EFAA Leadership’s Activities

EFRAG General Assembly Meeting, 15 February 2022
Salvador Marin, EFAA President, joined this teleconference call to approve the appointment of the EFRAG Administrative Board member on the civil society organisations’ seat and appointment of the President and Vice- President of the EFRAG Administrative Board

II International Meeting of Accounting Economists, 17-18 February 2022
As part of the conference Salvador Marín, Esther Ortiz and Paul Thompson participated in the roundtable, co-hosted with EFAA, “Towards non-financial information or sustainability standards in Europe”. Over 200 delegates attended online. Elena Arveras from DG FISMA and Patrick de Cambourg, chair of the EFRAG PTF-ESRS, presented alongside Salvador, Esther, and Paul.

Meetings with other stakeholders and representatives of EU institutions also took place.

For more information: Please contact Salvador Marín

IFAC Welcomes Commission Efforts to Enhance Corporate Reporting

In its response to the European Commission (EC) consultation Strengthening of the Quality of Corporate Reporting and its Enforcement the International Federation of Accountants (IFAC) has welcomed the wide focus on corporate governance, statutory audit, and supervisory aspects of the ecosystem that delivers relevant, reliable, and comparable information to stakeholders. As the voice of the global accountancy profession, IFAC says that it understands the crucial role that auditors, as well as professional accountants more broadly, play in high-quality corporate reporting but stress that “no matter how skilled or well-resourced, auditors alone cannot overcome significant shortcomings in other key areas of the reporting ecosystem—especially the role of directors, audit committees, and those charged with governance. IFAC also believes audit firms are best placed to provide not only audits of financial statements but also assurance on sustainability disclosures. In the last issue we reported that EFAA has responded to the consultation. EFAA enthusiastically welcomes the initiative and the all-encompassing approach that captures the entire corporate reporting ecosystem.

For more information: Please contact the Secretariat

Sustainability Reporting and Assurance Update

Global

On 24 February, IFAC has published a brief call to action today, explained in this LinkedIn article by Kevin Dancey, IFAC CEO, spelling out Next Steps for the Accountancy Profession so as help the profession lead on sustainability with a consistent voice. Whether working in public practice, within companies, or in the public sector, IFAC says professional accountancy organizations (PAOs) and professional accountants must: support the ISSB by contributing to its standard-setting work and advocating to local policymakers; and position our profession for success by making the case with our membership, within firms, to our clients, and to policymakers that our profession—with its global reach, public interest mandate, skills and competencies, ethical core, and regulatory oversight—is best positioned to provide sustainability services and assurance.

In this Reuters article Huw Jones looks at the intersection of sustainability and audit/assurance – and includes the International Auditing and Assurance Standards Board (IAASB) next steps in the space, and how often the ISAE 3000 standard is issued for sustainability reporting assurance.

With effect from 31 January 2022, the Climate Disclosure Standards Board (CDSB) has been fully integrated into the International Financial Reporting Standards (IFRS) Foundation. The CDSB is now closed. Read more here. On 9 February 2022, the UK Financial Reporting Council (FRC) published their preliminary comments on the prototype standards developed by the Technical Readiness Working Group. The FRC strongly supports the development of global sustainability reporting standards and the UK adoption of those standards. Read more here.

Europe

On 18 February 2022, the European Financial Reporting Advisory Group (EFRAG) General Assembly, which includes EFAA as a member, approved the admission of Eurosif and completed the composition of the EFRAG Administrative Board. Read the complete press release here. On 10 February 2022, EFRAG closed its call for candidates for its Sustainability Reporting Board which will be responsible for all sustainability reporting positions of EFRAG including technical advice to the EC on draft EU Sustainability Reporting Standards and amendments to Standards. The EFRAG call for candidates for both the chair (PDF version attached) and the members (PDF version attached) of its Sustainability Reporting Technical Expert Group (TEG) are still open – the deadline is 28 February 2022.

On 7 February, the EP Economic and Monetary Affairs (ECON) committee met and discussed the amendments to its draft opinion on the Corporate Sustainability Reporting Directive (CSRD). ECON coordinators expressed their wish to have an exchange of views with both the candidates for the position of Chair of the EFRAG Financial Reporting Board as well as the Chair of the Sustainability Reporting Board. The discussion focused on the scope of the proposal (e.g. inclusion of high risk sectors in the scope), EFRAG structure and involvement of civil societies, etc.. ECON vote is foreseen on 28 February. The leading committee is the Legal Affairs committee (JURI) and it is expected to vote on 14-15 March.

On 24 February, the Council adopted its position on the corporate sustainability reporting directive (CSRD). The Council amended the scope proposed by the European Commission in order to ensure that reporting requirements are not too burdensome for listed SMEs and that they have sufficient time to adapt to the new rules. Read more here.

SMEunited continue to publicly express reservations on the proposed CSRD. On 11 February 2022, Luc Hendrickx, during the virtual meeting of the SME-Intergroup of the European Parliament organised on “Sustainability reporting – should new rules cover SMEs?” and hosted by MEP Angelika Winzig, said that CSRD fails to fulfil its claimed objectives. Then, on 16 February 2022, SMEunited issued a press release arguing that the taxonomy for sustainable finance and sustainability reporting should help SMEs make their business more sustainable and master the green transition. The press release cited the fact that the European Banking Federation and the UN Environment Programme Finance Initiative included this issue in their new report.

On 23 February, the European Commission adopted a proposal for a Directive on corporate sustainability due diligence. We will monitor this proposal. Read more here.

For more information: Please contact the Paul Thompson

Other Developments in International Standard Setting

Audit, Assurance and Quality Management

The International Auditing and Assurance Standards Board (IAASB) has released First-time Implementation Guide for ISA 220, Quality Management for an Audit of Financial Statements. The guide will help stakeholders understand the standard and properly implement its requirements as intended. Alongside the previously released implementation guides for International Standard on Quality Management (ISQM) 1 and 2, the new Guide will help stakeholders implement the IAASB’s suite of quality management standards. The suite of standards was released in December 2020 and come into effect on 15 December 2022. The IAASB encourages all practitioners to plan early for appropriate implementation, given the potential impact of the changes to firms’ quality management systems. Read more here. SMPs grappling with ISQM implementation may wish to take a look at ICAEW’s Quality Management website hub which hosts lots of insightful articles and resources to help you on your quality management journey.

Ethics

IESBA has released for public comment proposed revisions to the International Code of Ethics for Professional Accountants (including International Independence Standards). The Exposure Draft Proposed Technology-related Revisions to the Code seeks to enhance the Code’s robustness and expand its relevance in an environment being reshaped by rapid technological advancements. The proposed amendments will guide the ethical mindset and behavior of professional accountants in business and in public practice as they deal with changes brought by technology in their work processes and the content of the services they provide. The IESBA invites all stakeholders to comment on the Exposure Draft by visiting the IESBA website. Comments are requested by 20 June 2022.

Reporting

On 17 February 2022, the Trustees of the IFRS Foundation invited nominations of suitable candidates for membership of the SME Implementation Group. Paul Thompson’s term as a SMEIG member ends this June.

For more information: Please contact Paul Thompson

Guidance for SMPs – Practice Transformation

EFAA has a library of resources, regularly updated, to help SMPs become sustainable here. EFAA also has a specially curated list of free guidance here to help SMPs emerge from the pandemic stronger and smarter.

IFAC has launched a new podcast series, “The Fast Future with IFAC,” that highlights innovative SMPs around the world. The first episode, with Australian accountant and Chartered Accountants Australia and New Zealand member Amela Kmetas, is available here.

For more information: Please contact Paul Thompson

Fostering Taxpayer Education to Enhance Public Trust in Tax and Help Achieve SDGs

On 8 February 2022 Paul Thompson along with over 1,200 others from over 110 countries participated in this online event hosted by ACCA, IFAC and the OECD. A short summary and video of the event here. Many SMPs already help business and personal clients build their financial and tax literacy.

For more information: Please contact Paul Thompson