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IASB AMENDS IAS 19 ON MEASURING PENSION EXPENSE ON PLAN CHANGES

The International Accounting Standards Board (IASB) has issued Plan Amendment, Curtailment or Settlement (Amendments to IAS 19). These amendments are narrow in scope and specify how companies must determine pension expenses upon changes to a defined benefit pension plan.

Companies account for defined benefit plans under International Accounting Standard (IAS) 19, Employee Benefits.When there is a change to a plan, whether an amendment, curtailment, or settlement, IAS 19 requires a company to remeasure the net defined benefit liability or asset.

Under the amendments, a company must use the updated assumptions from this remeasurement to determine current service cost and net interest for the remainder of the reporting period after the plan change. IAS 19, prior to these amendments, did not specify how to make this determination.

The IASB expects that the requirement to use updated assumptions will provide useful information to financial statements users.

The amendments apply to plan amendments, curtailments, or settlements occurring on or after the beginning of the first annual reporting period that begins on or after 1 January 2019. Earlier application is permitted but must be disclosed.

A link to the amendments is available below.

http://www.ifrs.org/news-and-events/2018/02/international-accounting-standards-board-issues-narrow-scope-amendments-to-pension-accounting/

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IFIAR ANNUAL SURVEY OF AUDIT INSPECTION FINDINGS POSES CHALLENGE TO AUDIT FIRM NETWORKS

On 8 March 2018, the International Forum of Independent Audit Regulators (IFIAR) released the report of its 2017 Inspection Findings Survey (Report) as well as the Survey Report Stakeholders Announcement (Announcement). The survey was IFIAR’s sixth annual survey of inspection findings from member regulators’ individual inspections of audit firms affiliated with the six largest global audit firm networks.

The 2017 Annual Survey reviewed two categories of activities, (a) inspections performed on firm-wide systems of quality control, and (b) inspections of individual audit engagements.

As noted in the Announcement, the analysis from 2017 inspections found that 40% of audit engagements inspected had at least one finding, compared to 42% in the 2016 survey and to 47% in the first survey capturing this percentage (2014 survey).

The highest rate and greatest number of findings in the 2017 survey were in the areas of accounting estimates and internal control testing. In accounting estimates, most findings related to failure to assess the reasonableness of assumptions, including consideration of contrary or inconsistent evidence and internal control testing. For internal control testing, the most common type of finding was the failure to obtain sufficient persuasive evidence to support reliance on manual internal controls, followed by the failure to sufficiently test controls over, or the accuracy and completeness of, data or reports produced by management.

Overall, IFIAR concluded that the inspection results showed that ‘the frequency of findings identified through inspections of listed [public interest entity] PIE audits is trending downward on an overall basis’. However, IFIAR also found that ‘progress is not experienced in all jurisdictions at the same rate and no definitive trends have been noted for findings arising from inspections of firm-wide systems of quality control’. Based on these results, IFIAR challenged global networks to ‘continue in their efforts to strengthen their systems of quality control and drive consistent execution of high quality audits throughout the world’.

Links to the Annual Report and Announcement are available below.

Annual Inspection Findings Survey

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ALBANIAN TAX INSIGHT – TAX ON BUILDINGS

An amendment to the Law no. 9632, dated 30.10.2006 “On the Local Tax System” (summarized in our Fiscal Package 2018 in Albania) approved the change from the area based system to the market value system for the tax on buildings. Decision of Council of Ministers No. 132, dated 7 March 2018 \\\”On methodology of determining taxable value of buildings\\\” defines the new tax methodology applicable from 1st of April, 2018 on the tax on buildings. The most significant changes of the new methodology relate to property value which is based on market value and the tax rates based on the buildings’ use.

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ALBANIAN TAX INSIGHT – NEW LAW ON ACCOUNTING AND FINANCIAL REPORTING

The new law provides some changes on the financial reporting and other accounting requirements and aims to harmonize the Albanian financial reporting requirements with the EU directives on accounting.  It aims to impose more disclosures for medium and large entities and less burden for micro and small entities.

Why Companies need to act now!

Though New Accounting Law mandatory effective date of 1 January 2019 may seem a long way off, entities are strongly advised to start preparing now for the new information required to report. Many entities will need to collect and analyze additional information and implement changes to internal policies, procedures and information systems.

Attached we are providing a summary of main changes that will be introduced by this new law in relation to financial and non-financial reporting requirements.

Please read our summary attached for more details.

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