Issue no. 55 I February 2021

Issue no. 55 I February 2021

The year gone by has witnessed various developments relating to accounting and financial reporting including those addressing effects of the pandemic (COVID-19). Despite the challenges posed by business disruptions and remote working, the expectation from the preparers of financial statements and auditors has been to continue applying existing accounting and auditing guidance and comply with all professional standards. With this objective and to provide an overview of how the accounting profession is tackling the challenges posed by COVID-19 while continuing to provide high-quality financial information to investors, recently, the American Institute of CPAs (AICPA) hosted its annual conference. In addition to financial reporting effects of COVID-19, highlights from the conference include specific observations on application of revenue, leases and credit losses standards and important auditing developments. In this edition of Accounting and Auditing Update (AAU), we aim to highlight key financial reporting matters to be considered by companies and related audit matters as discussed at the conference.

Corporate reporting is evolving to provide investors with a broader perspective on business performance. With an aim to address the reporting gap between the expectations of investors and communication by an organisation, the International Integrated Reporting Council (IIRC) issued the International Integrated Reporting <IR> Framework in December 2013. To facilitate more decision useful reporting, recently, the IIRC has issued revisions to the <IR> Framework. The revisions to the <IR> Framework focussed on a simplification of the required statement of responsibility for the integrated report, improved insight into the quality and integrity of the underlying reporting process, a clearer distinction between outputs and outcomes with examples and a greater emphasis on the balanced reporting of outcomes and value preservation and erosion scenarios. Our article summarises these new developments in the <IR> Framework.

Recently, the International Auditing and Assurance Standards Board (IAASB) has issued a discussion paper to deliberate and gather perspectives from all the stakeholders about the role of the auditor in relation to fraud and going concern in an audit of financial statements. The purpose of the discussion paper is to obtain input on matters about whether the auditing standards relating to fraud and going concern reman fit-for-purpose in the current environment. Our article on the topic provides an overview of the key challenges and issues regarding the expectation gap relating to the role of an auditor, and areas where IAASB seek responses.

As is the case each month, we have also included a regular round-up of some recent regulatory updates in India and internationally.

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