European accounting enforcers set out common enforcement priorities regarding companies’ 2022 financial statements

IAASA published the European Securities and Markets Authority (ESMA)’s annual priorities statement titled European common enforcement priorities for 2022 annual financial reports.

IAASA has published a October 2022 edition of Standards Newsletter

In the October 2022 edition, you'll find information on recently adopted standards as well as the standards that are due to become effective shortly, the ISA (Ireland) 600 consultation and other developments.

Reminds to issuers regarding the European Single Electronic Format (ESEF)

IAASA published ESMA’s updated ESEF Reporting Manual applicable to the 2022 financial year. This manual includes the requirement to mark up the notes to and the accounting policies of the IFRS consolidated financial statements, following the “block tagging” approach. This has the potential to be a significant task and ESMA encourages issuers to engage early with software providers and auditors to identify any issues at an early date.

IAASA publication: Climate-related disclosures in financial reports – IAASA information requests

IAASA has published a paper setting out information requests that it has raised with companies on their climate-related disclosures in their annual financial reports. The primary purpose of this paper is to provide preparers, auditors and users of financial statements with information to encourage discussion as to whether issuers adequately consider the appropriateness and completeness of climate-related disclosures provided in financial reports. 

IAASA highlights matters for companies to consider when preparing their 2022 financial statements.

IAASA has published its annual Observations paper highlighting matters that those charged with governance should consider when preparing their financial statements for 2022.

Draft Minimum Standard for Audit Committees

The FRC has launched a consultation on its draft proposal of a minimum standard for audit committees. This follows the Government's Response to its consultation on Restoring Trust in Audit and Corporate Governance, which set out its intention to give ARGA statutory powers to mandate minimum standards for audit committees in their role on the external audit.

The purpose of the standard will be to increase performance across audit committees in the FTSE350, ensuring a consistent approach and supporting a well-functioning audit market.

Annual review of Corporate Governance Reporting

The Financial Reporting Council published its Annual Review of Corporate Governance Reporting which found an improvement in the quality of reporting against the UK Corporate Governance Code. A common theme throughout the report is the lack of disclosure in relation to the outcomes and impacts of governance policies and practices. Companies need to demonstrate, within their reporting how their governance has been improved.

Annual Review of Corporate Reporting 2021/2022

The Financial Reporting Council has reiterated the need for high-quality disclosures from companies during periods of economic uncertainty. To support more informed decision-making, companies must ensure that investors and other stakeholders receive reliable information about a company’s financial performance and prospects. The FRC was disappointed to find errors in cash flow statements, an area where both companies and their auditors must improve. The review also identified scope for improvement in reporting on financial instruments and deferred tax assets.

Report on Navigating barriers to senior leadership for people from minority ethnic groups in FTSE 100 and FTSE 250 companies.

The FRC report shows that, while there are still significant challenges to be addressed, the need for change has been taken seriously across the spectrum, including senior managers, executive leaders, board chairs and executive search consultants.

FRC Lab Report: Net zero disclosures

To understand net zero disclosures further, the Lab spoke with investors, companies and other stakeholders. They sought to understand how investors use disclosures on net zero or other GHG reduction commitments; investor perspectives on current reporting, including good practice and areas for improvement; and reporting challenges and successes for companies with these types of commitments.

FRC Lab report: Structured digital reporting

This FRC Lab report identifies lessons learnt from the first year of mandatory structured digital reporting under the TD ESEF regulation.

FRC Lab report: Improving ESG data production

The FRC Lab launched a project about the production, distribution and consumption of ESG data, with the first phase focusing on the production of ESG data. The report focuses on how companies can better produce and use ESG data for effective decision-making. The report sets out the three key elements of ESG data production: motivation, method and meaning.

Commission Implementing Regulation (EU) 2022/1210 of 13 July 2022 laying down implementing technical standards for the application of Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to the format of insider lists and their updates (Text with EEA relevance)

The insider lists required by Article 18(1) of Regulation (EU) No 596/2014 shall contain a section specific to each piece of inside information and shall be drawn up using the format set out in Regulation (EU) 2022/1210.

ESG & Asset Management

In this episode of KPMG’s Asset Management Insights, KPMG Partner, Jorge Fernandez is joined by Andrew Farmer to discuss what is driving the investment management industry relevant to EU regulation. The conversation focuses on SFDR and how investment managers and investment consultants are reacting to and organising the commercial application of the directive.

Great ESG expectations

CEOs everywhere see the importance of environmental, social and governance (ESG) initiatives on their businesses, especially when questioned about ESG’s impact on improving financial performance, driving growth and meeting stakeholder expectations. Find out more about how Irish CEOs are dealing with the expanding ESG agenda.

Central Bank introduces Macroprudential Measures for Irish Property Funds

On 24 November 2022, the CBI introduced new macroprudential measures for Irish Property Funds. These new measures consist of (a) a 60% leverage limit on the ratio of Property Funds’ total debt to their total assets (the “Leverage Limit”) and (b) a CBI Guidance on redemption terms for Property Funds to avoid liquidity mismatch (the “Guidance”).

“Property Funds”, for the purpose of the new measures, are alternative investment funds  which are domiciled in Ireland, authorised under domestic legislation and which invest 50% or more directly or indirectly in Irish property assets. 

CBI – Central Bank requires firms to address potential risks for consumers from a changing economic landscape

The Central Bank has written to all regulated firms to reaffirm its expectations on how they treat consumers, in the context of the current economic environment. The Dear CEO Letter details the specific actions, as set out in the Consumer Protection Outlook Report, which firms are required to address to manage potential risks arising from this changing landscape for consumers

Read the CEO letter here.

Central Bank (Amendment) Bill 2022 (state updated 17 November 2022)

Bill entitled an Act to amend the Central Bank Act 1942 and prohibit financial service providers from discriminating against survivors of cancer from accessing financial services and to provide for related matters.

There is currently no active Central Bank consultation. The list of closed Central Bank consultations can be accessed here.