Mercia Newswire April 2021

  • By Mercia Group
  • 30 April 2021 12:08

With the continuing cautious move into post-Covid times, this month’s publications and announcement move to addressing a range of areas that may have had less attention in the last year. Of course, the effects of the pandemic are not entirely forgotten, with an unsurprising extension to the IFRS amendments for Covid-related rent concessions.

On the tax side, see our blog on the key Budget 2021 points for your clients and the latest on the Self-Employed Income Support Scheme Grant 4. The government has also issued guidance on the taxation of cryptoassets and a new bulk appeal process for Covid delayed self assessment tax returns.

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TAXATION

Bulk appeal for Late Filing Penalties - COVID-19

To make things easier for agents representing these individuals and businesses, HMRC have introduced a route for agents to submit a bulk appeal for late filing penalties, on behalf of their clients, where COVID 19 is being claimed as a reasonable excuse for late filing of the 2019/20 return. To read more, please click here.

National Insurance contributions relief for employers who hire veterans

HMRC have released guidance on this relief, which is available for 12 months from the veteran’s first day of civilian employment. To read more, please click here.

Taxation of cryptoassets

HMRC have issued a manual which sets out their view of the appropriate tax treatment of cryptoassets, based on the law as it stands on the date of publication. To read more, please click here.


AUDIT AND ACCOUNTING


ICAEW guide on reporting irregularities

ICAEW has issued a new guide for auditors reporting on irregularities in the audit report for the first time. There was already a general guide covering this change that applies to periods beginning on or after 15 December 2019 and this new document is tailored specifically to first-time reporting as this presents extra challenges.  

FRC shares information on Corporate Reporting Reviews

The FRC has issued a new document explaining its approach to audit supervision of firms performing audits of public interest entities. The document describes the three teams covering audit firm supervision, audit market supervision, and audit quality review, and looks at their respective responsibilities and powers as well as setting out how the FRC's work interacts with that of other regulators.  

FRC approach to audit supervision

The FRC has issued a new document explaining its approach to audit supervision of firms performing audits of public interest entities. The document describes the three teams covering audit firm supervision, audit market supervision, and audit quality review, and looks at their respective responsibilities and powers as well as setting out how the FRC's work interacts with that of other regulators.    

Audit of housing associations - issue of revised Practice Note

There is a revised Practice Note for the audit of housing associations. The underlying principles have not changed but the new note updates key business risks and expands on ISA (UK) specific guidance and material relating to devolved regulatory regimes. 

FRC strategic plan 2021-22

The FRC has published its strategic plan for the coming year. As expected, the focus is on the move to becoming ARGA and exercising its new powers based on the possible outcomes of the latest BEIS consultation on audit reform. The plan sets out the KPIs by which the FRC will measure its own success and also shows the proposed increases in the levies from various interested parties including accounts preparers and accounting firms, in order to fund the planned expenditure in the year.  

The future of UK GAAP

UK Accounting Standards are subject to regular review to ensure that they remain up to date and continue to provide high quality and cost-effective financial reporting. The next update to those standards is still some way off, with the effective date for any amendments currently expected to be 1 January 2024. Even so the FRC has started the review process, requesting views from interested stakeholders on areas that might be considered as part of the next review. Those that wish to suggest areas for consideration have until 31 October 2021 to do so.  

Pensions Regulator climate change strategy

The Pensions Regulator has set out a new climate change strategy which will supplement new regulations expected soon that will require trustees of larger schemes to maintain oversight of climate risks and to make relevant disclosures. The strategy notes that trustees of schemes with more than 100 members should comply with existing requirements relating to publishing a Statement of Investment Principles that includes a policy on financially material environmental considerations.

Preparers of pension scheme accounts will be pleased to hear that an addendum to the SORP has been published by PRAG to highlight these additional investment disclosure requirements, along the requirement to include an implementation statement as part of the annual report, which have come into force since the SORP was last revised.  

ISAB Exposure Draft - disclosure initiative

The IASB has issued a new Exposure Draft arising from their long-running "disclosure initiative" project. This ED effectively tests out the new principles on drafting disclosure requirements by proposing amendments to two standards, IAS 19 on retirement benefits and IFRS 13 on fair value measurement. It asks for feedback both on the principles and on the way that they are suggested to be applied in these particular example standards. 

Covid-related rent concessions

As expected, the IASB has extended the application of the practical expedient in IFRS 16 for covid-related rent concessions so that it now applies to concessions for payments originally due on or before 30 June 2022. The amended version of the standard is effective for periods beginning on or after 1 April 2021.

The FRC has announced plans to amend UK GAAP in a similar way, extending the concessions introduced last year for a further 12 months so that they also cover lease payments that were originally due on or before 30 June 2022.  


Audit Manual Package

The Mercia Audit Manual Package (UK) has been updated to incorporate audit data analytics (ADA) within the methodology. This update encourages auditors to utilise audit data analytics to improve the quality of their work and may lead to increase efficiencies. These changes principally focus on the use of ADA as part of the risk assessment, selection of high risk transactions for testing and stratification of populations to assist with sampling, although teams are encouraged to consider its use in other areas. The update incorporates two new forms at the planning stage and a new completion form. The Audit Procedures Manual and the methodology training have both been updated to reflect this enhancement to the methodology. The updated methodology will also flow into the rest of the audit related product range in the coming weeks.


Changes to the Money Laundering Regulations 2017

Various amendments have been made to the Money Laundering Regulations 2017 during the latter part of 2020 and early 2021. These are largely connected to Brexit and mainly technical in nature. For example changing references to the EU, EU institutions or EU Directives to UK equivalents. However, there were also some significant changes in respect of the forthcoming trust registration scheme that are not yet in force. Further HMRC guidance about these changes will be issued in due course.


A further important amendment to the Money Laundering Regulations 2017 was made in March this year which added a list of high risk third countries that apply when determining the need to apply enhanced due diligence. Also, in December 2020 HM Treasury and the Home Office issued an updated National risk assessment of money laundering and terrorist financing and in January 2021 the Accountancy AML Supervisors' Group (AASG), which consists of all the AML supervisory bodies in the accountancy sector, issued a Risk Outlook for the accountancy sector in January 2021. The latter document is essential reading when updating your firmwide AML risk assessment.

The Mercia Money Laundering Compliance Manual, MLRO Support Service and the ICAEW AML systems will be updated for the above changes and to reflect the draft CCAB guidance issued in September 2020 in the next week or so

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