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Intangible assets

29 April 2020

Entities holding significant intangible assets may find that changes in strategy or reductions in forecast revenues due to coronavirus will not only provide evidence of impairment but will also reduce the ability of the entity to meet the recognition criteria of intangible assets. This could mean an increase in costs being expensed to the P&L with knock on consequences for performance related pay, bonuses and covenants.

Accounting estimates and areas of judgement

29 April 2020

The outbreak of coronavirus could have a significant effect on the assumptions, estimates and accounting judgements entities take, which will then need to be reflected in the disclosures. This could impact reporting dates ending before as well as after the emergence and spread of coronavirus, for example, where critical judgements have been exercised in determining whether post balance sheet events are adjusting or not, or whether accounts should be prepared on a going concern basis.

Holiday pay accruals

29 April 2020

One of the government measures announced to support entities employing key workers during coronavirus was an extension of the window that employees can take their annual leave. FRS 102 (section 28 ‘Employee Benefits’) requires entities to accrue for any short-term employee benefits. Despite the reference to key workers in the government announcement, the change to the legislation applies to all businesses.

Defined benefit pension schemes

29 April 2020

With the impact of coronavirus on markets, mortality and interest rates, net defined benefit pension scheme liabilities under FRS 102 may increase in the short term mainly due to a fall in the value of any plan assets. They may also be impacted, to a less certain degree, by the effects of changes in the principal actuarial assumptions used to measure the defined benefit obligation.

Investment property and impairment of property

29 April 2020

The knock-on effect of having a lockdown is the significant impact on the real estate sector. Investor spend on London office buildings was down nearly 75 per cent in March. This is likely to have an impact on the valuation of all business property under FRS 102.

Shared-based payments

29 April 2020

During this period of economic uncertainty, when cash is limited, entities may seek to incentivise employees using non-cash benefits such as share-based payments. As well as this, existing share-based payment schemes may vest based on conditions such as employment continuity or KPI achievement which may be impacted by the current economic volatility.

Amendments to IAS 1 Presentation of Financial Statements
Danielle Stewart OBE

05 March 2020

The International Accounting Standards Board (IASB) has issued narrow-scope amendments to IAS 1 Presentation of Financial Statements to clarify how to classify debt and other liabilities as current or non-current.

Proposed amendments to FRS 101
Paul Merris

20 February 2020

The Financial Reporting Council (FRC) is proposing two minor amendments to FRS 101 Reduced Disclosure Framework. Comments are requested by 16 March 2020.

IFRS 9 – advice for non-banking entities
Paul Merris

14 February 2020

Overview of the FRC’s main messages to non-banking entities on disclosures in IFRS 9. The thematic review covered classification and measurement; impairment and hedging.

Help with IFRS 15 disclosures
Paul Merris

20 November 2019

An overview of the FRC’s thematic review of IFRS 15 aimed at helping companies to improve disclosures in the future. It also highlights the areas of focus that the FRC will monitor as the standard continues to be embedded.

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