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Directors' know how' is a monthly article which highlights key rule changes, proposed changes and market updates so that you know what is coming down the track.

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FRC launched a programme of proposed measures to help smaller quoted companies improve the quality of their corporate reports

On 2 June, the Financial Reporting Council (FRC) launched a programme of measures to help smaller quoted companies improve the quality of their corporate reports.

A discussion paper, ‘Improving the Quality of Reporting by Smaller Listed and AIM Quoted Companies’ published by the FRC, details its findings following a review of the quality of reporting by these companies and invites feedback on the findings and conclusions.

The paper sets out the FRC's findings and proposals from the first phase of the project it began in 2014 to investigate the importance of the quality of reporting to investors in such companies, and to explore how the FRC can support companies in fostering improvements in this area. The paper is open for comments until 31 July 2015.

The FRC is also holding an event to discuss the programme of proposed measures to help smaller quoted companies improve the quality of their corporate reports and the discussion paper. During this event, the FRC wishes to hear the attendees’ feedback on its findings and conclusions.

Topics covered on the night will include:

Introduction from Stephen Haddrill, FRC CEO – the importance of smaller companies and the key findings of the review. Followed by panel discussion with:

  • Paul George, FRC – Measures proposed by the FRC to help smaller companiesimprove the quality of their reporting.
  • Matthew Stallabrass, Crowe Clark Whitehill – an audit firm’s perspective of the issues and challenges in audits of smaller companies
  • Andy Brough, Schroders – an investor’s perspective on the importance of good quality reporting by smaller companies
  • Peter Fitzwilliam, The Mission Marketing Group plc., challenges faced during the preparation of the annual report by smaller companies
  • Audience discussion

This event is targeted at all those with an interest in smaller quoted companies' corporate reporting, including: finance directors, non- executive directors, auditors, investors, professional advisers, regulators and professional bodies. To register for this event please click here.

European Commission launches Action Plan for Fair and Efficient Corporate Taxation in the EU

On 17 June 2015, the Commission adopted an Action Plan for fair and efficient corporate taxation in the EU. The Action Plan sets to reform the corporate tax framework in the EU, in order to tackle tax abuse, ensure sustainable revenues and support a better business environment in the Single Market.

The Commission has identified 5 Key Areas for Action:

  1. Re-launching the Common Consolidated Corporate Tax Base (CCCTB)
  2. Ensuring fair taxation where profits are generated
  3. Creating a better business environment
  4. Increasing transparency
  5. Improving EU coordination

The Commission has also launched a public consultation to assess whether companies should have to publicly disclose certain tax information. The consultation will run until 9 September 2015. 

IASB consults on a revised Conceptual Framework for Financial Reporting

On 28 May 2015 the International Accounting Standards Board (IASB) published for public comment an Exposure Draft proposing a revised Conceptual Framework for Financial Reporting. The proposals aim to improve financial reporting by providing a more complete, clearer and updated set of concepts that can be used by the IASB when it develops International Financial Reporting Standards (IFRS) and others to help them understand and apply those Standards.

This Exposure Draft:

a. is more complete than the existing Conceptual Framework because it addresses areas that are either not covered, or not covered in enough detail, in the existing Conceptual Framework (measurement; financial performance (including the use of other comprehensive income); presentation and disclosure; derecognition; and the reporting entity).

b. clarifies some aspects of the existing Conceptual Framework.  For example, this Exposure Draft:

  • clarifies that the information needed to meet the objective of financial reporting includes information that can be used to help assess management’s stewardship of the entity’s resources;
  • explains the roles of prudence and substance over form in financial reporting;
  • clarifies that a high level of measurement uncertainty can make financial information less relevant;
  • clarifies that important decisions on, for example, recognition and measurement, are driven by considering the nature of the resulting information about both financial performance and financial position; and
  • provides clearer definitions of assets and liabilities and more extensive guidance to support those definitions.

c. updates the parts of the existing Conceptual Framework that are out of date.  For example, this Exposure Draft clarifies the role of probability in the definitions of assets and liabilities.

The consultation is open until 26 October 2015.

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