufficient qualitative and quantitative detail and that in some cases, there was evidence to indicate that significant judgements may have been applied in determining whether a company was a going concern or whether this was subject to material uncertainty, but these judgements were not identified or explained. The FRC findings can be found here: https://www.frc.org.uk/getattachment/2b213ba8-b950-49e4-838d-d919cbcbd6e6/Going-Concern-and-Viability-Review.pdf
Companies (Corporate Enforcement Authority) Bill 2021
Companies (Corporate Enforcement Authority) Bill 2021
The Bill, once enacted into Irish Law will establish the Office of the Director of Corporate Enforcement as a new standalone agency entitled the Corporate Enforcement Authority. The Bill also contains other amendments to the 2014 Act including amendments arising from certain recommendations of the Company Law Review Group (CLRG) on corporate governance and shares and share capital. The Companies (Corporate Enforcement Authority) Bill is available here: https://enterprise.gov.ie/en/Legislation/Legislation-Files/Companies-Corporate-Enforcement-Authority-Bill-2021.pdf The explanatory memorandum to the Bill can be found here: https://enterprise.gov.ie/en/Legislation/Legislation-Files/Companies-Corporate-Enforcement-Authority-Bill-2021-Explanatory-Memorandum.pdf
General Scheme of the Central Bank (Individual Accountability Framework) Bill 2021
The Department of Finance released the General Scheme of the Central Bank (Individual Accountability Framework) Bill 2021. The Bill proposes an Individual Accountability Framework (“IAF”) and Senior Executive Accountability Regime (“SEAR”) originally proposed in 2018. The draft legislation indicates that the SEAR will cover banks, insurance and investment firms and third country branches. The Bill is available here: https://www.gov.ie/en/publication/d28d9-general-scheme-central-bank-individual-accountability-framework-bill/ KPMG Ireland issued a publication – SEAR - 6 questions to ask your business which is available here: https://assets.kpmg/content/dam/kpmg/ie/pdf/2021/08/ie-sear-6-questions-to-ask-your-business-4.pdf
Environment, Social and Governance (ESG) Matters
EU Green Bond Standard (EUGBS)
The European Commission issued a draft EUGBS Regulation, which aims to address concerns about “greenwashing” and protecting market integrity, to ensure that legitimate environmental projects are financed. It will be a voluntary standard available to all issuers, both private and sovereign, and to non-EU as well as EU issuers. The EUGBS regulation is available here: https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/european-green-bond-standard_en
Taxonomy Regulation Disclosures
The EU’s sustainable finance and climate change agenda has brought forward a package of sustainable finance legislation. The Taxonomy Regulations sit alongside the Sustainable Finance Disclosure Regulations (SFDR) and the Low Carbon Benchmarks Regulation as part of this package. KPMG Ireland released a publication on the impact of the Taxonomy Regulation on different industry sectors. The KPMG Ireland release is available here: https://assets.kpmg/content/dam/kpmg/ie/pdf/2021/06/ie-taxonomy-regulation-disclosures.pdf
ESG risks for credit institutions and investment firms
The European Banking Authority (EBA) released a report on the management and supervision of ESG risks for credit institutions and investment firms. The EBA report is available here: https://www.eba.europa.eu/sites/default/documents/files/document_library/Publications/Reports/2021/1015656/EBA%20Report%20on%20ESG%20risks%20management%20and%20supervision.pdf
General
IBOR reform
KPMG Ireland discussed the impact of the interest rate benchmark reform on financial reporting.
The KPMG Ireland publication is available here: https://home.kpmg/ie/en/home/insights/2021/07/ibor-reform-valuation-fs.html?utm_campaign=PostBeyond&utm_source=LinkedIn&utm_medium=Social&utm_term=%23286859
Insurance
The European Insurance and Occupational Pensions Authority (EIOPA) published updated representative portfolios that will be used for calculation of the volatility adjustments (VA) to the relevant risk-free interest rate term structures for Solvency II. The EIOPA updated portfolios is available here https://www.eiopa.europa.eu/media/news/eiopa-updates-representative-portfolios-calculate-volatility-adjustments-solvency-ii-2_en
Banking
The European Banking Authority (EBA) published today the results of its 2021 EU-wide stress test, which involved 50 banks from 15 EU and EEA countries, covering 70% of the EU banking sector assets. The EBA results are available here: https://www.eba.europa.eu/sites/default/documents/files/document_library/Risk%20Analysis%20and%20Data/EU-wide%20Stress%20Testing/2021/ST%20results/1017864/2021-EU-wide-stress-test-Results.pdf
Active Central Bank consultations
There is currently no active Central Bank consultation.
The list of closed Central Bank consultations can be accessed here: https://www.centralbank.ie/publication/consultation-papers