Newswire December 2018

  • By Mercia Group
  • 30 November 2018 00:00

This month sees the publication of Sir John Kingman's Independent Review of the FRC and an update paper from the Competition and Markets Authority both making robust recommendations. See the A and A section for details. These reports came alongside news that the government is launching The Brydon Review of UK Audit Standards to recommend what more can be done to meet public, shareholder and investor expectations.

Whilst this has been happening, the FRC has been busy issuing a number of publications this month. These range from new auditing standards to factsheets on the application of FRS 102 that will doubtless be the focus of a number of our events as we head into the new year and the bigger picture for audit and its regulation comes into sharper focus.

Earlier this month, the Scottish government presented the Scottish Draft Budget with announcements on income tax bands and changes to Land and Buildings Transaction Tax. The income tax changes mean that the tax gap between Scottish taxpayers and taxpayers across the rest of the UK will widen for many. Update your clients on these changes with our client letter or digital summary.

We wish you all a happy, healthy and prosperous New Year and we look forward to working with you again in 2019.

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Independent review calls for FRC to be replaced

The final report from the independent review of the Financial Reporting Council (the 'Kingman Review') has been published which describes the FRC as a 'house built on weak foundations' and notes 'it is time to build a new house'. The report recommends that the FRC should be replaced by a new statutory body with its focus on the consumers, rather than the producers, of financial information. Many of the recommendations made will require primary legislation, and time, to implement hence interim proposals are also made. The full report and its proposals can be seen here.

This month has also seen the publication of a Competition and Markets Authority (CMA) update paper on its review into competition in the audit market. Recommendations include breaking down barriers to entry into the FTSE350 audit market by requiring joint audits in that market, as well as proposing a split between the audit and advisory arms of firms. The update paper can be seen here and the CMA welcomes responses to the update paper by Monday 21 January 2019.

The government has also launched another review, that will build on the above, to look at the quality and effectiveness of the UK audit market, to be led by Donald Brydon, the outgoing Chair of the London Stock Exchange. Read more on The Brydon Review into UK Audit Standards here.

Revised ISA on accounting estimates

The FRC has issued ISA (UK) 540 Accounting Estimates and Related Disclosures (Revised). The revised standard includes a more robust approach to identifying, assessing and responding to risks of material misstatement for accounting estimates and related disclosures. Changes are effective for audits of financial statements for periods beginning on or after 15 December 2019, with early adoption permitted.

The FRC has also proposed revisions to Practice Note 19: The Audit of Banks and Building Societies in the United Kingdom to address changes to UK auditing standards, legislation and regulation of the sector since the Practice Note was last updated in 2011. The FRC is requesting comments on the consultation by 8 March 2019.

Wates corporate principles for large private companies

 The Wates Corporate Governance Principles for Large Private Companies have been launched this month. The Wates Principles aim to provide a framework to help companies that employ more than 2,000 employees and / or have a turnover of more than £200m and a balance sheet total of more than £2bn to report on their corporate governance arrangements under The Companies (Miscellaneous Reporting) Regulations 2018.

FRS 102 Factsheets

The FRC has issued a series of staff factsheets covering aspects of FRS 102, including summaries and guidance on the application of the Triennial Review.

A&A technical round-up

In a relatively busy month for A&A technical publications, you may also find the following items, all relating to FRC publications and guidance, of interest:

  • an Audit Quality Thematic Review on other information in the annual report;
  • a consultation seeking feedback on the Client Asset (CASS) Assurance Standard;
  • a Staff Guidance Note providing guidance on group audits. Relevant information in relation to this guidance will be included in the forthcoming update to the Mercia Audit and Audit Procedures Manuals;

the withdrawal of Practice Note 25 Attendance at Stock-taking and Practice Note 27 The Audit of Credit Unions in the United Kingdom.

Technical Manuals News

This month we have issued updates to our Pensions and Property Professionals Specialist Assignment Manuals and our DPB (Investment Business) and Money Laundering Compliance Manuals.

If you are a subscriber and have any administrative questions about this update, please email TechnicalManuals or call us on 0116 258 1200.



The Lords Select Committee have published their report on MTD - recommending further deferral

The Lords Select Committee have published their report on MTD recommending further deferral. To read more please click here.

Find out about changes to VAT legislation on face value vouchers

HMRC has issued VAT Information Sheet 09/18 which details changes from 1 January 2019 to the VAT legislation governing face value vouchers in Sch 10A VAT Act 1994. To read more please click here.

Scottish Budget

Finance Secretary Derek Mackay presented the draft Budget to the Scottish Parliament on Wednesday 12 December 2018. To read more click here.




Your 2019 training programme

By now you should have received your 2019 brochure setting out our new memberships and credit pricing, offering you more choice and flexibility than ever before. We have had a busy year making sure we get it right to support the changing needs of the profession but maintaining the flexibility required to allow you to access your training in your preferred way. Thank you to all the firms who helped us by providing feedback in the planning stages.

Please call us if you'd like any help in deciding which options are best for your firm.

Helping local people in Crisis

Every year we support a charity that helps those less fortunate. This year the team donated items to create Christmas hampers for the Leicester South Foodbank. Each hamper contains emergency food to help feed families and individuals who are struggling to put food on the table this Christmas.

The response from the team has been phenomenally generous. For more information about the charity and how to donate you can visit their website by clicking here.

Christmas Jumper Day

The festive jumpers were out in full force at our office for Save the Children Christmas Jumper Day.

Christmas holiday opening hours

Our office will be closed from 12.30pm on Friday 21 December to 8.45am on Wednesday 2 January 2019.

Thank you for all your support in 2018. We wish you all a happy, healthy and prosperous New Year and we look forward to working with you again in 2019.


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