The International Financial Reporting Interpretations Committee (FRIC) has confirmed it will not seek to amend discounting rules under International Accounting Standard 19, Employee Benefits (IAS 19).The decision relates to uncertainty regarding the discounting of liabilities when using more than one currency.According the latest IFRIC update, “the committee concluded that the requirements in IAS 19 provide an adequate basis for an entity to determine the discount rate when the entity operates in a country that has adopted another currency as its official or legal currency”.In March the IFRIC proposed rejecting the call for it to start work on a project to develop interpretive guidance on the issue. The IFRS IC launched its probe of the topic after a company in Ecuador sought guidance on discounting its defined benefit liability, as this was denominated in US dollars.IAS 19 requires sponsors to use a high quality corporate bond rate to discount liabilities, or failing that a government bond rate.In the March edition of IFRIC Update, the committee confirmed current discounting practice in those terms.It also added that the discount rate was not meant to reflect the return on assets.Environmental lawyer highlights BoE climate change concernsSeparately, lawyers from environmental campaign group ClientEarth have warned that the Bank of England’s (BoE) policy focus on climate-change risk should serve as wake-up call for companies.ClientEarth corporate lawyer Alice Garton said: “The Bank of England continues its leadership on the financial risks and impacts of climate change. This latest statement reiterates that climate-related loss, mispriced assets and potential disruptions to financial markets must be taken seriously by all market actors, now.”In a quarterly update written by bank staff with responsibility for insurance and cross-border issues, the BoE said that climate change presented financial risks “which impact upon the bank’s objectives”.The bank identified these risks as manifesting through both the physical effects of climate change and the transition to a lower-carbon economy.The update said: “As banks and insurers realign their portfolios and adjust their underwriting practices, this will have consequences across the economy. Businesses and investors not considering these issues will be left behind.”Through its policy response, the bank was working with the sectors affected by climate change, such as insurers, it said.It was also aiming to enhance the resilience of the UK financial system through an orderly market transition to a lower-carbon economy.Recently, environmental NGOs such as ClientEarth, as well as investors, have shown a growing willingness to use the courts where companies fail to match their green commitments with deeds.FTSE 350 firms improve auditsMeanwhile, the UK Financial Reporting Council (FRC) has announced that its reviews of the audit environment among FTSE 350 companies during 2016/17 revealed an improvement in audit quality.Melanie McLaren, executive director at the FRC, said in a statement: “High-quality audit underpins public trust and confidence in business. While the progress made by individual firms differs, all firms are investing in audit quality and have set out further action to improve.”The FRC’s latest update revealed that 81% of the FTSE 350 audits it reviewed in the past year required no more than limited improvements.The FRC wants this figure to reach 90% by 2018-19.Among the areas singled out for improvement were revenue recognition and processes for complying with ethical or independence requirements.The review also noted that auditors must do more to challenge management in areas where significant judgement is exercised, such as impairment, asset valuation and provisions.
- Pennsylvania Remains Up for Grabs as Trump and Biden Assert Confidence
- Migrant worker neglect could hurt Malaysia economic recovery
- Women’s FA Cup: Government in talks with FA over resuming competition during lockdown | Football News
- North Korea: Going back in time with Pyongyang’s austere hotels
- Georgia: Biden closes gap with Trump to fewer than 500 votes.