Newswire February 2024

Welcome to our February Newswire, 2024 has already been a busy year for the accounting, audit and tax sectors and we are now gearing up for the Chancellor’s Spring Budget.

Mercia’s experts will be creating a range of digital products that can be used to keep your clients up to date. Our Budget products are designed to provide key information on key tax changes.

Mercia’s Budget Summary will provide in-depth analysis and commentary of the Chancellor’s announcement.

For a review of the Budget that will consider any immediate implications and actions for your clients, don’t miss our Rapid Reaction Highlights on 6 March.

In our Newswire, we look at the latest measures aiming to simplify and modernise the tax system and HMRC’s work relating Corporate Criminal Offences investigations, please see the tax section for details. On the audit side, we examine the FRC’s areas of supervisory focus for 2024/25 and the latest amendments to the FRS 101 Reduced Disclosure Framework.

AUDIT & ACCOUNTING

FRC revises UK Corporate Governance Code and publishes guidance 

The Financial Reporting Council (FRC) has announced important revisions to the UK Corporate Governance Code (the Code) that enhance transparency and accountability of UK plc and help support the growth and competitiveness of the UK and its attractiveness as a place to invest. 

The FRC has also published targeted and digitally accessible guidance to support companies applying the UK Corporate Governance Code 2024. 

FRC conducts a review of reporting by the UK’s largest private companies 

The FRC has published its review of reporting by the UK’s largest private companies. 

The FRC comments that overall, the quality of reporting was mixed, particularly in terms of how clearly companies explained material matters that were complex or judgemental. 

For more on this FRC thematic review you can read our blog here. 

FRC takes systemic look at barriers to competition in UK audit market 

The FRC has published a summary of key findings and potential actions from research it commissioned into barriers to entry and growth faced by audit firms in the UK. 

The FRC’s report highlighted capacity constraints, recruitment and retention challenges, alongside regulatory requirements, as the main obstacles for smaller firms looking to expand their presence - especially in audits of public interest entities (PIEs). 

IAASB issue proposed International Standard on Auditing 240 (REVISED): The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements 

The International Auditing and Assurance Standards Board (IAASB) has proposed revisions to ISA 240: The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements. The IAASB comments that the revisions represent a significant strengthening of its standard on auditors’ responsibilities relating to fraud. 

The IAASB invites all stakeholders to provide their comments on the revised ISA via the Response Template on their website by 5 June 2024. 

IESBA launches public consultation on new ethical benchmark for sustainability reporting and assurance 

The International Ethics Standards Board for Accountants (IESBA) has announced the launch of two Exposure Drafts (EDs): 

• International Ethics Standards for Sustainability Assurance ED, which includes revisions to the existing Code related to sustainability reporting; 
• Using the Work of an External Expert ED. 

The IESBA invites all stakeholders to provide their feedback on the EDs by visiting the IESBA’s website. Comments on the Using the Work of an External Expert ED are requested by 30 April 2024, and on the Sustainability ED by 10 May 2024. 

First changes to UK company law expected on 4 March 2024 

Companies House is aiming to introduce the first set of measures under the Economic Crime and Corporate Transparency Act on 4 March 2024. 

MONEY LAUNDERING 

Amendments to the Money Laundering Regulations 10 

The Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2024 have been made and take effect from 23 January 2024. The amendment revises the meaning of high-risk third country from “a country which is specified in Schedule 3ZA” to “a country named on either of the following lists published by the Financial Action Task Force as they have effect from time to time — 

(i) High-Risk Jurisdictions subject to a Call for Action; 

(ii) Jurisdictions under Increased Monitoring.”. 

TAXATION