TECHNICAL HIGHLIGHTS

AUDITING AND ASSURANCE

ISCA Issues Audit Bulletin 4 Non-Consolidation Of Subsidiaries – Considerations For The Auditor’s Report (AB 4)

In ACRA’s Audit Regulatory Report 2023, one area of concern highlighted is where an audited parent entity does not present consolidated financial statements as required by FRS 110 Consolidated Financial Statements. In such situations, the auditor needs to assess if this calls for a modification to the audit opinion.

This audit bulletin highlights key considerations for the auditor when assessing the effects of non-consolidation of subsidiaries on the auditor’s report, including illustrative examples on the types of audit opinions that may be issued.

ISCA Comments On IAASB’s Proposal To Extend Differential Auditing Requirements To Public Interest Entities

ISCA is supportive of the overarching objective to uphold public interest in extending differential auditing requirements to public interest entities. However, we highlighted that in determining the scope of entities to be subjected to additional requirements, focus should be given to the extent of public interest in the financial condition of that entity.

ISCA will be working with the respective authorities and agencies during implementation to address the profession’s concerns heard through the outreach activities on the scope of entities to be subjected to these requirements.

New IAASB Video Series Explores Proposed Changes To Fraud Standard

A new four-part video series has been released by IAASB on proposed amendments to its fraud standard to help stakeholders understand the proposed changes that strengthen auditor’s responsibilities related to fraud, and the rationale behind them.

FINANCIAL REPORTING

ISCA Comments On IASB’s ED Financial Instruments With Characteristics Of Equity (Proposed Amendments To IAS 32, IFRS 7 And IAS 1)

The ED aims to address diversity in accounting practices for the classification of financial instruments with both debt and equity features. It proposes (i) clarifying the underlying classification principles in IAS 32; and (ii) expanding disclosure and presentation requirements for certain financial liabilities and equity instruments.

We are generally supportive of the proposals and have highlighted areas where further clarification(s) could be made to enhance the understandability, scope and applicability of the requirements. However, we have reservations about two areas:

• the effects of relevant laws and regulations – we are concerned with (i) the apparent contradiction within IASB’s proposals regarding the need to consider rights and obligations created by relevant laws and regulations and (ii) the proposals going beyond the remit of IAS 32 and IFRS 9 which focuses on the assessment of contractual terms. The latter can lead to practical challenges such as the need for complex and in-depth legal analysis as well as potentially significant disruptions to current practice(s); and
• reclassification of financial liabilities and equity instruments – we are concerned that the proposed prohibition to reclassify financial liability to equity when the liability feature has expired would not faithfully represent the entity’s condition at reporting date; this can lead to reduced understandability and comparability of financial statements.

IASB Issues New IFRS Accounting Standard On Presentation And Disclosure In Financial Statements

IASB has issued IFRS 18 Presentation and Disclosure in the Financial Statements that will replace IAS 1 Presentation of Financial Statements. It introduces new requirements for presentation and disclosures in the financial statements and will be effective for annual reporting periods beginning on or after 1 January 2027, with early application permitted.

IFRS Foundation Publishes IFRS Accounting Taxonomy 2024

The IFRS Accounting Taxonomy enables electronic reporting of financial information prepared in accordance with IFRS Accounting Standards. IFRS Accounting Taxonomy 2024 is based on IFRS Accounting Standards as at 1 January 2024, including those issued but not yet effective. It incorporates changes made to IFRS Accounting Taxonomy 2023 which resulted from amendments made to IFRSs.

March 2024 IASB Update And Podcast Available

The topics discussed include the progress made in the Climate-related and Other Uncertainties in Financial Statements project; discussions in the Management Commentary project; and developments in the Power Purchase Agreements project.

March 2024 IFRIC Update Available

This Update is a summary of discussions by the IFRS Interpretations Committee (IFRIC) on the following topics:

• IFRIC’s Agenda Decisions relating to Climate-related Commitments (IAS 37), and Payments Contingent on Continued Employment during Handover Periods (IFRS 3);
• Other matters including Post-implementation Review of IFRS 9 Financial Instruments – Impairment.

March 2024 DPOC Meeting Agenda And Papers Available

For the Due Process Oversight Committee (DPOC) meeting held on 21 March 2024, topics discussed include approval for a shortened comment period of 90 days for proposed amendments to IFRS 9 and IFRS 7 related to contracts for renewable electricity, and updates to the DPOC on recent correspondences from Rethinking Capital relating to the Interpretations Committee’s work on climate-related commitments.

SUSTAINABILITY & CLIMATE CHANGE

March 2024 ISSB Update And Podcast Available

In this podcast, ISSB Chair Emmanuel Faber and ISSB Vice-Chair Sue Lloyd share on topics discussed at the ISSB meeting in March 2024, including ISSB’s work with jurisdictions around the world; key takeaways from the Sustainability Standards Advisory Forum (SSAF) meeting, the ISSB meeting and Transition Implementation Group (TIG) meeting; and ISSB’s strategic direction and balance of activities for the next two-year work plan.