Newswire July 2021

  • Mercia Group
  • 21 July 2021 00:00

In the world of accounting and audit this month, audit firms have been given a substantial project with the issue of the new quality management standards which for some will mean considerable work on their structures and processes. And those looking after LLPs will be interested to see prospective changes to the Statement of recommended practice (SORP) which offer welcome clarification and should reduce the need for interpretation and debate.

On the tax side this month's newswire focuses on COVID-19 measures, with details of HMRC's approach to collecting tax debts, how to calculate turnover for the fifth Self-Employment Income Support Scheme (SEISS) grant and guidance on whether changes are required to filed tax returns for SEISS payments. We also include a link to the latest HMRC guidance on extended loss carry back claims.



New quality management standards

The FRC has released the expected suite of three new quality management standards: ISQM 1 Quality management for firms that perform audits or reviews of financial statements, or other assurance or related services engagements, ISQM 2 Engagement quality reviews and ISA  220 Quality control for an audit of financial statements. The new standards combine to be a comprehensive update so that firms have an integrated approach covering all aspects of quality management from the high firm level down to the detail of how work is performed. The new standards are effective for periods beginning on or after 15 December 2022, although considerable work will be needed from firms before then to ensure that they have implemented effective quality management systems before this date.

In finalising the three standards only minor amendments were made to the drafts previously issued for consultation, which you can read about on our blog here.


New draft LLP SORP

The CCAB is consulting on a draft of a new version of the LLP SORP. It had been noted that there were still application difficulties particularly relating to distribution of profits. LLPs need to establish whether these distributions are automatic or discretionary as this has a significant effect on the accounting, and it has become clear that the current SORP does not yet address this decisively enough. The draft includes new definitions and further guidance, and brings all the revised guidance into one place to minimize confusion. It also gives more information on presenting distributions in the statement of cash flows. The comment period closes on 24 September 2021 and should the draft become a new SORP it would be effective for financial years beginning on or after 1 January 2022.

Key Facts and Trends

The FRC has issued its latest report on Key facts and trends in the accountancy profession which takes information from the main professional bodies across the UK and Republic of Ireland to give a snapshot covering matters such as distribution of work between firms, student numbers and diversity indicators.  notes that most firms have seen an increase in their fee income and that "challenger" firms have slightly increased their share of audits of FTSE 250 companies. You can learn more about the headlines from the report by reading our blog.

 Academy trusts

The ESFA has published a supplementary bulletin to the Academies Accounts Direction 2020/21 and its supporting guidance for auditors and model accounts, introducing a number of additional requirements that academy trusts must comply with. The bulletin principally addresses reporting issues related to the COVID-19 pandemic.





HMRC issue briefing: Collecting tax debts as we emerge from coronavirus (COVID-19)

This briefing sets out HMRC's approach to collecting tax debts and customer support as the UK emerges from the COVID-19 pandemic.

Extended loss carry backs

HMRC have updated their guidance note on the new rules for making extended loss carry back claims for companies and unincorporated businesses and to set out the procedure for making such claims.

Check if you need to change the Self-Assessment return for SEISS

HMRC have issued guidance on whether changes to a filed tax return for SEISS payments are required and how to do it.

Work out turnover to claim the fifth SEISS grant

HMRC have issued details on the fifth SEISS grant.

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