Accountancy Newsletter December 2015
DAC Beachcroft's Accountancy newsletter features topical news and insights for our clients and contacts.
Published 3 December 2015
The Financial Reporting Council (FRC) announced its 2016/19 strategy on 28 October 2015, outlining its priority areas for the next three years. FRC's mission remains 'to promote high quality corporate governance and reporting standards to foster investment in UK businesses'.
The FRC's focus is on working with companies to help their understanding and implementation of the codes, standards and regulations introduced since the financial crisis (and to avoid the distraction of introducing further changes to codes and standards if possible). The FRC also aims to ensure that audit and reporting in the UK is world-leading "to give the greatest possible confidence to investors globally."
A copy of the 2016/2019 strategy can be found here.
The FRC has always had a focus on ethical standards. It has, for example, published a number of ethical standards for auditors from December 2010 onward, including those relating to integrity, objectivity and independence as well as specific guidance for situations where there is a long-standing audit relationship between the auditor and audit client. On 10 November 2015, the FRC issued a consultation in relation to revised ethical standards for auditors. The consultation includes a proposal for a revised ethical standard for audit and other public interest engagements which incorporate changes required by new EU Regulations on statutory audit. Additionally, there are proposals as to auditing standards and quality control relating to specific areas of the new Regulations.
Pre-pack deals, whereby the terms of the sale of a struggling business are agreed before the company is placed into administration, are the subject of a new package of reforms. The reforms follow the recommendations of an independent review into pre-packs for the government by Teresa Graham CBE in 2014.
The aim of the reforms is to ensure transparency (particularly when businesses are sold to 'connected-parties') and to reassure creditors of the reasonableness of the pre-pack transaction and its justification in the circumstances.
EU pushing forward with tax reforms aimed at multinationals
The European Parliament is pushing ahead with its plans to promote extensive EU tax reforms aiming to prevent multinationals from shifting profits to low tax jurisdictions within the EU. MEPs also want all EU tax rulings to be made available to tax authorities in member states. The proposed reforms come after the European Commission decided that Luxembourg and the Netherlands granted selective tax advantages to Fiat and Starbucks respectively, which were deemed illegal under EU state aid rules.