CPD - AUDIT AIDE MEMOIRE: AUDIT TECHNICAL CHANGES – 30 JUNE 2015

CPD - AUDIT
AIDE MEMOIRE: AUDIT TECHNICAL CHANGES
1 JULY 2014 – 30 JUNE 2015
Introduction
ICAEW requires members to continue to maintain and develop their knowledge, skills and
expertise throughout their career. This aide memoire is to help you fulfil that requirement in respect
of technical changes relevant to working in the regulated area of audit.
There is no requirement to complete a specific amount of ‘structured’ CPD (ie, attendance on
courses). Instead, members are expected to plan their own programme of development activities to
enable them to ensure that they have the knowledge, skills and expertise to fulfil their role and
responsibilities. This may include technical knowledge, ethical and business awareness, IT skills
and ‘soft’ skills such as negotiation, time management and team leadership skills. For more
information, visit icaew.com/cpd
ICAEW members are required to provide an annual declaration of CPD compliance for each year
running from 1 November and ending on 31 October. The declaration asks members to confirm
that they have reflected on their responsibilities, undertaken appropriate learning and development
activities as necessary, and considered the impact of those activities, on an ongoing basis.
Every year a large sample of members are asked to provide evidence of their compliance. We
recommend that you keep an online record of your CPD throughout the year so that you can
submit this easily if required to do so.
Recording your CPD activity
Your self-assessment needs to reflect the three stages outlined below.
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Reflect
Consider your development needs and how you can meet them; and create a plan of action.
Whenever you identify a development need that has a bearing on your role, you need to consider
whether you need to take action. For example:
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Expectations - What do others expect of you and what standards do you expect of yourself?
Changes – What are the main changes affecting you in your role?
Responsibilities – What are your areas of responsibility?
Environment - What are the main business environment issues for you?
Knowledge gaps - What do you need to know about?
Act
Put your plan of action into practice. This could include:
 technical reading
 learning at work
 meetings with experts
 conferences
 courses and seminars
 online learning and webinars
 workshops with your peers
 reading magazines, newspapers and journals
 registering for updates and email alerts
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Impact
Evaluate the effectiveness of what you have done. Are you satisfied that your actions have
enabled you to meet your objectives, or do you need more work in this area? Are there gaps, or
are there emerging issues that you need to take into account for the coming year?
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Examples of key audit related technical changes
The following are examples of key audit related technical changes and developments issued by
the standard-setting bodies between 1 July 2014 and 30 June 2015. The list is not exhaustive and
does not include other areas of CPD which may be relevant to you. Not all changes and
developments are relevant to every firm.
Legal and regulatory
 The UK Corporate Governance Code: Revised September 2014. Effective for financial years
beginning on or after 1 October 2014.
Audit
 Glossary of terms: Audit and ethics. Revised February 2015.
 ISA (UK and Ireland) 260: Communication with those charged with governance. Revised
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September 2014. Effective for periods commencing on or after 1 October 2014.
ISA (UK and Ireland) 570: Going concern. Revised September 2014. Effective for periods
commencing on or after 1 October 2014.
ISA (UK and Ireland) 700: The auditor’s report on financial statements. Revised September
2014. Effective for periods commencing on or after 1 October 2014.
FRC Bulletin 4 : Recent developments in Company Law, The Listing Rules and Auditing
Standards that affect United Kingdom Auditor’s Reports (Revised). Revised June 2015 to
update certain illustrative examples of auditor’s reports for changes originally reported in Bulletin
2014/4, and subsequent changes to reflect the application of FRS 101 and 102, the clarification
statement issued for ISA 700 (UK and Ireland) and amendments to the UK listing rules issued in
January 2015.
Technical release TECH 13/14 AAF: Issues for auditors arising from the implementation of
FRS 102
FRC Audit Quality Thematic Review: The audit of loan loss provisions and related IT controls
in banks and building societies. Published 2 December 2014.
Financial reporting
UK GAAP
 Forward to Accounting Standards (March 2015): Revised 19 March 2015.
 FRS 104: Interim financial reporting. Issued on 19 March 2015. Relevant for entities that
apply UK and Irish GAAP and prepare interim financial reports. Effective for interim periods
commencing on or after 1 January 2015, with early application permitted.
 FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland
(August 2014) Issued on 22 August 2014. The revised standard incorporates amendments in
respect of basic and other financial instruments and hedge accounting issued in July 2014
together with also assorted editorial amendments and corrections to minor typographical errors.
Effective for periods commencing on or after 1 January 2015.
 FRS 102 (August 2014): Editorial amendments and clarification statements. Updated 16 April
2015. Clarification statement in relation to net investment hedges of foreign operations that are
branches.
 FRS 102: Amendments to FRS 102– Pension obligations. Issued on 27 February 2015. Clarifies
aspects of accounting for defined benefit pension plans by UK and Irish entities. Effective for
periods commencing on or after 1 January 2015.
 FRS 102 Staff Education Notes (SENs): SENs highlight key areas of consideration when
transitioning to FRS 102.
- SEN 13 - Transition to FRS 102 (updated April 2015)
 FRS 101: Reduced Disclosure Framework (August 2014). Issued on 22 August 2014. The
revised standard incorporates amendments in respect of FRS 103, Insurance Contracts issued
in March 2014 and amendments relating to the 2013/14 cycle issued in July 2014. Effective for
periods commencing on or after 1 January 2015.
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IFRS
 IFRS for SMEs: 2015 Amendments to the IFRS for SMEs. Issued 21 May 2015 and effective for
annual periods beginning on or after 1 January 2017. Earlier application is permitted.
 IFRS 9: Financial instruments. Issued 24 July 2014. The IFRS sets out principles for the
recognition, derecognition, classification and measurement of financial assets and financial
liabilities together with requirements relating to impairment of financial assets and hedge
accounting. IFRS 9 supersedes IAS 39. Effective for periods beginning on or after 1 January
2018.
 Amendment to IAS 1: Presentation of Financial Statements. Amended 18 December 2014 by
Disclosure initiative (amendments to IAS 1). Effective for periods beginning on or after 1
January 2016.
 Amendments to IFRS 10, IFRS 12 and IAS 28: Consolidated financial statements, Disclosure
of interests in other entities and Investments in associates and joint ventures (2011). Amended
18 December 2014 by Investment entities: applying the consolidation exception (amendments
to IFRS 10, IFRS 12 and IAS 28). Effective for periods beginning on or after 1 January 2016.
 Annual improvements 2012-2014 cycle: Issued 25 September 2014. Makes minor
amendments to IFRS 5 Non-current assets held for sale and discontinued operations, IFRS 7
Financial instruments: disclosures, IAS 19 Employee benefits and IAS 34 Interim financial
reporting. Effective for periods beginning on or after 1 January 2016
 Amendments to IFRS 10 and IAS 28: Consolidated financial statements and Investments in
Associates and Joint Ventures (2011). Amended 11 September 2014 by Sale or contribution of
assets between an investor and its associates or joint venture (amendments to IFRS 10 and IAS
28). Effective on a prospective basis for periods beginning on or after 1 January 2016.
 Amendment to IAS 27: Separate financial statements (2011). Amended 12 August 2014 by
Equity method in separate financial statements (amendments to IAS 27). Effective for periods
beginning on or after 1 January 2016.
UK Regulation
Sector specific
 The Companies, Partnerships and Groups (accounts and Reports) Regulations 2015 (SI
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2015/980): Introduces changes to UK law for implementation of the EU accounting directive.
Apply to financial years beginning on or after 1 January 2016 (with early adoption permitted for
financial years beginning on or after 1 January 2015), except for the change requiring a full list
of subsidiaries to be disclosed in the notes to the accounts which applies to annual accounts
approved on or after 1 July 2015.
Charities Act 2011 (Group) Accounts) Regulations 2015 (SI 2015/322) and Charities Act
2011 (Accounts and Audit) Order 2015. Issued March 2015. The statutory intstruments
amend the income thresholds for charity group accounts and audits to £1m. Effective from 31
March 2015.
SORP: Financial Reports of Pension Schemes. Issued December 2014. Effective for periods
commencing on or after 1 January 2015.
SORP: Financial Statements of Investment Trust Companies and Venture Capital Trusts.
Issued November 2014. Effective for periods commencing on or after 1 January 2015.
SORP: Housing SORP 2014: Registered Social Landlords. Issued September 2014. Effective
for periods commencing on or after 1 January 2015.
SORP: Accounting and Reporting by Charities (FRS 102). Issued July 2014. Effective for
periods commencing on or after 1 January 2015.
SORP: Accounting and Reporting by Charities (FRSSE). Issued July 2014. Effective for periods
commencing on or after 1 January 2015.
SORP: Accounting by Limited Liability Partnerships. Issued July 2014. Effective for periods
commencing on or after 1 January 2015.
Technical release TECH 01/15 CFF: Guidance for preparers of pro-forma financial information.
Technical release TECH 16/14 BL: Guidance on donations by a company to its parent charity.
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Sources of information
You can find further information on all the standards and guidance listed above on the following
websites:
icaew.com/aaf
icaew.com/faculties
icaew.com/sigs
icaew.com/auditnews
icaew.com/frf
icaew.com/technicalfaqs
icaew.com/clarity
icaew.com/practicehelpsheets icaew.com/technicalhelpsheets
icaew.com/corporategovernance icaew.com/QADonline
isaaudit2010.com
icaew.com/events
www.iasb.org
icaew.com/regulations
www.frc.org.uk/Our-Work/Codes-Standards/Audit-and-assurance
www.frc.org.uk/.Our-Work/Codes-Standards/Accounting-and-Reporting-Policy
www.frc.org.uk/Our-Work/Codes-Standards/Corporate-Governance
www.frc.org.uk/Our-Work/Conduct/Audit-quality
The Financial Reporting Faculty and the Audit & Assurance Faculty have produced a number of
webinars that cover a wide range of updates on IFRS, UK GAAP and auditing standards. Members
of the faculties can watch recordings at:
icaew.com/aafwebinars
icaew.com/frfwebinars
Financial Reporting Faculty factsheets are available at icaew.com/frffactsheets
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