Amendments to the Accountancy Profession Act (Cap. 281) and other laws
Amendments to the Accountancy Profession Act (Cap. 281) and the Companies Act (Cap. 386), implementing Directive 2014/56/EU (the ‘Directive’) and certain provisions of Regulation (EU) No. 537/2014 (the ‘Regulation’), have been finalised and enacted. The amendments address a number of issues governing the statutory audit and the accountancy profession. Notable amendments include specific provisions applicable to public interest entities, such as specific provisions on mandatory audit firm rotation, public tendering, and prohibited non-audit services.
Other amendments, largely emanating from the Directive and Regulation have also been included in L.N. 233 of 2016 amending the Accountancy Profession (Accounting and Auditing standards) Regulations and L.N. 234 of 2016 amending the Accountancy Profession Regulations.
IESBA redefines accountants’ ethical role when laws and regulations are broken
The International Ethics Standards Board for Accountants released a new standard that redefines the roles of auditors, CFOs and other accounting professionals when they witness or suspect illegal acts at their own organisations or within a client’s organisation.
The standard is known as NOCLAR, short for noncompliance with laws and regulations. It aims to guide accountants on how to act in the public interest when they encounter or become aware of suspected illegal acts such as accounting fraud.
New EU rules to fight insider dealing and market manipulation in Europe’s financial markets take effect
The European Union’s Market Abuse Regulation (Regulation (EU) No 596/2014) (MAR) replaced the EU’s Market Abuse Directive (Directive 2003/6/EC) (MAD) on 3 July 2016. In much of the EU, the directive on criminal sanctions for insider dealing and market manipulation (Directive 2014/57/EU) (the CSMAD) will be implemented in parallel with MAR.
The Market Abuse Regulation ensures that rules keep pace with market development, such as new trading platforms, as well as new technologies, like high frequency trading (HFT). The new Directive on Criminal Sanctions for Market Abuse (or Market Abuse Directive) complements the Market Abuse Regulation by requiring member states to introduce common definitions of criminal offences of insider dealing and market manipulation, and to impose maximum criminal penalties for the most serious market abuse offences. Member states have to make sure that such behaviour, including the manipulation of benchmarks, is a criminal offence, punishable with effective sanctions everywhere in Europe.
IASB confirms amendments to current insurance contracts Standard
The International Accounting Standards Board (IASB) confirmed it will amend the current insurance contracts Standard, IFRS 4. This is to address issues that may arise from implementing the new financial instruments Standard, IFRS 9, before implementing the new insurance contracts standard which will replace IFRS 4.
At its May meeting, the board concluded deliberations on this topic and asked staff to draft the final amendments to IFRS 4 Insurance Contracts, which the board expects to issue in September 2016.
The new insurance contracts standard is currently being drafted and the board expects to issue it around the end of 2016 with an effective date no earlier than 2020. Both IFRS 9 Financial Instruments, effective 1 January 2018, and the new insurance contracts standard are relevant to companies that issue insurance contracts.
Responding to some companies’ concerns about the timing of the implementation of the two standards and the related consequences, the board has, following public consultation, confirmed that it will issue amendments to IFRS 4 that:
- give companies that issue insurance contracts the option to remove from profit or loss the volatility that may be caused by certain changes in the measurement of financial assets when applying IFRS 9 before the new insurance contracts standard; and
- give companies whose predominant activities are insurance-related an optional temporary exemption from applying IFRS 9 until 2021.
The amendments to IFRS 4 will supplement existing options in that standard that could be used to address the volatility that may be caused by applying IFRS 9 before the new insurance contracts standard.
Trustees conclude review of structure and effectiveness of the IFRS Foundation
The Trustees of the IFRS Foundation, responsible for the governance and oversight of the International Accounting Standards Board (IASB), have outlined a range of enhancements to ensure the organisation remains fit for a changing world.
The latest review is the fifth to be conducted by the trustees, and as such focused on evaluating and refining the current structure and activities of the organisation (including those established as a result of previous reviews), as well as considering the future role of the organisation.
To reach the conclusions outlined in the review, the trustees conducted an extensive consultation process, with stakeholders encouraged to submit feedback and proposals. The review will see the trustees oversee the implementation of a number actions.
The trustees have proposed amendments to the Constitution to facilitate these changes to the governance and funding of the IFRS Foundation. The comment period on these proposed amendments ends 15 September 2016.
Parallel to the trustees’ review into structure and effectiveness, the IASB has been undertaking a consultation on its future agenda and the conclusions of that review will be published later this year.