Mercia Newswire November

  • By Mercia Group
  • 30 November 2020 00:00

In November, companies, auditors, accountants and regulators all start gearing up for December year ends. This will be an unusually challenging time to prepare informative accounts, whether this be preparing a statement of cashflows, pandemic related disclosures or Brexit related risk disclosures. See below for further guidance. Auditors dealing with December year ends will also need to consider the challenges of ISA (UK) 540 on Accounting Estimates and ISA (UK) 570 on Going Concern for the first time. Our Audit Manual Package has been updated for these revised standards and the package now includes online training to support the changes in the methodology.

This month also saw Chancellor Rishi Sunak announce measures to support the economy including an extension to the Coronavirus Job Retention Scheme, see the tax section and our download for more details. The UK is due to leave the EU at the end of the transition period on 31 December. It is time to ensure your clients are ready for the changes ahead. Our new Brexit - Preparing for January 2021 webinar will be available mid-December. There is no charge for member firms. It can be purchased by non-members for £72 per person or 2 credits.  

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This months free download discusses the extension to the Coronavirus Job Retention Scheme (CJRS) until 31 March 2021. 

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Compliance Update 26 November

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TAXATION


Updated guidance on PAYE for employees coming to the UK
HMRC has updated its guidance for employers on operating PAYE for employees who come to work in the UK, to reflect changes in circumstances resulting from coronavirus restrictions. To read more, please click here.

COVID-19: how HMRC will continue to support customers and the economy
HMRC have issued a briefing sets out how they will continue to support customers and the economy over the coming months. To read more, please click here.

AIA changes
The Government has announced that the temporary £1m cap has been extended until 31 December 2021. To read more, please click here.

 


AUDIT AND ACCOUNTING

 

Letters of Support
The ICAEW Audit and Assurance Faculty has produced some timely guidance for auditors of subsidiary undertakings that rely on their parents for financial support. In such cases it is common practice to request a letter of support from the parent as part of the evidence needed to address going concern. This guidance considers how much reliance can be placed on such letters along with other issues that the auditor will need to consider whenever they are used.
This forms part of the Institute’s 2020/21 Reporting Season guidance which also considers areas such as COVID transparency, the cash flow statement and other topical issues.

Suspicious Activity Reporting

In its recent thematic review of Suspicious Activity Reports (SAR) the ICAEW revealed that over half of all reports made to the National Crime Agency were as a result of audit and assurance work. This report, as well as providing some interesting statistics, also highlights areas where firms are already doing well along with where they can improve their reporting procedures further. Unsurprisingly it refers to the need to monitor clients that have taken advantage of pandemic-related government support such as the Coronavirus Job Retention Scheme and to ensure that SARs are made where fraudulent claims may have arisen.


Brexit Transition

With little more than a month to go before the end of the Brexit transition period, BEIS and the FRC have joined forces to issue letters to the accounting and audit sectors to set our how the regulatory framework will change from 1 January 2021. Firms should review these letters to ensure that they are ready for the changes about to come into force.

 

FRC reports on climate change

The FRC has issued several documents on climate change. Its main review document sets out key findings, expectations and next steps. While at present there are no new climate reporting requirements, the FRC is encouraging companies to start to report against the Task Force on Climate-related Financial Disclosures’ (TCFD) 11 recommended disclosures and, with reference to their sector, using the Sustainability Accounting Standards Board (SASB) metrics. It has also released reports covering various aspect of climate change reporting including financial reporting, audit and governance.

 

Developments in audit

The FRC’s latest Developments in Audit report, issued this month, has pointed out that there continue to be inconsistencies in audit quality. Issues noted continue to relate to insufficient challenge of management, with considerable extra difficulties now added because of the practical effects of Covid-19.

 

Expectations of company directors

The FRC has written its annual public letter to boards, outlining it expectations for the coming reporting season. The contents are not controversial, and emphasise explaining risks and uncertainties, whether these relate to the ongoing effects of Covid-19, or Brexit. Boards are also reminded to consider what will be an appropriate reporting timetable when there are many extra pressures on both preparers and auditors: taking time to get reporting right will be particularly important in this cycle.

Thematic review on cash flows

The FRC has published a thematic review covering cash flow and liquidity-related disclosures under IAS 7 and IFRS 7. While much of the content is IFRS-specific, there is also the observation that many entities are still making simple preparation errors in their cash flow statements, which can be picked up just from reviewing the accounts. This highlights the fact that financial reporting problems are not always related to complex judgements – some relate to errors, and cash flow statements are not always straightforward to draft or to update when the other primary statements are adjusted.

FRC consultation on third country auditors' fees

The FRC has opened a public consultation on fees payable by third country auditors, covering the FRC’s costs in regulating them. After 31 December 2020 these will be relevant to all auditors outside the UK that perform UK audits. Under the proposals the fee levels would not change but are reviewed each year.

Audit of housing associations

A consultation is now open on updating the FRC’s Practice Note on the audit of housing associations, which hasn’t been revised since 2014. Under the proposals the note would be updated to ensure the materials in it were only those relevant to housing associations, and to provide clear explicit links to current ISAs. Anyone wishing to comment on the proposals has until 29 January 2021 to do so.

OTHER NEWS 


It’s here – your 2021 Training Programme!

Following the launch of the 2021 Training Programme last week, your digital brochure should now have landed in your inbox!

With over 140 course titles and an unrivalled choice of dates and times, our 2021 training programme can help you achieve your training goals…

  • Keep your CPD up to date and develop professionally
  • New simplified membership and pricing structure, with membership for just £35 (+VAT) per person, or courses from just £33 (+VAT)
  • Fit your training in around other commitments – with the addition of our early morning, lunchtime and late evening one hour courses
  • Varied formats however you like to learn, including face to face events (when guidance allows us to return), our Mercia Live events and hundreds of on-demand recordings.
  • Delivered by our team of experienced lecturers
  • We understand that 2020 has been a year of change, where we have all had to adapt. To reflect this, your brochures have gone digital for 2021! The brochures are now interactive, enabling you to:
  • Complete an interactive booking form
  • Apply for membership with an interactive membership form
  • Easily navigate from the brochure to our website by simply clicking on a course title to be taken straight to the course outline

If you haven’t already, download your regional brochure today by clicking here!

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