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ICAEW technical round-up: October 2021

Author: ICAEW Insights

Published: 27 Oct 2021

This month’s top technical stories include in-depth analysis of the Budget and Spending Review, news of new online agent services and a nod towards SOX-style financial reporting reforms.

Need to know

Autumn Budget and Spending Review 2021: Keep up to date with the latest insight and analysis via ICAEW’s dedicated Budget hub.

UK likely to adopt SOX-style reforms, says FRC CEO: Jon Thompson, chief executive of the FRC, told delegates at ICAEW’s Financial Reporting, Audit and Assurance Conference to expect some form of SOX in the UK and voiced support for market caps for FTSE350 audits.

HMRC develops new online agent services: HMRC has taken some small but important steps towards giving agents access to the information and services available to clients. ICAEW’s Tax Faculty outlines recent changes including giving agents access to payments and liability information for VAT and employer PAYE.

Pandora Papers show importance of knowing your customer: Well-publicised information about the affairs of high net worth individuals draw attention to the importance of due diligence.

UK signs global tax initiative to re-align digital services tax and refund any excess: The UK has agreed a deal on how to transition from its digital services tax to the new OECD-led two Pillar global tax system due to be implemented in 2023.

ICAEW calls for new framework and body for good regulation: In its response to the government’s ‘Reforming the Framework for Better Regulation’ consultation, ICAEW is calling for a new, better framework and a new body to make it work.


Sustainability and climate change

ICAEW joins global accountancy drive to achieve net zero: Thirteen professional accountancy bodies from around the world, including ICAEW, have joined forces to fight climate change.

‘Little evidence’ of climate risk effects in financial statements: Over 70% of listed companies representing some of the world’s biggest corporate carbon emitters failed to disclose the effects of climate risk in their 2020 financial statements, according to a report from financial think-tank Carbon Tracker.

The road towards unified non-financial reporting standards: While the impetus for non-financial disclosures is growing, there needs to be some harmonisation of standards if it’s going to work.

ICAEW stresses importance of IFRS but urges agility and timeliness: In ICAEW’s response to the IASB’s agenda consultation, ICAEW reiterated the importance of IFRS, the need for IASB to be both proactive and agile, and that interaction with the proposed new International Sustainability Standards Board is vital.

Proportionality and cooperation key to future of sustainability reporting: The UK government aims to lead on mandating climate-related financial disclosures and adopting international sustainability reporting standards but acknowledges requirements must not be excessively costly or onerous for business, says Lord Callanan.

Narrative reports and back-end financials - numbers must back up words: Companies need to do a better job of providing more consistency between front-end and back-end reporting in their annual financial statements if they are to engender trust with stakeholders and tap into the burgeoning appetite among investors for opportunities to invest.


Other technical news and updates

ICAEW backs new Accountancy Sector Fraud Charter: To counter rising levels of fraud, ICAEW has signed up to a new Fraud Charter for the accountancy sector.

Upward trend in R&D tax relief claims continues: The number and monetary value of claims for tax relief for research and development expenditure increased in the year to March 2020, according to the latest statistics from HMRC. ICAEW’s Tax Faculty takes a closer look at the data.

FRC’s changes to fraud auditing standard explained: The new UK Auditing Standard on Fraud looks to clarify the auditor’s roles and objectives regarding fraud, with a focus on enhanced professional scepticism.

Don’t obscure relevant GAAP measures with alternatives, warns FRC: An FRC review of Alternative Performance Measures by UK listed companies has warned that their context needs to be better explained amid concerns that profit-based measures tend to be more favourable than their GAAP results.

FRC identifies recurrent problem area in company disclosures report: The Financial Reporting Council has published the findings of its review into IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’, which has been identified as a frequent problem area.

Put the kettle on for the FCA: New expectations laid out by the Financial Conduct Authority could lead to financial services employees being visited at their ‘residential address’ by the regulator’s staff.

Bank of England raises concerns on SME lending: The Bank of England's Financial Policy Committee has highlighted worries about the supply of credit for small business lending in the current volatile economic climate - are we seeing a tightening of credit conditions?

Employers reminded to report contractual payday in RTI submissions: HMRC has reiterated that employers should continue to report contractual pay dates in their full payment submission for December if they pay employees early, rather than actual payday, to avoid complications for staff receiving universal credit.

Applications open for freeport customs sites: The forms required for businesses to operate special customs procedures within a designated freeport customs site have been published, along with further guidance on procedures for declaring goods moving into and out of sites.

SA1 still available to register clients for self assessment: Tax agents can still register clients for self assessment using the online SA1 form despite HMRC having moved it behind the government gateway. ICAEW’s Tax Faculty explains what has changed. 

More HMRC support on plastic packaging tax: HMRC is hosting free webinars to help businesses affected by the introduction of the plastic packaging tax to understand the regime. It is also looking for feedback on the associated service from individuals accessing their organisation’s liability.

Change in VAT treatment of construction self-supply charge: HMRC has revised its policy on the meaning of ‘entire interest’ for the purposes of the construction self-supply charge following the Supreme Court’s judgement in the Balhousie Holdings case.


Podcasts and graphics

Less Complex Entity audits: Sophie Campkin, ICAEW’s Technical Lead, Audit and Assurance, is joined by a panel of experts to discuss Less Complex Entity audits.

The ICAEW Tax Race - 54 years in the making: How has the government’s ‘take’ from different UK taxes changed over the last five decades? ICAEW looks at this question with an interactive ‘Tax Race’ graphic.


Member helpsheets and guidance

What good looks like – Going concern: The audit of going concern is often a challenge. Here we look at what a good audit file looks like in the context of going concern.

Training materials: What good looks like - going concern: This content provides training materials to assist you in embedding what good looks like in your firm in the context of the audit of going concern.

Insights special: Repairing public finances

ICAEW Insights takes a closer look at the efforts being made to repair public finances in the wake of the coronavirus pandemic.

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