Draft guide on supplementary financial measure

The Professional Accountants in Business Committee (PAIB) of the International Federation of Accountants (IFAC) has released a draft guide Developing and Reporting Supplementary Financial Measures — Definition, Principles, and Disclosures. Comments on the draft guide are requested by 26 May 2014. The Guide seeks to establish a benchmark for the use of supplementary financial measures, in order to improve understanding of an organization’s performance among management, investors, and other stakeholders. It provides principles regarding the qualities a measure should have and disclosures that should accompany them if reported externally. Building on the qualitative characteristics of useful financial information, the guidance recommends professional accountants consider a number of attributes when developing and reporting supplementary financial measures.

IASB decides on final effective date of IFRS 9

The International Accounting Standard Board (IASB) has after taking all the arguments into account and considering the time it takes for endorsement, tentatively decided to select an effective date of 1 January 2018 as the effective date for mandatory application of the completed IFRS 9 as a whole (i.e. classification and measurement, impairment and hedge accounting).

A Framework for Audit Quality: Key Elements that Create an Environment for Audit Quality

The International Auditing and Assurance Standards Board (IAASB) has released ‘A Framework for Audit Quality: Key Elements that Create an Environment for Audit Quality’. Through this Framework, the IAASB aims to raise awareness of the key elements of audit quality, encourage key stakeholders to challenge themselves to do more to increase audit quality in their particular environments, and facilitate greater dialogue between key stakeholders on the topic.

Adoption of ISAE 3410 ‘Assurance Engagements on Greenhouse Gas Statements’

The Council of the Institute in its 250th meeting held on January 25, 2014 has approved the adoption of International Standard on Assurance Engagements (ISAE) 3410 ‘Assurance Engagements on Greenhouse Gas Statements’. This ISAE deals with assurance engagements to report on an entity’s GHG statement. It applies to assurance procedures performed with respect to the GHG statement other than when the GHG statement is a relatively minor part of the overall information subject to assurance.  ISAE 3410 is effective for assurance reports covering periods beginning on or after July 1, 2014.

Revised Review Report – Statement of Compliance – CCG 2012

Under Clause (xli) of the revised Code of Corporate Governance (CCG) 2012, the external auditor is now required to highlight all non-compliances with the CCG requirements in the Review Report. The Council of the Institute has approved the revised review report on Statement of Compliance – CCG 2012. The revised report is effective prospectively from the date of ICAP circular No.2/2014 dated February 24, 2014. This circular supersedes the previous circular No.9/2009 dated January 19, 2009. Following are the key changes:

• Where management has accepted and disclosed the non-compliances in the Statement of Compliance; the auditor would only have to reiterate what management has already accepted by highlighting the material non-compliances in the Review Report. Clean Review Report would be issued in this case.
• In case of clean report the non-compliances will be highlighted along with the note reference of the Statement of Compliance after the opinion paragraph in the Review Report.
• Where the non-compliance is on the part of the Company but management is neither accepting nor disclosing the fact, the auditor would issue Modified Review Report (similar to the earlier practice).
• In case of modified report, the auditor would report instances of non-compliances, on the basis of which report is modified, before the opinion paragraph in the Review Report.
• It may not be possible to highlight all non-compliances; hence it would be at discretion of the auditor to highlight the material non-compliances in the Review Report.