Crowe Horwath Reporting Insights
2017 — Issue 2
Welcome to our second newsletter of 2017.
We include details of the new IFRS 17, as well an important consultation about the revision of the standard for auditing accounting estimates. New reporting requirements about conflict minerals in the EU present significant opportunities and the opportunity to repeat in the EU and beyond the successful conflict mineral and regulatory compliance practice built by Crowe Horwath LLP in recent years.
The newsletter also includes links to recent articles by member firms and to Crowe Horwath LLP’s resources on Cybersecurity. Our members have thoughts on a diverse range of business developments. Cybersecurity is a challenge for business so take the opportunity to share these articles.
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Thoughts from Member Firm Leaders
Recent published thoughts from Crowe Horwath International member firm leaders include:
- Tax Implications of Brexit by Laurence Field of Crowe Clark Whitehill, United Kingdom;
- E-commerce and VAT - How it will impact the business model by Markus Suslio of Crowe Horwath United Arab Emirates; and
- Making Your Business Click by Dawkins Brown of Crowe Horwath Jamaica.
IFRS 17 Insurance Contracts
The International Accounting Standards Board (IASB) has issued IFRS 17 Insurance Contracts, which comes into force in 2021 and will require all insurance contracts to be accounted for in a consistent manner. It is the first truly international IFRS Standard for insurance contracts and will help investors and others better understand insurers' risk exposure, profitability and financial position and enable them to compare and contrast the financial performance of otherwise rel="noopener noreferrer" similar companies.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 is effective for periods commencing 1 January 2018 and leads to significant change as it replaces two old and somewhat limited standards. Every company has to consider the impact of IFRS 15, and it is not just about accounting. Contractual terms should be reviewed for their accounting implications, and, if necessary, standard terms for future contracts revised. There are also significant new disclosures. Investing now in considering the impact of IFRS 15 will save time, effort and possible surprises later.
Our latest articles and information about IFRS 15 include:
- Matthew Stallabrass of Crowe Horwath International's UK member firm summarises IFRS 15 in an article published by the Quoted Companies Alliance.
- Crowe Horwath LLP, our US member firm, has a Revenue Recognition Resource Center that includes a guide, videos and webinars about the new requirements.
Cybersecurity Watch
Cybersecurity issues are often distorted by technology providers, sensationalised by media, and downplayed by attacked organizations. It is difficult to know how to react to specific threats, as well as how to prevent them and be prepared when they occur.
Crowe Horwath LLP's Cybersecurity Watch blog is a resource to learn probing questions to ask and practical actions to take to manage cyber risk.
Conflict Mineral Reporting in the EU
The EU Conflict Mineral Regulation has been approved. Compliance and reporting obligations will apply from 2021. In advance, companies will need to ascertain whether they are subject to the Regulation and implement reporting systems and procedures.
Camillo Giovannini of Crowe Horwath Romania has prepared a detailed briefing introducing the Regulation. Crowe Horwath International member firms in the EU can provide support to companies that are impacted by the Regulation. An early discussion about the implications is strongly advised.
Audit of Accounting Estimates
The International Audit & Assurance Standards Board (IAASB) is progressing with its proposed revisions to ISA 540 and the audit of accounting estimates.
The proposed revisions:
- Enhance requirements for risk assessment procedures to include specific factors related to accounting estimates, namely complexity, judgment, and estimation uncertainty;
- Set a more detailed expectation for the auditor's response to identified risks related to accounting estimates, including augmenting the auditor's application of professional scepticism; and
- Are scalable regardless of the size or sector of the business or audit firm.
The revisions to ISA 540 are important to companies as well as their auditors. Every set of financial statements includes accounting estimates. In future, companies may have to prepare more information to support the accounting for their estimates before they are audited. Adopting an internal attitude of scepticism towards accounting estimates will help anticipate the audit process and reduce questions later.
