The Commons milestone paves the way for scrutiny by the House of Lords later this month and official delegation of UKEB’s official functions by the middle of May.
The creation of UKEB is part of the post-Brexit onshoring process as the body takes over endorsement of international accounting standards from EFRAG. UKEB will have two primary statutory functions: to endorse IFRS for use in the UK by listed companies, and to influence the development of IFRS for the benefit of the UK.
Pauline Wallace, a former head of public policy at PwC who assumed the role of UKEB interim chair in September for a year-long term, told ICAEW Insights that the appointment last month of UKEB’s board marked a major milestone, following what she described as a “very good response” to an open recruitment process.
The board’s 10 members with backgrounds that range across the user community, preparers, academia and auditors, include Philip Aspin, Chief Financial Officer of United Utilities Group; Giles Mullins, UK Head of Financial Reporting Advisory Group & Special Projects at Grant Thornton UK; and Liz Murrall, who retired as Director of Stewardship and Reporting at the Investment Association at the end of 2020.
Wallace said the appointment of two academics to the board - Amir Amel-Zadeh, an Associate Professor at the University of Oxford’s Saïd Business School, and Michael Wells, Professor of Practice at Imperial College Business School, would help to drive thought leadership and influence the IFRS debate.
“If you get the influencing process right, then endorsement ought to be a pretty straightforward thing. The best place to start is with the agenda consultation and the thought leadership processes. Having academics on board will help us ensure we’ve explored all the issues and understood what needs to be done in the UK,” Wallace said.
While debates would centre on the nuances of accounting standards, it was also most importantly about understanding what is right from a UK perspective, Wallace explained. “One of our objectives must be to ensure that standards are conducive to the UK public good and that’s quite a demanding assessment to make, both from the view of the economy but also from the perspective of capital markets. Making sure users have the information they need and markets are operating on a competitive basis is really critical,” Wallace said.
An initial priority and UKEB’s biggest technical challenge is to endorse IFRS 17 on insurance, a complex and controversial standard due to the dramatic impact it looks set to unleash on the insurance industry.
“Another critical challenge is that the IASB has just issued its agenda consultation and it’s important that we provide some real thought leadership into that process so we can start influencing IFRS from day one when it’s at the agenda consultation stage,” added Wallace.
Wallace says drafting UKEB’s due process handbook and putting it out for consultation is another priority, While UKEB reports directly to the government via the Secretary of State in relation to technical decisions, it also reports to the FRC, which provides an oversight role in relation to governance and due process. “One of our underlying principles is transparency and therefore we need to make sure all our stakeholders have the opportunity to feed into our processes but also understand how we’ve dealt with their comments so it’s critical that we get the due process handbook right.”
A public appointment process for the role of chair will take place this summer.