deloitte financial reporting conference rising to …...deloitte financial reporting conference -...
TRANSCRIPT
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Deloitte Financial Reporting Conference
Wednesday, 30 September 2015The g Hotel, Galway
Rising to the challenge
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WelcomeGerard CaseyAudit Partner
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Agenda
Topics Speakers Welcome and Introduction Gerard Casey
New Irish GAAP – Change is here Oliver HoltAustin SammonKatie O’Connor
Current tax issues Brian Farrell
Cyber security Stephen WrightCoffee/Tea break
The Impact of the Companies Act 2014 Nessagh Quinn, Ciarán Treacy, Austin Sammon
IFRS developments for 2015 and beyond Oliver Holt
Closing comments Gerard Casey
Lunch
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New Irish GAAPChange is here!
Gerard Casey
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“Old” Irish GAAP – 2014
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Goodbye
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Recap
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Conversion timeline for a December year end company
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1 Jan 2014 31 Dec 2014 31 Dec 2015 31 Dec 2016 31 Dec 2017
Opening Balance Sheet
Comparative Balance Sheet
Year End Balance Sheet
Transition date
Adopt for year ending 31 December 2015
Implementation project
First financial
statementsprepared
Financial statements
filedIFRS/IFRS Comparatives
New GAAP
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High Level Overview of Standards
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New Irish
GAAP
FRS 100
FRS 101
FRS 102
FRS 103
FRS 104
FRS 105
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What is a qualifying entity?
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Entity must make certain disclosures in its financial statements -compliance, exemptions taken.
Shareholders must have been notified in writing - objection thresholds (5% total or 50% minority)
Qualifying entity:
Member of a group where:
• Parent prepares publiclyavailable consolidated financialstatements;
• which are intended to give a ‘trueand fair’ view &
• include equivalent disclosures atgroup level.
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What are the disclosure reductions?
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As specified by FRS 101
Disclosed on an “equivalent” group basis
Not currently required under Irish GAAP
Other
• Share-based payments (IFRS 2)• Financial instruments (IFRS 7)†• Fair values (IFRS 13)†• Acquisitions (IFRS 3)• Cashflows from discontinued operations
(IFRS 5)• Impairment (IAS 36)
• Cash flow statement & notes (IAS 7)• Key management compensation (IAS 24)
• Comparative data (IAS 16, 38, 40)• Third balance sheet (IAS 1)• Capital management (IAS 1)†• Standards not yet applied (IAS 8)• Group related party transactions (IAS 24)
As specified by FRS 102Section 1.12
• Share-based payments
• Financial instruments†
• Cash flow statement & notes• Key management compensation
† No exemption for financial institutions
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Still unsure which option to select?
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Question:
Which Irish GAAP standard did your organisation choose to adopt and why?
Perspectives from you
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Panel discussion
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New Irish GAAP – A view from our Panel
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Oliver Holt
Austin Sammon
Katie O’Connor
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Question:
What was the key aspect of your financial statements impacted on transitioning to FRS 101 or FRS 102?
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Perspectives from you
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Transition - The Next Steps
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Question:
How did you approach the transition process?
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Perspectives from you
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Conversion timeline for a December year end company
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1 Jan 2014 31 Dec 2014 31 Dec 2015 31 Dec 2016 31 Dec 2017
Opening Balance Sheet
Comparative Balance Sheet
Year End Balance Sheet
Transition date
Adopt for year ending 31 December 2015
Implementation project
First financial
statementsprepared
Financial statements
filedIFRS/IFRS Comparatives
New GAAP
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The countdown has begun
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Phase
1Phase
2Phase
3Phase
4Phase
5Planning & scoping
Assessment & GAAP analysis
Embed in monthly procedures
Drafting financial statements
Sustain
Analyse the implications of new
GAAP adoption, identify potential
opportunities, and develop an approach to
phased adoption where it makes
sense.
Develop a detailed approach to adoption and execute implementation.Complete and
sustain “business as usual” reporting.
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Last words of advice
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Question:
What advice would you give companies that have not yet started their transition process?
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Perspectives from you
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Current tax issues
Brian Farrell
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This morning…
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Section 76A
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For the purposes of Case I or II of Schedule D, the profit or gain of a trade or profession carried on by a company shall be computed in accordance with Generally Accepted Accounting Practice subject to any adjustment required by law in computing such profits or gains for these purposes.
Gives power and effect to Schedule 17A.
1 2
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“Adjustment required or authorised by law”
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Revenue guidance on FA2005:
“Law” for these purposes is not defined but it would constitute statute law, statutory instruments and any directly applicable EU law. It would effectively include case law because case law involves a decision by the courts as to what statute law means. Revenue practice notes would not constitute law but they do outline how Revenue interprets the law”
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Schedule 17A
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• Brings in transitional arrangements from current GAAP to RAS
• More definitions – Relevant Accounting Standards (RAS) IFRS
or Irish GAAP which is based on published standards which
• are stated to embody in whole or in part IFRS• and, the application of which would produce results
which are substantially the same as those produced byIFRS
After 1 January 2015 Irish GAAP based on standardswhich embody IFRS
[FRS101 and 102]Revenue guidance say early adopters covered
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Section 76B – Financial instruments
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• More definitions! Fair Value Financial Asset Financial Liability
• A profit or gain from financial asset or financial liability In accordance with RAS Included in P&L account of the company for accounting period
shall be taken into account in computing case I or II profits.
• No distinction between realised or unrealised gains/losses
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Financial instruments
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Schedule 17A – Transitional Arrangements
• Basic idea – to ensure no drop out of revenue or expenditure from thetax net
• Deals with
Changeover of non specific items of Irish GAAP to RAS
Specific rules for financial instruments
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Schedule 17A – Non Specific Items
• Excess – spread over 5 accounting periods
• Where the company’s last accounting period in which it carried on a trade or profession occurs within the 5 accounting period spread, then the last accounting period will act as the “catch-up” period, i.e. no income/ deduction falls out.
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Taxable amount XDeductible amount (X)Excess X/(X)
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Example• A financial instrument cost €100 in 2014.• It had a fair value of €130 at December 2014.• It was sold for €150 in 2015.Issue• Before RAS the company was taxed on a realised basis.• After RAS the company is taxed on movements in the fair value.• Fair value has increased in 2015 so that the company becomes taxable on €20.
This means that, overall, the company is taxed only on €20 even though it madea gain of €50.
Solution• The €30 that would otherwise not have been counted is identified as a “taxable
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Key points
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Follow the accounts in computing trading profits
Amounts “falling out” on transition spread over 5 years
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This morning…
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BEPS
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What is BEPS all about?
High Taxed CountriesInterest
Royalties
Products
Services
Low Taxed Countries
• Are countries getting their fair share of revenue?
• The BEPS project has two key objectives: To align substance and taxing rights To address double non-taxation
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CFC legislation
Definition of CFC - companies, trusts, non-transparent partnershipsand PEs where the PE’s income is exempt in itshead office.
CFC rules - a legal and economic control test
CFC income – passive income of excess profits
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Action 13 – TP Documentation and CbC reporting
Master File
Key information about the group’s global operations including an overview of the company’s structure from a transfer pricing perspective
Local File
Detailed transfer pricing analysis of the transactions undertaken by the local taxpayer
Country-by-Country (“CbC”) Template
Key financial information on all group members on an aggregate country basis with an activity code for each member
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Action 13 - Master File / Local File
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© 2014 Deloitte Tax & Consulting
Master File1. Organisational Structure
• Chart with Group legal & ownership structure and geographicallocation of operating entities
2. Description of the Group’s Business(es)
• Important drivers of business profits
• Description of important business restructuring transactions
• Description of supply chain for 5 largest products / services
• List and brief description of important group service arrangements
• Brief functional analysis describing the principal contributions tovalue creation by individual group entities
4. Group Intercompany Financial Activities
• Group’s financing arrangements and related TP policies
• Identification of central financing entities
5. Group’s Financial & Tax Positions
• List of relevant APAs and tax rulings relating to the allocation ofincome among countries
• Annual consolidated financial statement
1. Local Entity
• Local organisation chart and management structure
Local File
• Detailed description of the business and business strategypursued (including business restructurings or intangibletransfers)
• List of key competitors
2. Controlled Transactions (not exhaustive)
• Amount of intra-group payments and receipts involving the local entitiesbroken down by jurisdiction of the foreign payor / recipient
• List of associated enterprises involved in controlled transactions andrelationships
• Detailed comparability & functional analysis with copies of all materialintercompany agreements
• Indication of the most appropriate TP method selected
• List and description of selected comparable uncontrolled transactionsrelied on in the TP analysis and possible adjustments performed
• Copy of APAs or tax rulings to which local tax jurisdiction is not a partybut impacting relevant controlled transactions
3. Group’s Intangibles
• Description of the overall strategy for development and exploitationof intangibles including Group TP policies re R&D and intangibles
• List of important Group intangibles with the list of (a) entitieslegally owning them and (b) important intragroup agreements
• Important transfers of interests in intangibles within the Group
3. Financial Information
• Annual local entity financial accounts
• Information and allocation schedules showing link between financialdata used in TP method and annual financial statements
• Summary schedules and sources of relevant financial data forcomparables used
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CbC Reporting Guidance on ImplementationAction 13
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This morning…
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CCCTB
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The Theory ...
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The Likely Reality
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This morning…
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Knowledge Development Box
Entrepreneurs
Travel and subsistence expenses
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‘intellectual property, other than for the purposes of the definition of acquisition costs,’
means:
(a) a patent granted under the laws of the State or under any corresponding provisions of any territory outside the State,
(b) any copyright or related right within the meaning of the Copyright and Related Rights Act 2000…in relation to computer software,
(c) any supplementary protection …concerning the supplementary protection certificate for medicinal products,
(d) any supplementary protection certificate …concerning the creation of a supplementary protection certificate for plant protection products, or
(e) any plant breeders’ rights within the meaning of section 4 of the Plant Varieties(Proprietary Rights) Act 1980, as amended by the Plant Varieties (Proprietary Rights) Amendment Act 1998;
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1m
1m +100m
100m 1.28m
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Knowledge Development Box
Entrepreneurs
Travel and subsistence expenses
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UK EIS
Lower income tax rate for lending to company
Lower income tax rate on dividends
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Knowledge Development Box
Entrepreneurs
Travel and subsistence expenses
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Revenue Guidance SP – IT/2/07
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…..expenses of travelling from home to work and work to home are expenses of travelling which are NOT necessarily incurred by the office holder or employee in the performance of the duties of his/her office or employment.
If an office holder or employee receives expense payments in respect of travelling to and from work, such expense payments are taxable and subject to PAYE deductions.
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Two aspects in one concept
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CONCEPT
Normal place of work – fact based Non Executive directors
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Conclusion
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New Irish GAAP – follow the financial statements but 5 year spread
BEPS - significant change is coming
Finance Bill results of consultations
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55Deloitte Financial Reporting Conference - Rising to the challenge
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The tax@hand app
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Cyber security
Stephen Wright
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Introduction
Stories of organisations getting hacked are becoming so frequent that it would be easy to believe that there’s no real way to avoid being the next target.
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IDENTIFY UNDERSTAND FORWARD PLANNING
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Why does hacking occur? Time invested in identifying why someone might want to hack you is worthwhile. If you work in Finance then your job description alone suggests that you have access to funds and makes you an attractive target for cybercriminals.
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Some of the more common reasons are:
Access to/theft of sensitive data such as intellectual
property or credit card/bank account details
Access to one of your business associates
Cash transfer Free use of your facilities
To disrupt your day to day business!
To embarrass an organisation and discourage
clients from using your services
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Why does hacking occur? There are multiple ways for an external person to gain unauthorised access into a system, the most common being exploiting a known vulnerability, the introduction of malware or some combination of the two.
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A hacker goes through a similar process to a house burglar; they case out the joint, test to see if there are any obvious points of entry and then attempt to break in. Hacking can be easy there are three main stages involved in targeted hacking:
FOOTPRINTING EXPLOITATIONENUMERATION
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Cyber scams and attacks There are a huge variety of cyber scams and attacks that can be inflicted on an organisation. Some of the more disruptive and damaging events that we are seeing in Ireland at the moment are banking Trojans, ransomware, DDos (Distributed Denial of Service) and fund diversion by social engineering.
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EMAIL PHISHING
DRIVE-BY ATTACK
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Ashley Madison – The AttackCase #1
This was a “PRINCIPLED” attack
The attack was first disclosed in July 2015.
The group behind the breach (Impact Team) said their goal was to destroy Ashley Madison's parent company as they objected to Ashley Madison's morally dubious business model.
In mid August, data from 37 million of users began to appear online.
9.96GB of internal data released online including:
User Databases
Financial Records (9 million individual credit card transactions)
Private details of the service’s owners
The distribution was 13.9% women versus 86.1% men
12,736 unique .ie addressesDeloitte Financial Reporting Conference - Rising to the challenge 62
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Heat Map Of User AccessCase #1
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Sony Pictures – The AttackCase #2
The attack was discovered on the 24th November 2014 by users seeing defacement of their login screens.
The network was compromised for an unknown length of time prior to being detected.
The group responsible claims to have stolen over 100 Terabytes of data.
After copying data, the Destover malware wiped the infected systems
Over 40GB of internal data released online including:
Intellectual Property (5 films)
Corporate data including salaries and performance reviews
Confidential emails
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Nortel – The AttackCase #3
Using spyware, attackers stole the passwords of the Nortel CEO and 6 other senior executives.
Nortel security staff detected unusual downloading patterns from these account and changed the passwords a couple of years later. They also began monitoring for further suspicious activity, but stopped shortly after.
It was 2010, believed to be a decade since the initial attack, that it was realised that attackers had access to:
Technical documents
Business plans
Emails
Research reports
It was too late
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Confidential – ERP GoneCase #4
Client arrived on Monday morning and could not access financial information on their ERP system
All of the system configuration had been corrupted
Back up process had been corrupted
Email received requesting significant payment for return of ERP
Week later we found data hidden on network
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Confidential – Funds TransferCase #5
Client transferred €Xm to Cypriot bank
Fob had been used to approve transfer
Large single transfer
Call back from bank had not seemed to occur
Transfer did not complete through sheer luck
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Cyber scams and attacks From our security lab in Dublin we have investigated a number of cases involving malware that attempts to collect banking credentials or encrypt data for a ransom fee in the past year.
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Variants of banking Trojans:
+ =Install some kind of keylogger on your system to record your keystrokes
Capture your banking credentials
The credentials can be used by an
attacker to transfer funds from your
account
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Example of crypto ransom attackA particularly nasty crypto ransom attack has been doing the rounds globally and we have spent a couple of late nights helping our clients deal with its aftermath. This malware is typically targeted at an organisation and introduced via a phishing email.
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User receives an email
with a link
User clicks on the link
Server downloads
& runs crypto
malware
Malware starts encrypting data files & mapped
drives Users attempt to access a file & are alerted that
the data has been encrypted
Decryption keys will only be provided on
payment of a ransom
It can be quite some time before anyone becomes aware of this. The payment is typically requested in bitcoin, an online currency which is much more difficult to track than traditional bank transfers or credit card payments. Sadly, if you don’t have a good file backup strategy in place then you could be in real trouble with this attack, particularly if your backups are held on a mapped drive and also become encrypted.
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So, how can you try to avoid being the next victim of the Cyber crimewave?
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Install anti-malware software and keep it up-to-date.
Don't click on email links from unknown or atypical sources
Use complex passwords or passphrases, keep them safe and don’t use the same password across multiple systems.
Encrypt data that you don't want stolen and safeguard the decryption keys
Get your systems checked for known vulnerabilities
Operate good patch (software updates) management practices
Monitor patterns of system usage and payments
Avoid visiting suspect websites
Use two factor authentication for sensitive transactions
Keep good backups of your important data
Train your system users in safe online practices
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Coffee/Tea Break
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The impact of the Companies Act 2014
Nessagh Quinn
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What’s new?
Companies Act 2014 commenced on 1 June 2015 (some exceptions)
Act is divided into 2 volumes
- Parts 1 - 15
- Parts 16 - 25
Introduced two forms of private company limited by shares
• Private company limited by shares LTD
• Designated Activity Company DAC
Conversion process for all existing private companies
Transition period 1 June 2015 – 30 November 2016
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What do shareholders and directors need to consider?
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Existing private limited
company
LTD
DAC
Action required
Action required
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Key features of the LTD v DACThe Decision
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LTD DAC
• No objects clause - full and unlimited capacity • Will have an objects clause
• Can eliminate authorised share capital • Must state authorised share capital
• Can have one director • Must have a minimum of two directors
• Can dispense with holding the AGM – bothsingle and multi-member company
• May dispense with the AGM only if it is asingle member company.
• Credit institutions and insurance companiescannot be LTDs
• Credit institutions and insurance companiesmay be DACs
• Cannot offer shares to the public or list debtsecurities
• Cannot offer shares to the public but able tolist debt securities
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Other company types
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No action required
Change of name required
PLC
ULC
CLG
Change of name required
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Timeline
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1 June 2015 to
31 August 2016
Time period to convert to a DAC or LTD
1 September 2016 to
30 November 2016
Final period to “Opt In” and convert to LTD
30 November 2016End of transition period
Automatic conversion to LTD by CRO
Unlimited companies and guarantee companies must change name
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Matters for considerationDrafting new constitution
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Act contains mandatory and optional provisions
Optional provisions - adopt all or some?
consider if fit for purpose ability to modify to suit
company needs deemed location of
directors meetings when held via conference
authorise directors to use company property
Some optional provisions must be specifically stated in
constitution to apply
Example: use of company seal abroad issue of notices by electronic
means approval of directors’
remuneration at AGM
Drafting constitutions - group situation
Adopt standard across subsidiary companies
detailed examination of parent company existing Articles of Association
look at optional provisions, modify and adopt as relevant
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Top 10 changes
79
12
3
Existing duties of directors are now codified into eight principle duties will apply to all directors shadow directors and de facto directors now defined acknowledge they know the law must be satisfied financial statements give and true and fair view and otherwise comply with the Act
Financial statements restriction on changes to year end additional disclosures voluntary revision audit exemption regime expanded
Company secretary directors’ duty to ensure company secretary has necessary skills new requirements for a PLC
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Top 10 changes – contd.
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456
109
78
New process for registering charges with the CRO
Relief in certain circumstances from the recognition of share premium
Mergers and divisions
Categorisation of offences
New provisions relating to general meetings
Summary approval procedure (SAP)
Directors’ compliance statement
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Summary approval procedure (SAP)
What is it?
• Streamlined procedure to authorise seven activities
- otherwise restricted/prohibited/needed court approval
• Modelled on the old “whitewash” procedure
• Directors’ declaration of solvency – not to be undertaken lightly as may cause the directors to be personally liable for the company’s debts
Who is SAP available to?
• Restricted use for PLCs
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When is a SAP required?
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Audit report that directors’ declaration not unreasonable required for 3; 4; 5; and 7
Financial assistance
for purchase
of own shares
1
Loansto
directors
2
Members voluntary
winding up
7
Pre-acquisition profits –
distributing in holding company
3
Reduction in capital
4
Variation of capital on
re-org
5
Mergers
6
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Directors’ compliance statement
Ciarán Treacy
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What you need to knowDirectors’ compliance statement
S225 CA14: sets out the areas to be included with regard to the directors’ compliance statement
Applies to: PLCs and companies with a balance sheet total (not net assets!) of €12.5m and turnover of €25m for the year in question
Applies from: Financial periods beginning on or after 1 June 2015
Requirement to comply or explain
Exempt from requirement: Investment Companies, Section 110 Companies and Unlimited Companies
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What you need to knowDirectors’ compliance statement
The requirement:
Acknowledgement of directors’ responsibility to secure compliance with “relevant obligations”
Comply or explain:
a) Drawing up a “compliance policy statement”
b) Putting in place appropriate arrangements or structures, designed to secure material compliance with “relevant obligations”
c) Conducting a review during the financial year of the arrangements referred to in b
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What you need to knowDirectors’ compliance statement
Relevant Obligations:
If listed in the EEA:
Serious Market Abuse offences
Serious Prospectus offences
And for everybody within scope…
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“Relevant Obligations”
Company Law
Category 1 and 2 offences
A serious market abuse or prospectus offence
Tax Law
Customs Acts
Excise Duties
Capital Gains Tax Acts
The Tax Acts
Value Added Tax Acts
Capital Acquisitions Tax Act 2003 and amendments
Any other instruments or enactments relating to Tax
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What you need to know – Relevant ObligationsDirectors’ compliance statement
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Failing to keep adequate accounting
records
Failure to retain accounting
records for 6 years
Approving financial statements not
giving a true and fair view
Fraudulently altering/ omitting book or
document relating to affairs of the
company
Offences in relation to directors’ loans and
other transaction
Category 1 and 2 Offences – Examples
Failure to provide information required
to the auditors
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What you need to know – Relevant Obligations (Tax)Directors’ compliance statement
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Income Tax PAYE PRSI Benefits in Kind USC Corporation Tax
Tax credits, e.g. R&D Tax
Credit Customs Duty Excise Duty Capital Gains
Tax
%Capital
Acquisitions Tax
Withholding TaxDividends; Interest;
Royalties; and Capital Gains
Stamp Dutye.g., on cheques;
cash cards; & other relevant assets
VATVAT
e.g., on property;place of supply/reverse charge
services; &filing obligations
Tax obligations arising from
mortgagee in possession
Deposit Interest Retention Tax
(DIRT)
Tax Relief at Source (TRS)
e.g. mortgage interest relief
Encashment Tax
Professional Services
Withholding Tax(PSWT)
Double taxation relief/credits Transfer pricing
Relevant Contracts Tax (RCT)
Local Property Tax (LPT)
Reporting obligations
under the EU Savings Directive
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What you need to doDirectors’ compliance statement
Identify the structures in scope
Initial review of relevant structures
Assessment and improvement where appropriate
Communicate with directors
Apply continuous monitoring and improvement
Timeline (92 days to go): 31 December year-end, all needs to be in place before 1 January 2016 if a clean compliance statement is to be given in the directors’ report for 2016
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Impact on the annual report and financial statements
Austin Sammon
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Changes from 1 June 2015 includeDirectors’ Report
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Directors no longer required to disclose interests <1% or non-
voting interests
Single director companies only: provision made for single director sign off of
directors’ report.
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Directors’ Report
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Must list the names of all persons who were directors at any time during the year
Changes for accounting periods beginning on or after 1 June 2015 include
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Comply or explain already an obligation for Public Interest Entities [reg. 91 SI no. 220 of 2010] now extended to large companies / groups for accounting periods beginning on or after 1 June 2015
Audit Committees
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Obligatory for large companies / groups where
- Balance Sheet Total >€25mAND
- Turnover >€50m
Must confirm in Directors’ Report that Audit Committee
has been appointed or provide reasons why not
Must have at least one independent director with competence in accounting
or auditing on the committee
Directors’ ReportChanges for accounting periods beginning on or after 1 June 2015 include
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New auditor statement required from directors for accounting periods beginning on or after 1 June 2015
Directors’ Report
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Statement that all relevant information has
been disclosed to the auditors
Each director has taken all necessary steps to
make him/herself aware of all relevant audit
information
Category 2 offence
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Approval of financial statements
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Category 2 offence if directors approve the statutory financial statements and have not satisfied themselves that they give a true and fair view and otherwise comply with the Act.
Changes from 1 June 2015 include
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Approval of financial statements
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“otherwise comply with the Act” – there are a number of disclosures which are captured by this requirement: need to avoid any disclosure deficiencies in these areas to avoid reporting implications
Changes from 1 June 2015 include
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Examples from Part 6*Additional information required by CA 14 not in Schedules 3 & 4
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Section Matter304 Treatment of entity profit and loss account where group financial statements prepared305/306 Directors’ remuneration307/308 Directors’ benefits: loans, quasi-loans, credit transactions and guarantees309 Other transactions in which directors etc. have a material interest310-313 Credit institutions314 -316 Information on related undertakings317 Disclosure of particulars of staff318 Details of authorised share capital, allotted share capital and movements319 Financial assistance for purchase of own shares320 Holding of own shares or shares in holding undertaking321 Disclosure of accounting policies322 Disclosure of remuneration for audit, audit-related and non-audit work323 Information on arrangements not included in balance sheet
* Other parts apply depending on company type eg for PLCs look also to part 17
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Approval of financial statements
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• Only required to sign balance sheet(s)• Must also state name• Category 2 offence to lay or file without signing
Changes from 1 June 2015 include
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More disclosures in financial statements – some examples!
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Directors’ emoluments• Pension contributions: analyse between defined benefit and defined contribution
schemes• Long term incentive schemes• For accounting periods beginning on or after 1 June 2015:
Gains on exercise of share options;Connected person remuneration.
Wages and salaries disclosure• Separately disclose “other compensation”• Number of employees – previously 52 week average: now monthly average
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Directors’ loans
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Loans by a company to a director, S.236 CA 2014If not in writing or is ambiguous, then deemed to be:• Repayable on demand • Bears interest – at appropriate rate- currently 5% • Covers quasi loans also
Loans by director/connected persons to company or holding company, S.237 CA 2014
If not in writing or is ambiguous:• Arrangement constitutes neither a loan or quasi loan • Bears no interest • Not secured• Subordinate to all other debts
Changes from 1 June 2015 include
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Reminder: filing regime
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Small company must make public disclosuresMay file full shareholders’ financial statementsBut at a minimum must file an abridged balance sheetWhile do not have to file a profit and loss account, section 353 is clear that notes to the abridged balance sheet includes s. 305 to s. 321 disclosures including:-
Directors’ remuneration Staff costs and numbers
as well as disclosures from five paragraphs of Schedule 3 (para: 52, 53, 57, 58 and 68)Requirement to include directors’ interest in shares in a note to the balance sheet for filing purposes remainsDefinition of Turnover includes “gross revenue” derived from the making or holding investments as part of the “ordinary activities”
Changes from 1 June 2015 include
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Watch out!!
New law coming that impacts non-filing structures
Unlimited companies with subsidiaries now within the consolidation regime
Devil is in the detail – need to look at PART 6 as supplemented by the other relevant parts if dealing with corporates other than the LTD
103Deloitte Financial Reporting Conference - Rising to the challenge
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Further information
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Collateral on www.deloitte.com/ie
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IFRS Update
Oliver Holt
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Deloitte IAS Plus – your source for accounting information
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Deloitte IAS Plus – your source for accounting information
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First mandatory for y/e 2015
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IFRIC 21 Levies (EU: 17
June 2014; IASB: 1.1.14)
Companies Act 2014
S.292: IFRS entity
S295: IFRS group
Non compliance: Category 2
offenceFrom 1 June
2015
Materiality is not a
consideration when
complying with additional
information
IFRS financial statements y/e 2015 prepared
under CA 14
Must contain additional
information required by Act
other than schedules 3
and 4
Exemption from consolidation
s.297 and s.302
Annual Improvements
2011-2013 Cycle
(EU: 1.1.2015; IASB: 1.7.14)
Unreserved statement
compliance with IFRS in notes – no
change
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Examples from Part 6*Additional information required by CA 14 not in Schedules 3 & 4
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Section Matter304 Treatment of entity profit and loss account where group financial statements prepared305/306 Directors’ remuneration307/308 Directors’ benefits: loans, quasi-loans, credit transactions and guarantees309 Other transactions in which directors etc. have a material interest310-313 Credit institutions314 -316 Information on related undertakings317 Disclosure of particulars of staff318 Details of authorised share capital, allotted share capital and movements319 Financial assistance for purchase of own shares320 Holding of own shares or shares in holding undertaking321 Disclosure of accounting policies322 Disclosure of remuneration for audit, audit-related and non-audit work323 Information on arrangements not included in balance sheet
* Other parts apply depending on company type eg for PLCs look also to part 17
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First mandatory for y/e 2015
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IFRIC 21 Levies (EU: 17
June 2014; IASB: 1.1.14)
Companies Act 2014
S.292: IFRS entity
S295: IFRS group
Non compliance: Category 2
offenceFrom 1 June
2015
Materiality is not a
consideration when
complying with additional
information
IFRS financial statements y/e 2015 prepared
under CA 14
Must contain additional
information required by Act
other than schedules 3
and 4
Exemption from consolidation
subject to IFRS 10
s.302
Annual Improvements
2011-2013 Cycle
(EU: 1.1.2015; IASB: 1.7.14)
Unreserved statement
compliance with IFRS in notes – no
change
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First mandatory for y/e 2015
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IFRIC 21 Levies (EU: 17
June 2014; IASB: 1.1.14)
IFRS financial statements y/e 2015 prepared
under CA 14
Annual Improvements
2011-2013 Cycle
(EU: 1.1.2015; IASB: 1.7.14)
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Annual Improvements 2011-2013 Cycle(EU: 1.1.2015; IASB: 1.7.14)
Standard Amendment
IFRS 1 First time adoption
Clarification of the meaning of “effective IFRSs”
IFRS 3 Business combinations
Clarification of the scope exclusion for joint ventures
IFRS 13 Fair value measurement
Clarification of the scope of the portfolio exception
IAS 40 Investment property
Clarification of the interrelationship between IFRS 3 and IAS 40
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First mandatory for y/e 2016
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Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of
Depreciation and Amortisation
Amendments to IFRS 10 and IAS
28: Sale or Contribution of
Assets between an Investor and its Associate or Joint Venture*
Amendments to IFRS 10, IFRS 12 and IAS 28:
Investment Entities:
Applying the Consolidation Exception
Amendments to IAS 27: Equity
Method in Separate Financial
Statements
IFRS financial statements y/e 2016
Annual Improvements
2010-2012 Cycle(EU: 1.2.2015; IASB: 1.7.14)
Amendments to IAS 16 and IAS
41: Bearer Plants
Amendment to IAS 19 (EU:
1.2.2015; IASB: 1.7.14)
Amendments to IAS 1:
Disclosure Initiative
Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of
Depreciation and Amortisation
Annual Improvements
2012-2014 Cycle
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IFRS 15: Revenue from Contracts with Customers
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Step 1Identify the
contract with a customer
Step 2 Identify the
performance obligations in the contract
Step 3 Determine
the transaction price
Step 4 Allocate
the transaction price to the
performance obligations in the
contract
Step 5 Recognise revenue
when (or as) the entity satisfies a
performance obligation
Accounting periods commencing on or after 1 January 2018; EU endorsement expected Q1 2016
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Overview of the 5-step modelStraight forward example
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€100
€5
€4
€1
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IFRS 15: Revenue from Contracts with Customers
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Other topics addressed
Costs to fulfil a contract
Costs to obtain a contract
Contract modifications
Customers’ unexercised
rights
Options to acquire
additional goods/services
Licenses Sales with rights of return Warranties
Principal vs agent
Non-refundable up-front fees
Repurchase agreements
Consignment arrangements
Bill-and-hold arrangements
Customer acceptance
Disaggregation of revenue for
disclosure
Disclosure requirements
expanded
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IFRS 15: Revenue from Contracts with Customers
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T R G Identifying performance obligations
Principal versus agent consideration
Licensing
Transition relief
Other topics
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IFRS 9 Financial Instruments (2014)
Effective for annual period beginning on or after 1 January 2018.
Not yet endorsed for use in the EU.
IFRS 9 (2014) supersedes IFRS 9 (2009), IFRS 9 (2010) and IFRS 9 (2013), but these standards remain available for application outside EU-IFRS reporters if the relevant date of initial application is before 1 February 2015
Replaces IAS 39
Classification and measurement. Financial assets are classified by reference to the business model within which they are held and their contractual cash flow characteristics. The 2014 version of IFRS 9 introduces a 'fair value through other comprehensive income' category for certain debt instruments. Financial liabilities are classified in a similar manner to under IAS 39, however there are differences in the requirements applying to the measurement of an entity's own credit risk.
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Impairment. The 2014 version of IFRS 9 introduces an 'expected credit loss' model for the measurement of the impairment of financial assets, so it is no longer necessary for a credit event to have occurred before a credit loss is recognised
Hedge accounting. Introduces a new hedge accounting model that is designed to be more closely aligned with how entities undertake risk management activities when hedging financial and non-financial risk exposures
Derecognition. The requirements for the derecognition of financial assets and liabilities are carried forward from IAS 39.
Transition
E-learn: http://www.iasplus.com/en-gb/tag-types/e-learning
IFRS 9 Financial Instruments (2014) continued
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Leases Insurance Contracts
Disclosure Initiative
Conceptual Framework
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Closing commentsGerard Casey
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