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IAASA publishes observations on selected accounting issues for 2014 financial statements

Thursday, 23rd October, 2014: IAASA, Ireland’s accounting enforcer, has published its annual Observations document highlighting key topics to be considered by those preparing, approving and auditing 2014 financial statements.

IAASA’s remit extends only to Irish companies trading on regulated markets. However, this Observations document should be of interest to a wider range of companies when preparing their 2014 year end financial statements.

Key topics covered by this Observations document include the following:

a) Measurement of recoverable amounts on cash generating units: Areas requiring careful examination are the determination of value in use calculations and the disclosure of recoverable amounts of cash generating units containing goodwill or intangible assets with indefinite useful lives. Close attention is needed in determining the disclosures to be provided by each significant cash generating unit rather than for all such units in aggregate.

b) Recognition, measurement and disclosures surrounding deferred tax assets: The judgements made regarding the assessment of the probability of future taxable profits being available against which unused tax losses may be recovered and the period of recovery warrant very close scrutiny.

c) Accounting for uncertain tax positions: The measurement and disclosure of uncertain tax positions require close attention in preparing 2014 financial statements.

d) Assessing control under IFRS 10 Consolidated Financial Statements: IFRS provides a single consolidation model that identifies control as the basis for consolidation. The IFRS 10 principle of control is more broadly defined than that applied under earlier financial reporting standards. Companies should carefully consider their judgements in assessing whether control exists under the IFRS 10 definition.

e) Alternative performance measures: IAASA will continue to engage with issuers in order to seek improvements in the use, presentation and disclosures surrounding alternative performance measures.

f) Messages for financial institutions: There are specific messages for financial institutions regarding the accounting aspects of the ECB/EBA Asset Quality Review, impairment provisioning and the level of disclosures in relation to forbearance measures granted to residential mortgage holders.

The Observations document can be accessed here.

IAASA has in previous years issued similar Observations documents and these may be accessed here.


IAASA seeks expressions of interest in the provision of Financial Reporting Review Services

Thursday, 16th October, 2014: IAASA’s statutory role includes examining whether the annual and half-yearly financial reports (collectively referred to as ‘periodic financial reports’) of certain entities whose securities have been admitted to trading on a regulated market, situated, or operating within the EU (‘issuers’) have been drawn up in accordance with the requirements of the relevant reporting framework as laid down by the Transparency (Directive 2004/109/EC) Regulations, 2007 (‘the Transparency Regulations’). IAASA’s examination constituency in this regard comprises issuers of equity and debt as well as closed ended funds. These issuers publish an aggregate of approximately 260 periodic financial reports per annum.

IAASA selects issuers’ periodic financial reports for examination based on risk assessment criteria, supplemented by cyclical and random selections. Given the level of IAASA’s examination activity, together with the scale and nature of the examination constituency, IAASA anticipates a requirement to supplement its internal professional resources from time to time by engaging the services of suitably qualified and experienced providers of statutory financial reporting expertise. Accordingly, IAASA wishes to update its existing Panel of individuals and firms who are interested in being considered for such engagements. Further information on this requirement can be found below:

Invitation of Expressions of Interest for the Provision of Statutory Financial Reporting Full Scope Review Services

In addition to the existing Panel of Full Scope Reviewers, IAASA anticipates a requirement to supplement its internal professional resources by engaging the services of individuals/firms to provide financial reporting advisory services. Consequently, IAASA now seeks to establish a second Panel of suitably qualified individuals/firms to provide such services as the needs arise. Further details can be found below:

Invitation of Expressions of Interest for the Provision of Financial Reporting Advisory Services

The closing date for receipt of Expressions for both Panels is 17:00 on Friday, 31 October 2014. Late applications will not be considered.


IAASA publishes a Commentary on the review of the application of IAS 7 Statement of Cash Flows by selected Irish equity issuers

Monday, 13 October 2014: IAASA has today published its findings from a thematic examination of how selected Irish equity issuers prepare cash flow statements under international accounting standard IAS 7 Statement of Cash Flows. The findings are published in IAASA’s Commentary:

Review of the application of IAS 7 Statement of Cash Flows by selected Irish equity issuers.


A statement of cash flows is one of the four primary financial statements that entities are required to produce. IAS 7 requires the entity to classify cash flows during the reporting period into operating, investing, and financing activities.

The statement of cash flows is useful in:

• determining the short-term viability of an entity;

• providing information as to how the entity conducts its operations;

• providing insight into the ability of the entity to provide returns to investors; and

• understanding the changes in the financing of the entity.

Preparers of financial statements exercise judgement in the preparation of financial statements with the result that reported amounts may not be comparable from one entity to another. Users of such financial statements need to study the financial statements carefully to fully understand the entity’s cash flows and preparers need to provide sufficient disclosures to aid users’ understanding.

IAASA’s publication has been prepared to highlight for users of Irish equity issuers’ annual financial statements the areas where divergent, but not necessarily non-compliant, approaches have been adopted in practice. The document also aims to stimulate debate amongst stakeholders as to whether and, if so, how existing approaches could be modified to provide enhanced comparability with similar information about other entities and with similar information about the same entity for another reporting period.

Key findings and messages

• The level of compliance with the presentational requirements of IAS 7 Statement of Cash Flows by the equity issuers selected was satisfactory;

• There are a number of areas where the presentation of cash flows does not result in information that is readily comparable between equity issuers;

• The application by issuers of alternative financial reporting treatments permitted by IAS 7 highlights the need for users to carefully study the particular treatments adopted in specific instances; and

• Issuers produce various non-accounting standard based cash flow statements and the measurement basis used for these Alternative Performance Measures varies.


The EAIG has submitted comment letters to the IAASB and IESBA

Wednesday, 1st October, 2014: The European Audit Inspection Group (‘EAIG’) has submitted joint comment letters to the:

•  International Auditing and Assurance Standards Board (‘IAASB’) regarding the IAASB’s exposure draft of proposed changes to the International Standards on Auditing “Addressing Disclosures in the Audit of Financial Statements” (click here to view); and

International Ethical Standards Board for Accountants(‘IESBA’) regarding the IESBA’s exposure draft “Proposed Changes to Certain Provisions of the Code Addressing Non-Assurance Services for Audit Clients” (click here to view).

The comment letters have been signed by a number of EAIG members, including IAASA.

The primary purpose of the EAIG is to create awareness of significant issues and to promote cooperation and consistency amongst European audit regulators on inspections. The group shares inspection practices and findings and facilitates discussions on topics related to audit inspections with third parties, such as the standard setters and the audit profession.


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Supervisory Authority
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Co Kildare

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