Deloitte Financial Reporting Conference Rising to …...Deloitte Financial Reporting Conference -...

Deloitte Financial Reporting Conference

Wednesday, 30 September 2015The g Hotel, Galway

Rising to the challenge

WelcomeGerard CaseyAudit Partner

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

New Irish GAAPChange is here!

Gerard Casey

“Old” Irish GAAP – 2014

Deloitte Financial Reporting Conference - Rising to the challenge 5

Goodbye

Conversion timeline for a December year end company


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

High Level Overview of Standards


New Irish

GAAP

FRS 100

FRS 101

FRS 102

FRS 103

FRS 104

FRS 105

What is a qualifying entity?


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.

What are the disclosure reductions?


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

Still unsure which option to select?


Question:

Which Irish GAAP standard did your organisation choose to adopt and why?

Perspectives from you


Panel discussion

New Irish GAAP – A view from our Panel


Oliver Holt

Austin Sammon

Katie O’Connor

Question:

What was the key aspect of your financial statements impacted on transitioning to FRS 101 or FRS 102?



Transition - The Next Steps

Question:

How did you approach the transition process?



Conversion timeline for a December year end company


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

The countdown has begun


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.

Last words of advice

Question:

What advice would you give companies that have not yet started their transition process?



Current tax issues

Brian Farrell

This morning…


Section 76A


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

“Adjustment required or authorised by law”


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”

Schedule 17A


• 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

Section 76B – Financial instruments


• 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

Financial instruments


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


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.


Taxable amount XDeductible amount (X)Excess X/(X)

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

amount”.Deloitte Financial Reporting Conference - Rising to the challenge 31

Key points


Follow the accounts in computing trading profits

Amounts “falling out” on transition spread over 5 years

This morning…



BEPS

35

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


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

17

Action 13 - Master File / Local File


© 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

CbC Reporting Guidance on ImplementationAction 13


This morning…


The Theory ...

The Likely Reality

This morning…


Deloitte Financial Reporting Conference - Rising to the challenge45

Knowledge Development Box

Entrepreneurs

Travel and subsistence expenses

‘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;

46

1m

1m +100m

100m 1.28m

48

Deloitte Financial Reporting Conference - Rising to the challenge49


Entrepreneurs



UK EIS

Lower income tax rate for lending to company

Lower income tax rate on dividends


Entrepreneurs



Revenue Guidance SP – IT/2/07


…..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.

Two aspects in one concept


CONCEPT

Normal place of work – fact based Non Executive directors

Conclusion


New Irish GAAP – follow the financial statements but 5 year spread

BEPS - significant change is coming

Finance Bill results of consultations

55Deloitte Financial Reporting Conference - Rising to the challenge

The tax@hand app


Cyber security

Stephen Wright

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.


IDENTIFY UNDERSTAND FORWARD PLANNING

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.


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

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.


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

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.


EMAIL PHISHING

DRIVE-BY ATTACK

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

Heat Map Of User AccessCase #1


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


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


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


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


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.


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

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.


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.

So, how can you try to avoid being the next victim of the Cyber crimewave?


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

Coffee/Tea Break

The impact of the Companies Act 2014

Nessagh Quinn

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


What do shareholders and directors need to consider?


Existing private limited

company

LTD

DAC

Action required

Action required

Key features of the LTD v DACThe Decision


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

Other company types


No action required

Change of name required

PLC

ULC

CLG

Change of name required

Timeline


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

Matters for considerationDrafting new constitution


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

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

Deloitte Financial Reporting Conference - Rising to the challenge

Top 10 changes – contd.


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

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


When is a SAP required?


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

Directors’ compliance statement

Ciarán Treacy

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



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



Relevant Obligations:

If listed in the EEA:

Serious Market Abuse offences

Serious Prospectus offences

And for everybody within scope…


“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


What you need to know – Relevant ObligationsDirectors’ compliance statement


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

What you need to know – Relevant Obligations (Tax)Directors’ compliance statement


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

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


Impact on the annual report and financial statements

Austin Sammon

Changes from 1 June 2015 includeDirectors’ Report


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.

Directors’ Report


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

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


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

New auditor statement required from directors for accounting periods beginning on or after 1 June 2015

Directors’ Report


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

Approval of financial statements


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



“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


Examples from Part 6*Additional information required by CA 14 not in Schedules 3 & 4


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



• Only required to sign balance sheet(s)• Must also state name• Category 2 offence to lay or file without signing


More disclosures in financial statements – some examples!


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

Directors’ loans


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


Reminder: filing regime


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”


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

Further information


Collateral on www.deloitte.com/ie

IFRS Update

Oliver Holt

Deloitte IAS Plus – your source for accounting information


First mandatory for y/e 2015


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

Examples from Part 6*Additional information required by CA 14 not in Schedules 3 & 4


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




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


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




June 2014; IASB: 1.1.14)


under CA 14

Annual Improvements

2011-2013 Cycle

(EU: 1.1.2015; IASB: 1.7.14)

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




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

IFRS 15: Revenue from Contracts with Customers


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

Overview of the 5-step modelStraight forward example


€100

€5

€4

€1

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




T R G Identifying performance obligations

Principal versus agent consideration

Licensing

Transition relief

Other topics

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.


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


http://www.iasplus.com/en-gb/tag-types/e-learning


Leases Insurance Contracts

Disclosure Initiative

Conceptual Framework

Closing commentsGerard Casey

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