Mercia Newswire March 2021

  • By Mercia Group
  • 26 March 2021 12:08

It has been a long wait, but at last BEIS has launched its consultation on audit reform that could see major changes to the way the audit profession is regulated. Other publications focus on the flexibility we have all become used to in the past year, looking at how not only AGMs but also corporate reporting can move away from their traditional media into wider offerings such as online meetings and presentation of information using virtual reality.

The 23rd March saw the publication of 30 tax policy announcements including draft guidance, further consultations and reports on previous consultations, separated from the Budget to "allow more space for scrutiny". The move to ensure compulsory professional indemnity insurance (PII) for all tax advisors will see HMRC working with the professional bodies to find ways of implementing adoption and a talking point for clients owning Furnished Holiday Lets will be how future legislation will toughen the criteria for these properties to qualify for the small business rates relief.

Latest tax and accounting products

 

 

Free Download
Newswire Bulletin

Want to digest the essentials of Newswire but in a different format? Introducing Newswire Bulletins. All the same expert content, now delivered in video and podcast format.

TAXATION

More help for Self Assessment taxpayers

HMRC have announced that Self Assessment taxpayers will not be charged a 5% late payment penalty if they pay their tax or set up a payment plan by 1 April 2021. To read more, please click here.

VAT Deferral New Payment Scheme - online service opens

Businesses that deferred VAT payments last year can join the new scheme to pay it in smaller monthly instalments. To read more, please click here.

More guidance on the new SEISS

HMRC have issued some initial guidance on the fourth and fifth instalments of SEISS. To read more, please click here.

Changes to the advisory fuel rates from 1 March 2021

The advisory fuel rates have been issued with effect for all journeys undertaken on or after 1 March 2021. To read more, please click here.

Apply for a grant to help small and medium-sized businesses new to importing or exporting

The SME Brexit Support Fund could give businesses up to £2,000 to help with training or professional advice, if it has up to 500 employees and no more than £100 million annual turnover. To read more, please click here.

 


AUDIT AND ACCOUNTING


Reform of the UK's audit regime

BEIS has launched its long-awaited consultation on the overhaul of the audit regime, which aims to break up dominance of the Big 4 audit firms, improve corporate transparency and restore business confidence. The consultation adopts many of the recommendations of the recent Kingman, Brydon and Competition and Markets Authority’s reviews that followed a series of high-profile corporate failures, and includes wide-ranging proposals including the replacement of the FRC with the more powerful Audit, Reporting and Governance Authority (AGRA). With those wishing to comment on the consultation having until 8 July 2021 to do so.

For more information on the proposed reforms you can read our blog here or watch a short video about the consultation here.  

Companies House resumes normal service

Companies House has confirmed it has resumed its usual strike-off process from 8 March. The process had previously been suspended in April 2020 and resumed in October 2020 before being suspended again in January 2021 to reflect covid-related processing delays.

Also coming to an end is the filing deadline extensions that were introduced last Summer. Regarding the filing of accounts, the temporary three-month extension only applied where the normal filing deadline fell between 27 June 2020 and 5 April 2021 inclusive, so those companies and LLPs with normal filing deadlines from 6 April 2021 will need to file their accounts within the normal period for doing so. Also returning to normal from 6 April are the deadlines for filing the annual confirmation statement and event-driven filings such as changes to directors and PSC Register information.

Reporting on the Corporate Governance Code 

The FRC has published further guidance relating to Corporate Governance Code reporting, emphasising to companies the requirement to be transparent in their "comply or explain" reporting when they depart from certain provisions of the Code, including explicitly referring to the provisions of the Code which have not been complied with.  

Company AGMs in the time of COVID

The Chartered Governance Institute has issued new guidance about company AGMs, recognising ongoing difficulties in holding in-person meetings. The guidance emphasises that based on the UK government’s roadmap, in person meetings may well be legal at the end of March and in this case companies will need to offer shareholders a chance to attend a physical event, but also asks companies to look at offering hybrid events if their Articles do not rule this out.

Solicitors

The ICAEW has published a new technical release providing guidance on Solicitors Accounts Rules engagements, which takes account of changes to those rules that took effect from 25 November 2019. TECH 01/21 AAF replaces the previous guidance that was available and includes background to the rules as well as providing guidance on the practical implications for reporting accountants from planning the engagement through to reporting matters to the Solicitors Regulation Authority.  

Operational separation of audit firms 

In advance of the proposals to reform the audit profession the FRC has updated its principles relating to operational separation of the audit practices of the "Big Four" firms, as firms move into the implementation stage. The changes to the principles add more requirements for instance relating to situations where the audit practice passes fees to other parts of a firm.  

Virtual reality in reporting 

The FRC's Financial Reporting Lab has issued a report on the use of virtual and augmented reality in corporate reporting, suggesting this may have an increasingly important role in investor communications in modern times where digital rather than physical contact has become the norm.  

Narrow scope amendments to IFRS

The IASB has published amendments to IFRS designed to improve accounting policy disclosures and to clarify the distinction between accounting policies and accounting estimates. These changes affect IAS1 Presentation of Financial Statements and IAS8 Accounting Policies, Changes in Accounting Estimates and Errors along with IFRS Practice Statement 2 Making Materiality Judgements and will be effective for reporting periods commencing on or after 1 January 2023, with early application permitted. 

Keeping assurance standards in line with quality management standards

The IAASB has issued an exposure draft of conforming changes to other assurance standards to keep them in alignment with the proposed new quality management standards that are effective from 2022. In general, the changes do not affect meaning or practice, but are focused on updating references and terminology. The UK's FRC is consulting already on adopting a UK version of the quality management standards so is likely in due course to propose a similar set of amendments to those standards that have been adopted in the UK. 


The Mercia Audit Manual Package, Charities Manual and LLP Manual have all been updated for the Ethical Standard 2019 and for Brexit related changes. We also took the time to include supplementary (non-mandatory) forms which were previously outside of our systems. The areas included are COVID-19, BREXIT and Changes to financial reporting frameworks. A similar update is expected in the next week for the Pension Schemes Manual, Clubs Manual and Registered Social Housing Providers Manual.

Early next month we are excited to release updated audit methodology which incorporates using data analytics. This is an area which will evolve over the coming 12-24 months, so please watch this space!

You might also be interested in these articles…

You might also be interested in these products…

© Mercia Group Ltd, a division of Wilmington plc

Mercia Group Ltd is a company registered in England & Wales with company number 1464141
Great Britain: Wilmington plc, 5th Floor, 10 Whitechapel High Street, London, E1 8QS. VAT no GB 899 3725 51
Northern Ireland: Unit 9, Cloughoge Business Park, Newry, Co. Down, BT35 8WL

Mercia Ireland Ltd is a company registered in the Republic of Ireland with company number 321135
Registered office: Suite 329, The Capel Building, Mary's Abbey, Dublin 7