Hey everyone,
October was a busy month for the corporate reporting team at the UK’s Financial Reporting Council (FRC). They’ve issued not one, but two thematic reviews! For me, their technical publications are right up there with those of Big 4, and I always pay attention to what they say.
But that’s not all that happened in October, so…
Let’s dive in!
Technical Publications
Financial reporting by investment entities
The first thematic review released by the FRC covers financial reporting by investment trusts, venture capital trusts and other closed-ended investment entities. While the financial statements of these entities are generally straightforward, the FRC identified recurring issues. These include disclosures around techniques and assumptions underlying Level 3 fair value measurements, APMs, and significant judgements relating to the investment entity definition.
Thematic review of IFRS 2 disclosures
The second thematic review covers IFRS 2 and share-based payments — a topic you either love or hate, …or are fortunate never to have dealt with 😉 The report covers the basics but also digs into more nuanced topics, such as group arrangements, tax effects and specific considerations for private companies.
FX differences on intragroup balances
Last month’s discussion by the IFRS Interpretations Committee on FX differences on intragroup monetary items inspired Peter Clark to publish an interesting piece on the mechanics and conceptual basis for these FX differences surviving intragroup eliminations and being carried through to consolidated P&L. Peter argues that this requirement, clearly set out in IAS 21.45, is ill-founded and perhaps not fully thought through. I highly recommend the piece if cross-currency intragroup balances interest you, though be prepared for some heavy worked examples!
European enforcement priorities
ESMA, the European regulator, has published its enforcement priorities for 2025 annual financial reports. While these are especially relevant for EU-based issuers, other regulatory bodies are also likely to focus on similar topics.
Geopolitical risks and uncertainties (think tariffs, Ukraine, and the Middle East) top ESMA’s list for 2025. Possible financial reporting implications include asset impairments and write-downs, provisions (e.g. onerous contracts), recoverability of deferred tax assets, disclosures on financial risks (such as liquidity risks), and key assumptions used in models like those for ECL and fair value.
ESMA also highlights common ESEF (think EU-iXBRL) filing errors in the statement of cash flows, such as incorrect signs, unnecessary extensions, and incomplete or inconsistent tagging.
Work in Progress at the IASB
The October IASB meeting was held on 29-30 October, and the IASB Update isn’t yet available as I’m finalising this edition of Reporting Period. Don’t worry though, we’ll catch up next month!
By the way, we were promised final versions of the examples on reporting uncertainties in October, after the IFRS Foundation published ”near-final” versions back in July. I couldn’t find any trace of them in the October highlights, so perhaps the forthcoming IASB Update will shed some light on the delay.
Anyway, stay tuned 🙂
Miscellany
Financial reporting standard for non-profits
The Chartered Institute of Public Finance and Accountancy and Humentum have established the International Non-Profit Reporting Foundation (INPRF), a new public interest entity dedicated to improving accounting and financial reporting in the non-profit sector. INPRF has started strong, publishing a comprehensive financial reporting standard for non-profits worldwide: the International Non-Profit Accounting Standard (INPAS).
Deloitte isn’t proud of its AI hallucination-filled report
Deloitte grabbed October headlines after agreeing to provide the Australian government with a partial refund after one of its consulting reports was found to contain hallucinated AI citations and quotations.
The narrower takeaway: always double-check AI-generated text, especially references and citations. The broader one: don’t outsource your thinking to AI – it’ll quickly turn your brain to mush. Writing is thinking.
That’s all for this edition of Reporting Period. Thanks for reading and see you in the next issue!
Best regards,
Marek