EFAA Leadership’s Activities

EFRAG General Assembly Meeting, 1 March 2022
Salvador Marin, EFAA President, and Paul Thompson, EFAA Director joined this teleconference call. The main agenda item was approval of the appointment of members of the EFRAG Sustainability Reporting Board (SRB).

Edinburgh Group Meeting, 2 March 2022
Salvador Marín and Paul Thompson joined this teleconference call which included a presentation from IFAC leadership followed by Q&A.

IFAC Board, 3-4 March 2022
Salvador Marín joined this teleconference call. The agenda included extremely interesting topics on SMPs, Practice Transformation, Future and Challenges for our profession.

IESBA CAG Meeting, 7 (and 31) March 2022
Hysen Cela,  a member of EFAA’s Assurance Expert Group represented EFAA on this teleconference call along with Paul Thompson. The agenda papers are here.

IAASB CAG Meeting, 8-9 March 2022
Hysen Cela and Paul Thompson represented EFAA on this teleconference call. The agenda papers are here. 

For more information: Please contact Salvador Marín

Member spotlight: EFAA’s Portuguese Member OCC Comes to Aid of Ukrainians

The Portuguese professional accountants organization OCC – Ordem dos Contabilistas Certificados, one of EFAA’s oldest and largest member organisations, has expressed its strongest condemnation of the aggression that Ukraine is currently experiencing and its deep concern for the situation of all Ukrainian citizens, in particular members of the Ukrainian Federation of Accountants Certificates and Auditors (UFPAA). OCC and UFPAA are members of the International Federation of Accountants (IFAC). OCC has initiated a set of measures to help Ukrainians as follows:

• Organising a volunteer group of OCC members (speaking Ukrainian or English) to provide free tax and accounting advice to all certified accountants, auditors, their families, and other Ukrainian citizens who need information on any tax or accounting aspect applicable in Portugal.
• Working with the Embassy of Ukraine in Portugal and the Association of Ukrainians in Portugal to ensure that the OCC’s technical assistance can reach all interested parties who need this support.
• Liaising with the UFPAA to quickly find a process of reciprocal recognition of skills and qualifications, which will allow professionals from that country to obtain more quickly the qualification of certified accountant awarded by the OCC that allows them to perform professional functions and activities in our legal system.
• Created a free technical support hotline (+351 217 999 789) in English which can be used by any Ukrainian citizen.
• Welcomes and promotes through its group of volunteers, the Portuguese Order of Notaries initiative on providing a free service to handle exit permits for minor children, sons of Ukrainian citizens who are in Ukraine.

Paula Franco, OCC President said: “These measures represent OCC’s commitment and contribution to help Ukrainian war refugees quickly enter our country and here to find a refuge that allows them to live in dignity and peace.”

For more information: Please contact the Secretariat

European Commission adopted a proposal for a Directive on corporate sustainability due diligence (CSDD)

On 23 February, the European Commission adopted a proposal for a Directive on corporate sustainability due diligence (CSDD) – read more here. Proposed CSDD sets out a corporate due diligence duty to identify, prevent, end, mitigate and account for adverse human rights and environmental impacts in the company’s own operations, its subsidiaries and their value chains. While SMEs do not directly fall under the directive’s scope, SMEs will likely be impacted as large companies within scope pass on demands to SMEs in their value chain. The value chain of the financial sector does not cover SMEs that are receiving loan, credit, financing, insurance or reinsurance. Read more.

In a first reaction to the proposed CSDD, SMEunited welcomes the Commission’s pragmatic and balanced approach, but expressed concerns over the negative impact on SMEs as they explain here. Véronique Willems, SMEunited Secretary General, elaborated in SMEunited position in this interview with the website Vote Watch. Supporting measures may be necessary to help SMEs build operational and financial capacity. EFAA, who responded to the 2021 consultation, will monitor this proposal.

For more information: Please contact Paul Thompson

Sustainability Reporting and Assurance Update

Global

This Reuters article 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. The IAASB’s meeting of 14-23 March 2022 will include an agenda item for sustainability assurance (see item 6 here).

On 24 February 2022 IFAC published a brief call to action, 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. Dancey states that with its global reach, public interest mandate, skills and competencies, ethical core, and regulatory oversight the accountancy profession is best positioned to provide sustainability services and assurance.

Meantime, the Trustees of the IFRS Foundation has signed Memoranda of Understanding (MoUs) with German public and private sector institutions to formalise the partnerships and funding arrangements required to establish the presence of the International Sustainability Standards Board (ISSB) in Frankfurt.

Europe

On 28 February 2022 the EFRAG call for candidates for both the chair and the members  of its Sustainability Reporting Technical Expert Group (TEG) closed. Over 90 applicants have been received for 22 seats: each will be interviewed before a recommendation is made.

EFRAG is recruiting staff and resources to support its new sustainability reporting role. It is seeking a full-time Sustainability Reporting Technical Director to provide leadership to its technical sustainability reporting activities. Read the full job description here and apply by 23 March 2022. Read more here. EFRAG is also looking for sustainability reporting professionals interested to join the EFRAG sustainability reporting technical staff to work  in the EFRAG offices in Brussels on a full time basis on the development of draft European sustainability reporting standards. Read the full job description here: the application dadline is 31 March 2022. Read more here. EFRAG is also looking for additional secondments in kind, ideally on a full-time basis but at a minimum, 50% part-time. EFRAG is asking for such secondments till the end of 2022 (and beyond). They would be part of the technical staff supporting the sustainability reporting standard-setting work. Read the full job description here and apply by 31 March 2022. Read more here.
As part of the due process during the project mode EFRAG publishes the next set of PTF ESRS Cluster Working Papers. Included in this set is the Cluster Working Paper on ESRS P1 on Sustainability Statements, ESRS S1 on Own workforce – General, ESRS S4 on Own workforce – Other work-related rights, ESRS S5 on Workers in the value chain, ESRS S6 on Affected communities, ESRS S7 on End-users / consumers, ESRS E4 on biodiversity and ecosystems. Read more here. A few days before EFRAG published Cluster Working Paper ESRS SEC1 Sector classification standard. Read more here.

The proposed Corporate Sustainability Reporting Directive (CSRD) continues to progress through the European Parliament. The leading committee is the Legal Affairs committee (JURI) and it is expected to vote on 15 March. On 24 February 2022 the European Council adopted its position on the CSRD. It 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. Once the European Parliament has agreed its position, it and the Council will then seek to establish a consensus.

For more information: Please contact the Paul Thompson

Other Developments in International Standard Setting

Audit, Assurance and Quality Management

The Consultative Advisory Group (CAG) of the International Auditing and Assurance Standards Board (IAASB) met on 8-9 March 2022. The agenda papers are here. Hysen Cela, member of EFAA’s Assurance Expert Group, represented EFAA along with Paul Thompson. A short report will follow in the next Latest from Brussels.

Ethics

Similarly, Hysen Cela and Paul Thompson represented EFAA at the International Ethics Standards Board for Accountants (IESBA) CAG meeting on 7 (and will also meet on 31) March 2022. The agenda papers are here. A short report will follow in the next Latest from Brussels.

The IESBA has released for public comment the Exposure Draft Proposed Revisions to the Code Relating to the Definition of Engagement Team and Group Audits. The proposed revisions establish provisions that comprehensively address independence considerations for firms and individuals involved in an engagement to perform an audit of group financial statements. The proposals also address the independence implications of the change in the definition of an engagement team in the IAASB’s International Standard on Auditing (ISA) 220, Quality Management for an Audit of Financial Statements. Among other matters, the proposals include: clarify and enhance the independence principles that apply to firms engaged in the group audit, including firms within and outside the group auditor firm’s network (often SMPs); and more explicitly set out the process to address a breach of an independence provision at a component auditor firm (again often SMPs), including reinforcing the need for appropriate communication between the relevant parties and with those charged with governance of the group.

IESBA and IFAC, together with the Chartered Professional Accountants of Canada (CPA Canada) and the Institute of Chartered Accountants of Scotland (ICAS) have just released Identifying and mitigating bias and mis- and disinformation, the third publication in a four-part thought-leadership series examining the impact of rapid technological change on ethical leadership and the accountancy profession. The latest instalment examines the high-stakes impact that bias and mis- and disinformation have on trust and objective decision-making.

IESBA will hold a series of three global virtual roundtables to obtain stakeholder feedback on matters it is considering relating to the development of an ethics standard addressing the provision of tax planning and related services by professional accountants in business (PAIBs) and professional accountants in public practice (PAPPs). The roundtables will be held virtually during these sessions: 25 April 17:00-21:00 CET; 26 April 14:00-18:00 CET; and 28 April 06:00-10:00 CET. Attendance will be by invitation only. Register your interest at TPRoundtables@ethicsboard.org by 31 March 2022 indicating name, job title, organization, location, and session.

Financial Reporting

EFRAG has published its Final Comment Letter in response to the IASB’s Exposure Draft ED/2021/7 Subsidiaries without Public Accountability: Disclosures. In the ED, the IASB proposes that eligible subsidiaries can provide reduced disclosure requirements together with the recognition, measurement, and presentation requirements in IFRS Standards. In addition, EFRAG has issued a Summary of the inputs received from preparers that includes the feedback received from an EFRAG’s survey and a Briefing prepared by the EFRAG Secretariat focused on the compatibility of the Accounting Directive 2013/34/EU with the IASB’s ED. Read more here. And finally, EFRAG has issued a Feedback Statement summarising constituents’ feedback on EFRAG’s Draft Comment Letter relating to the IASB’s Exposure Draft 2021/3 Disclosure Requirements in IFRS Standards – A Pilot Approach (the ‘ED’) and explaining how EFRAG considered this feedback in developing its Final Comment Letter. Read more here.
The meeting report for the 21 January 2022 IASB SME Implementation Group meeting is now available here. Paulk Thompson and Jose Maria Hinojal, a member of EFAA’s assurance Expert Group, attended. On 17 February 2022 the Trustees of the IFRS Foundation invited nominations of suitable candidates for membership of the SME Implementation Group.

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 with the ICAEW has released a new instalment in its Anti-Money Laundering: The Basics educational series: Installment Seven: Virtual Assets. The publication is part of a series helping accountants enhance their understanding of how money laundering works, the risks they face, and what they can do to mitigate these risks. Instalment seven looks at the broad new class of assets that have emerged over the past decade known as virtual assets, including Bitcoin and NFTs (non-fungible tokens). Anti-Money Laundering: The Basics is user-friendly, easily accessible, and will be a resource for SMPs and accountants less familiar with AML. Anti-Money Laundering: The Basics is featured on the IFAC (landing page) and is available for download for free. To be globally relevant, the series uses the risk-based approach of the Financial Action Task Force (FATF) as a starting point.

For more information: Please contact Paul Thompson