Financial Reporting Update
SI 2013/1981 replaced the directors' remuneration reporting requirements for quoted companies for periods ending on or after 30 September 2013. Although at first glance the new requirements may look similar to those they replace, there are some significant changes that may pose a challenge for some. In order to assist preparers with some of the practical implications of the new requirements, KPMG in the UK has issued Directors' Remuneration Report, which will be available for download shortly.
From 1 January 2015, current UK GAAP will be replaced with FRSs 100, 101 and 102. All companies, except those that apply EU-IFRS or the FRSSE, will be affected and those with a December year end that have not early-adopted the new UK GAAP face their transition date on 1 January 2014.
Directors' remuneration reporting
In our September/October Update, we discussed the new legislation, SI 2013/1981, that replaces the current directors' remuneration report (DRR) requirements for quoted companies (as defined by the Companies Act 2006) for periods ending on or after 30 September 2013. The requirements for disclosure of directors’ remuneration for non-quoted companies remain unchanged.
As a brief reminder, the DRR must now comprise:
- an annual statement;
- an annual report on remuneration; and
- a report on the directors’ remuneration policy (required only in certain periods).
On first look at the requirements in the new Schedule 8, it would appear that little has changed from the previous requirements. For example, the DRR still includes a remuneration policy section and extensive numerical disclosures (most of which are provided in tabular form) explaining the rewards to the directors in a given financial year.
However, preparers and users should be aware of some fundamental changes to the requirements.
One of the key disclosures under the new Schedule 8 is the ‘single figure table’, which includes for each director a total of all benefits provided, including, for the first time, defined benefit pensions and long-term incentives. Further, Schedule 8 confirms when remuneration or awards that are subject to longer-term performance or service conditions are included in the single figure table. For example, long-term incentive schemes, long-term profit sharing arrangements, and share-based payment arrangements with a service period spanning a number of years are included in the single figure table when all performance conditions (e.g. total shareholder return (TSR) or earnings per share (EPS) targets) are met, regardless of any further service conditions.
Companies should also not overlook the requirement for a mandatory shareholder vote on remuneration policy, disclosed in the DRR, every three years starting at the first AGM at which a DRR under the new requirements is laid.
KPMG in the UK has prepared a guide to assist preparers with tackling the new requirements, which will be available for download shortly from our Financial Reporting Publications page. In the meantime, please speak to your usual KPMG contact for further assistance.
New UK GAAP: are you ready?
From 1 January 2015, current UK GAAP will be replaced with FRSs 100, 101 and 102. Companies with a December year end that have not early-adopted the new standards will need to prepare comparatives for their first set of new UK GAAP financial statements. This means that 1 January 2014 would be the ‘transition date’, i.e. the start of the comparative period in the first new UK GAAP accounts.
The new accounting regime will affect all UK companies other than those that apply EU-IFRS or report under the FRSSE regime.
KPMG in the UK has various publications and resources available that should assist companies with the transition process:
- Cutting through UK GAAP summarises new UK GAAP and notes the main differences to EU-IFRS and the current UK GAAP.
- GAAP conversion guidance and e-learning modules on FRSs 100-102 (available from the KPMG Learning Academy).
Links to all these resources and other examples of how we can help may be found on our New UK GAAP web site. Alternatively, please speak to your usual KPMG contact.
2013/14 UK GAAP Checklist
Our bi-annual UK GAAP checklist for 2013/14 is now available for download here.
IFRS newsletters and other publications
KPMG in the UK has recently published Breaking News UK, a new publication that summarises key developments in UK and International Financial Reporting Standards and UK company law. You may subscribe by sending an email to Breaking News UK.
KPMG IFRG Limited has published the following since the September/October 2013 Update, which are available on its web site at www.kpmgifrg.com:
- Guide to annual financial statements – Illustrative disclosures for banks (December 2013)
- US GAAP and IFRS: Fair Value Measurement – Questions and Answers (November 2013)
- IFRS compared to US GAAP: An overview (November 2013)
KPMG IFRG Limited also publishes In the Headlines, which provide information in relation to new exposure drafts and standards issued by the IASB, as well as any other relevant developments affecting current and future IFRS reporters.
- In the Headlines, Issue 17 – Focus areas for regulators
- In the Headlines, Issue 18 – Improving the quality of disclosures
- In the Headlines, Issue 19 – Hedge accounting
- In the Headlines, Issue 20 – Employee contributions
- In the Headlines, Issue 21 – Equity method in separate financial statements
- In the Headlines, Issue 22 – IFRS New standards
- In the Headlines, Issue 23 – Integrated reporting