[Draft Revised] UKEB Due Process Handbook

The UKEB does not accept any liability to any party for any loss, damage or costs howsoever arising, whether directly or indirectly, whether in contract, tort or otherwise from any action or decision taken (or not taken) as a result of any person relying on or otherwise using this document or arising from any omission from it.

© 202X All Rights Reserved

1. Introduction

Purpose

1.1 The Secretary of State for the Department of Business, Energy and Industrial Strategy (BEIS)¹ (Secretary of State) delegated the functions relating to influencing, endorsing and adopting international accounting standards for application in the UK to the UK Endorsement Board (UKEB) in May 2021².

1.2 In August 2022, given the UKEB’s responsibilities for endorsing and adopting international accounting standards, the Secretary of State also requested that the UKEB respond to the ISSB’s projects from that viewpoint, including how the sustainability standards interact with accounting standards.³

1.3 This Due Process Handbook (Handbook) sets out the due process the UKEB follows in carrying out its statutory functions, in relation to:⁴

1. thought leadership activities to influence and contribute to the development of a single set of international accounting standards;
2. the adoption of international accounting standards for use in the UK; and
3. periodic reviews of the impact of international accounting standards adopted for use in the UK.

1.4 It also sets out the due process steps that the UKEB follows for:

1. developing its own research programme;
2. setting up and operating advisory groups; and
3. ensuring it complies with the required due process steps in this Handbook;

which are processes which assist the UKEB in fulfilling its statutory functions and adhering to its Terms of Reference.

1.5 The UKEB ensures that its work is carried out in a proportionate way, paying due regard to the significance of standards for the UK, including the prevalence of the issue(s) they relate to, their impact on the UK capital market, on UK stakeholders more broadly, and on the UK long term public good.

1.6 The Secretary of State maintains a regular review of the performance of the UKEB in exercising its functions. The UK Financial Reporting Council (FRC) oversees the effective governance of the UKEB and its adherence to the due process set out in this Handbook. It also provides operational support. The FRC does not have the power to direct the UKEB in relation to the determination of its programme of work or the outcome of its technical decision-making⁵.

1.7 This Handbook is one of the key documents of the UKEB. A diagram illustrating the relationship between these documents can be found in Appendix A.

2. Statutory functions of the UKEB

2.1 The statutory functions exercisable by the Secretary of State are set out in the Statutory Instrument 2019 No. 685 (SI 2019/685)⁶. The main statutory functions, and the power of the Secretary of State to delegate those functions to a designated body, are set out below:

> Regulation 5 > > Responsibility for adoption of international accounting standards > > The Secretary of State is responsible for— > >

>
1. the adoption of international accounting standards for use within the United Kingdom, with a view to harmonising the financial information presented by the companies required by section 403(1) of the Companies Act 2006 to prepare their accounts in accordance with UK-adopted international accounting standards, in order to ensure— >
   >
   1. a high degree of transparency and international comparability of financial statements; and
   >
   2. the efficient allocation of capital, including the smooth functioning of capital markets in the United Kingdom; and
   >
   >
>
2. participating in and contributing to the development of a single set of international accounting standards.
>

> > Regulation 6 > > Power of the Secretary of State to adopt international accounting standards > >

>
1. The Secretary of State may adopt international accounting standards for use within the United Kingdom, in accordance with regulations 7 and 8.
>
2. In exceptional circumstances, the Secretary of State may exercise the power to adopt international accounting standards in accordance with paragraph (3) or (4).
>
3. Where the effect of regulation 7 is that an international accounting standard taken as a whole cannot be adopted, the Secretary of State may adopt an international accounting standard in part only, provided that— >
   >
   1. those parts of the standard which are not adopted are— >
      >
      1. severable from the standard so that the rest of the standard is operational;
      >
      2. severed only to the extent necessary to enable adoption of the rest of the standard for use within the United Kingdom; and
      >
      >
   >
   2. adoption of that part of the standard would be in compliance with regulation 7.
   >
   >
>
4. Where there is an option available as part of the standard, the Secretary of State may— >
   >
   1. make provision in the standard to extend the scope of undertakings eligible to use that option; and
   >
   2. make such extension of scope subject to an undertaking meeting criteria specified by the Secretary of State.
   >
   >
>

> > Regulation 7 > > Basis for adoption of international accounting standards > >

>
1. The Secretary of State may only adopt an international accounting standard under regulation 6 if the Secretary of State is of the view that, in relation to the form of the standard the Secretary of State intends to adopt— >
   >
   1. the standard is not contrary to either of the following principles— >
      >
      1. an undertaking’s accounts must give a true and fair view of the undertaking’s assets, liabilities, financial position and profit or loss;
      >
      2. consolidated accounts must give a true and fair view of the assets, liabilities, financial position and profit or loss of the undertakings included in the accounts taken as a whole, so far as concerns members of the undertaking;
      >
      >
   >
   2. the use of the standard is likely to be conducive to the long term public good in the United Kingdom; and
   >
   3. the standard meets the criteria of understandability, relevance, reliability and comparability required of the financial information needed for making economic decisions and assessing the stewardship of management.
   >
   >
>
2. In deciding whether the use of a standard is likely to be conducive to the long term public good in the United Kingdom, the Secretary of State must have regard, in particular, to the following matters— >
   >
   1. whether the use of the standard is likely to improve the quality of financial reporting;
   >
   2. the costs and benefits that are likely to result from the use of the standard; and
   >
   3. whether the use of the standard is likely to have an adverse effect on the economy of the United Kingdom, including on economic growth.
   >
   >
>
3. The Secretary of State may, by regulations made by statutory instrument, amend paragraph (2).
>
4. Regulations made under paragraph (3) are subject to annulment in pursuance of a resolution of either House of Parliament.
>

> > Regulation 8: > > Adoption of standards: consultation > > Before adopting an international accounting standard under regulation 6, the Secretary of State must consult such persons as the Secretary of State considers to be representative of those with an interest in the quality and availability of accounts, including users and preparers of accounts. > > Regulation 11: > > Periodic review by Secretary of State of impact of adopted standard > >

>
1. The Secretary of State must publish a statement setting out the Secretary of State’s policy on what amounts to a significant change in accounting practice, and must keep this policy statement under review.
>
2. Paragraphs (3) and (4) apply in relation to the adoption of any standard by the Secretary of State under regulation 6 which the Secretary of State considers likely to lead to a significant change in accounting practice.
>
3. The Secretary of State must— >
   >
   1. carry out a review of the impact of the adoption of the standard; and
   >
   2. publish a report setting out the conclusions of the review no later than 5 years after the date on which the standard takes effect (being the first day of the first financial year in respect of which it must be used).
   >
   >
>
4. The Secretary of State may carry out subsequent reviews from time to time, and in the event of doing so the Secretary of State must publish a report setting out the conclusions of any review conducted.
>

> > Regulation 13: > > Delegation of the Secretary of State’s functions > >

>
1. The Secretary of State may make regulations under this regulation (“delegation regulations”) for the purpose of enabling functions of the Secretary of State under Chapter 3 of this Part to be exercised by a body designated by the regulations.
>

> > Regulation 17: > > Reporting by the body > >

>
1. The body must, at least once in each calendar year for which the delegation regulations are in force, make a report to the Secretary of State on— >
   >
   1. the discharge of the functions transferred to it, and
   >
   2. such other matters as the Secretary of State may by regulations require.
   >
   >
>
2. Delegation regulations may modify paragraph (1) as it has effect in relation to the calendar year in which the regulations come into force or are revoked
>
3. The Secretary of State must lay before Parliament copies of each report received under this paragraph.
>

2.2 In May 2021, the statutory functions, set out in regulations 5-12 of the ‘principal regulations’ (2019/685), were delegated to the UKEB by Statutory Instrument 2021 No. 609 (SI 2021/609)⁷. The UKEB is, therefore, the ‘body’ referred to in Regulation 17 above.

> SI 2021/609 - Regulation 2 > > Delegation of the Secretary of State’s Functions > >

>
1. The UK Endorsement Board is designated for the purpose of enabling it to exercise functions of the Secretary of State under Chapter 3 of Part 2 of the principal Regulations.
>

3. Terms of Reference and Guiding Principles

Terms of Reference

3.1 The UKEB’s Terms of Reference⁸ (ToR) further elaborate on its role and responsibilities as they relate to the statutory functions. The UKEB’s key responsibilities include:

1. Considering and deciding whether to endorse and adopt⁹ new or amended international accounting standards for application in the UK¹⁰. This includes a formal endorsement criteria assessment as set out in SI 2019/685.
2. Influencing the development of IFRS. The UKEB will:
   1. follow, contribute to and monitor debates on IASB and IFRS Interpretations Committee (IFRIC) projects;
   2. consult with UK stakeholders to obtain their views;
   3. highlight any concerns to the IASB at different stages of their projects, including the development of the IASB’s agenda; and
   4. respond to the IASB’s draft proposals and consultations (including a request for information on an IASB post-implementation review).¹¹
3. Ensuring that there is an open and transparent due process including a public consultation process with UK stakeholders on items such as draft comment letters to the IASB or draft endorsement criteria assessments.
4. Reporting to the Secretary of State in relation to the performance of the UKEB’s statutory functions.
5. Reporting to the FRC Board in relation to the UKEB’s, governance and adherence to the Handbook.
6. Preparing, and submitting, a regulatory strategy each year, to the Secretary of State for approval.
7. Reviewing, at least once every five years, the UKEB’s Handbook to ensure that it meets the guiding principles set out in paragraph 3.3 of this Handbook, making recommendations for its revision following such consultation as is deemed appropriate by the UKEB.

3.2 The ToR are set by the Secretary of State and adopted by the UKEB.

Guiding Principles

3.3 The UKEB is required to act in accordance with the following guiding principles:

1. Accountability—by:
   1. consulting with UK stakeholders that are affected by financial reporting;
   2. undertaking activities and due process procedures in a timely and proportionate manner,
   3. paying due regard to the significance of standards for the UK, including the prevalence of the issue(s) they relate to, and their impact on the UK capital market, on UK stakeholders more broadly, and on the UK long term public good; and
   4. providing a rationale for the decisions it makes.
2. Independence—to ensure that it acts in the UK’s long term public good and is independent from other organisations or stakeholder groups, including the FRC and Government, in respect of the performance of its statutory functions, including its technical decision making.
3. Transparency—to undertake its activities in a transparent manner so that stakeholders are aware of current projects and understand how decisions have been made (e.g. by making formal comment letters submitted to the UKEB publicly available,¹² on a timely basis).
4. Thought leadership—to:
   1. lead and represent the UK on international accounting standards and reporting;
   2. represent UK views in international fora with the aim of influencing debate;
   3. engage with accounting and reporting and endorsement and adoption bodies in other jurisdictions, to influence and understand best practice; and
   4. pro-actively participate in the development of new global accounting standards, for example by undertaking research.

4. Governance activities

Quorum of attendance

4.1 Paragraph 5.1 of the UKEB’s ToR sets out the quorum for UKEB (Board) meetings. It requires that a minimum of sixty percent of the appointed Board members (Members) (including the UKEB Chair as an appointed Member) attend a meeting of the Board.

Transparency of meetings and stakeholder observers

4.2 The Board may hold meetings in person, virtually, or other similar means. In deciding the format of meeting, the UKEB Chair should take into consideration public access and attendance.

4.3 The meetings schedule for the calendar year is published on the UKEB website.

4.4 Public meetings are webcast live and recorded. The recordings are published on the UKEB website.

4.5 The Board may hold certain discussions in private or in the presence of invited observers with speaking rights only. For instance:

1. meetings held to discuss administrative and strategic issues, and matters shared in confidence by a third party; or
2. education sessions, held before public Board meetings, to improve Members’ understanding of new or complex proposals or standards.

4.6 Only Members and observers with speaking rights¹³ have the right to speak at Board meetings. Other individuals may be invited by the UKEB Chair to speak at all or part of any meeting, as and when appropriate.

Minutes of public Board meetings

4.7 Minutes of UKEB public meetings shall record the names of those present and in attendance, and summarise the Board discussion and decisions reached. They shall be published on the UKEB website, following their approval by the UKEB at its next public meeting.

4.8 A summary of decisions reached by the Board at each UKEB public meeting is approved by the Chair for publication on the UKEB website, usually within 10 working days of the meeting.

Minutes of private Board meetings

4.9 The minutes for each UKEB private meeting are circulated to Members for approval at the next private meeting. Once approved, extracts of the minutes are published and made available on the UKEB website.

Agenda papers

4.10 The Board agenda and papers for each public meeting are usually made available on the UKEB website no later than five working days¹⁴ before they are scheduled for discussion at a Board meeting. In exceptional circumstances, and with the prior approval of the UKEB Chair, Secretariat papers may be distributed closer to the meeting date.

4.11 In exceptional circumstances, and taking into consideration the Guiding Principles, the UKEB Chair may, at their absolute discretion, decide that all or part of certain Secretariat papers used for discussion by the Board at public meetings should not be made publicly available. Such circumstances may be, for example, commercial confidentiality or a risk of prejudice to the conduct of public affairs.

4.12 Board papers for discussion at private Board meetings are not made publicly available.

Keeping stakeholders informed

4.13 The UKEB is committed to conducting its activities in a transparent manner. The principal means of communication, between the UKEB and its stakeholders, is through public meetings, and the posting of relevant information and documents on the UKEB website.

4.14 In particular, the UKEB publishes on its website:

1. Its work plan, meeting schedules, agenda, papers for discussion at public Board meetings, and the minutes and recordings of those meetings;
2. Individual project information, including project initiation plans, the draft/final comment letters submitted to the IASB, draft/final Endorsement Criteria Assessments and project closure documents, such as stakeholder feedback and adoption statements.
3. Media and information releases relating to its activities.
4. Comment letters submitted to the UKEB, whether in response to consultation documents or unsolicited, unless the respondent has requested confidentiality.
5. Access to educational materials or webinars.

4.15 All public materials, including those related to the UKEB due process, are freely available on the website.

UKEB’s work plan

4.16 The UKEB’s work plan is mainly influenced by the IASB’s work plan. The Board, in consultation with the Technical Director, prioritises individual projects and resource allocation.

4.17 The UKEB’s work plan includes the projects mentioned below. This list is not in any order of priority.

1. Research projects derived from the UKEB’s thought leadership and research programme¹⁵.
2. Influencing projects¹⁶ that include technical issues identified by the IASB and by the IFRS Interpretations Committee that give rise to:
   1. proposals for new standards or major amendments to existing standards;
   2. proposals for minor or narrow-scope amendments to international accounting standards that meet the IASB’s criteria for packages of minor improvements or for narrow-scope amendments¹⁷;
   3. research proposals;
   4. requests for information (for example on the IASB’s post-implementation reviews or on consultations on the IASB’s work plan);
   5. draft IFRIC Interpretations; and
   6. IFRIC tentative agenda decisions on which the Board has decided to respond to the IFRS Interpretations Committee¹⁸.
3. The UKEB’s own post-implementation review projects¹⁹.
4. Endorsement projects²⁰, which include the endorsement and adoption of new or amended standards.
5. International Sustainability Standards Board (ISSB) projects from the viewpoint of the UKEB being the body responsible for endorsing and adopting international accounting standards, in the UK, including how the sustainability standards interact with accounting standards.

Prioritising technical projects in the UKEB’s work plan

4.18 In prioritising and allocating resources to individual projects, the Board shall consider whether the level of activities is proportionate to the importance, impact, and urgency of the issue being addressed, for users and preparers.

4.19 When assessing a project’s significance to the UK the UKEB will consider, but is not limited to, using the IASB’s assessment of the potential impact of a project.

Updating the UKEB’s work plan

4.20 The UKEB’s work plan is updated regularly to add or remove projects and to reflect the Board’s decisions in relation to estimated project timelines. It is presented for approval at the Board’s private meetings and, once approved, is uploaded onto the UKEB website.

Consulting on the UKEB’s work plan

4.21 The UKEB consults on its work plan every year as part of its consultation on its regulatory strategy.²¹

Voting process for endorsement decisions

4.22 A tentative vote on the endorsement and adoption of a standard²² must be taken at a quorate public Board meeting.²³

4.23 The formal written vote (in paper or electronic form) must be approved by at least two-thirds of appointed Members, including the Chair. Each member of the Board has one vote. In exceptional circumstances, if the Chair is not available, Members may elect another Member to act as an alternate Chair.

4.24 Following the conclusion of the written vote, the Chair shall publish the outcome of that vote within 3 working days. Where the result is to adopt a standard in whole or in part, the date of the Adoption Statement constitutes the date of the adoption of that standard by the UKEB.

4.25 Where the vote to adopt a standard does not reach the required majority, the Chair may, after consultation with external parties including DBIST, choose to ask the Board to return to the vote. This may include asking the Board to vote on part of the standard, amendment or interpretation if it appears that this will have the required support. A subsequent decision to adopt a standard, in whole or in part, must be made by at least two-thirds of the appointed Members.

4.26 Where a vote by the UKEB to adopt a standard, in whole or in part, has failed to reach the required majority and, in the opinion of the Chair there is no prospect of such majority being reached, the UKEB Chair must provide a written explanation of circumstances to the Secretary of State within 10 working days of the failure to adopt. The Secretary of State may require further evidence. The Chair must inform Members of any recommendations made by the Secretary of State.

Voting process for all other decisions

4.27 Other decisions made at public meetings do not require a formal written vote by the Board. They require the support of a simple majority of the Members present at a quorate public meeting.

Reviewing the Due Process Handbook

4.28 The Handbook will, under normal circumstances, be reviewed every five years. Revisions require Board discussion, and significant revisions will be considered for public consultation. Following approval of the revised Handbook at a public Board meeting, it will be published on the UKEB website.

Complaints process

4.29 The UKEB’s complaints policy is accessible on its website.²⁴ The UKEB reviews complaints on its standard of service, the behaviour of its personnel and on any action or lack of action by personnel affecting an individual or group when exercising or failing to exercise the UKEB’s functions.

5. Influencing process

Influencing objective

5.1 The UKEB shares a common objective with other national standard-setters: that of influencing the development and maintenance of high-quality, understandable, enforceable and globally accepted international accounting standards, after consulting²⁵ with the public and gathering stakeholder feedback.

Influencing projects

5.2 The UKEB’s influencing activities include the proactive monitoring by the Secretariat of a range of projects being undertaken by the IASB and IFRS Interpretations Committee. The Board discussions may result in the identification of specific concerns or areas of focus for future work by the UKEB²⁶ and, where appropriate, the UKEB may consider communicating this feedback to the IASB, to the IFRS Interpretations Committee²⁷ or to the ISSB.

5.3 In undertaking influencing activities, the UKEB will agree its proportionate approach to the project at a public Board meeting. This will be set out in a project initiation plan, which can be revised, as necessary, as the project progresses.²⁸

UK stakeholder input

5.4 The UKEB will undertake outreach activities, that are relevant and proportionate to the nature and impact of the project, in order to obtain input from a representative range of UK stakeholders.

5.5 For projects undertaken to develop a response to an IASB Exposure Draft, the UKEB will publish a Draft Comment Letter (DCL) on the UKEB website, usually accompanied by an Invitation to Comment (ITC). The consultation will be open for a period of 30 days, at the Board’s discretion. All responses to the consultation will be published on the website, unless a respondent has requested confidentiality.

5.6 The UKEB will reflect stakeholder feedback to the consultation into its Final Comment Letter (FCL), as appropriate. A summary of the formal consultation feedback, and evidence derived from other outreach activities, will be published on the UKEB website project page.

Influencing tentative agenda decisions (TADs)

5.7 The IFRS Interpretations Committee (IFRIC) publishes tentative agenda decisions to explain why a standard-setting project should not be added to the IASB’s work plan to address a question submitted. The comment period for a tentative agenda decision is normally 60 days²⁹.

5.8 The UKEB expects to respond to a limited number of tentative IFRIC agenda decisions. The Board may consider the degree of impact on UK companies; disagreement with the IFRIC analysis; or the usefulness of the explanations and clarifications included in the tentative agenda decision.

5.9 The Board might also choose to respond to provide public support for a tentative agenda decision, where others have expressed disagreement with the tentative agenda decision’s analysis.

5.10 If an issue discussed by IFRIC arises outside the usual Board meeting cycle, the UKEB Chair can approve initiation of work on the tentative agenda decision.

Influencing TAD projects

5.11 Given the shorter consultation period for a tentative agenda decision, the UKEB may consult with a representative group of stakeholders and/or with members of the UKEB’s standing and/or ad-hoc advisory groups.

5.12 After considering comments from UK stakeholders on tentative agenda decisions, the UKEB may decide to recommend that the IFRS Interpretations Committee:

1. finalises a tentative agenda decision³⁰;
2. revises (or abandons) a tentative agenda decision; or
3. refers the matter to the IASB to consider adding a standard-setting project to the IASB’s work plan.

6. Endorsement process

Endorsement objective

6.1 New or amended standards issued by the IASB are not part of UK-adopted international accounting standards unless or until the UKEB has endorsed and adopted those standards³¹.

6.2 The primary objective of endorsing and adopting international accounting standards for use in the UK as set out in SI 2019/685³² is to harmonise the financial information presented by relevant companies.

6.3 This is to ensure:

1. a high degree of transparency and international comparability of financial statements; and
2. the efficient allocation of capital, including the smooth functioning of capital markets in the United Kingdom.

6.4 The regulatory power embodied in the UKEB’s endorsement and adoption function lends weight and authority to the UKEB’s influencing activity.

Endorsement projects

6.5 The UKEB applies its own process before it decides whether to endorse and adopt a new or amended international accounting standard, to ensure the Board fulfils its statutory responsibility. This process may commence either in advance of a new or amended standard being issued by the IASB, or after it has been issued by the IASB, but before the standard is effective.

6.6 In undertaking endorsement activities, the UKEB will agree its proportionate approach at a public Board meeting. This will be set out in a project initiation plan, which can be revised, as necessary, as the project progresses.

UK stakeholder input

6.7 The UKEB will undertake outreach activities, relevant and proportionate to the nature and impact of the amendment or international accounting standard³³ being assessed, to obtain input from a representative range of UK stakeholders.

6.8 For all endorsement projects, the UKEB will publish a Draft Endorsement Criteria Assessment ([Draft] ECA) on the UKEB website. The consultation will be open for a period of 90 days, at the Board’s discretion. All responses to the consultation will be published on the website, unless a respondent has requested confidentiality.

6.9 The UKEB will reflect stakeholder feedback to the consultation into the Final Endorsement Criteria Assessment (ECA), as appropriate. A summary of the consultation feedback and evidence derived from other outreach activities will be published on the UKEB website project page.

[Draft] Endorsement Criteria Assessment

6.10 In general, a [Draft] ECA considers and addresses the following:

1. Introduction: legislative framework and approach to the assessment.
2. Rationale for the new or amended international accounting standard.
3. Whether or not the standard is not contrary to the principle that an entity’s accounts or consolidated accounts must give a true and fair view (SI 2019/685 Regulation 7(1)(a)).
4. Whether or not use of the new or amended standard is likely to be conducive to the long term public good in the UK (SI 2019/685 Regulation 7(1)(b)).
5. Whether or not the standard meets the criteria of relevance, reliability, comparability and understandability required of the financial information needed for making economic decisions and assessing the stewardship of management (SI 2019/685 Regulation 7(1)(c)).
6. Whether or not the new or amended standard is likely to lead to a significant change in accounting practice (refer to paragraph 8.3 of this Handbook) and, therefore, whether a post-implementation review will be required.

6.11 If a Member has significant concerns about a new or amended standard, and is concerned they may be unable to support the endorsement and adoption of a new or amended standard, and this is apparent during the drafting of the [Draft] ECA, the relevant matter(s) and concern(s) of the Member should be reflected in the [Draft] ECA, so that it is included in the public consultation.

Adoption package

6.12 The ‘adoption package’ consists of the: Final Endorsement Criteria Assessment (ECA); a summary of the consultation feedback and evidence derived from other outreach activities; an adoption statement; and the text of the UK-adopted international accounting standard that is the subject of the endorsement decision.

Adoption statement

6.13 The adoption statement includes:

1. a statement that the new or amended standard has been:
   1. adopted for use within the UK, in compliance with the requirements in Regulations 7 and 8 of SI 2019/685 and the reasons for this decision; or
   2. partially adopted in accordance with paragraph (3) of Regulation 6 of SI 2019/685 and the reasons for this decision;
2. when applicable, reasons for extending the scope of undertakings eligible to use an option in the standard in accordance with paragraph (4) of Regulation 6, setting out the full details;
3. a description of the financial years in respect of which that standard must be used;
4. the wording of the adopted standard (in a separate document);
5. a list of the Members that approved the adoption of the new or amended standard by written vote; and
6. in the event a Member dissents from voting to adopt a standard, a link to their written dissenting opinion.

6.14 On an annual basis, the UKEB updates the new or amended international accounting standards that have been adopted during the year into a consolidated text of UK-adopted international accounting standards³⁴.

Publication of the Board’s decision

6.15 The adoption statement and the text of the UK-adopted international accounting standard (that is the subject of the endorsement decision) are published on the UKEB website within 3 working days of completion of the written vote.³⁵

7. Thought leadership and research programme

Thought leadership objective

7.1 In applying the principle of thought leadership, the UKEB aims to:

1. Lead the UK debate on international accounting standards and reporting.
2. Represent UK views in international fora with the aim of influencing debate.
3. Engage with accounting and reporting and endorsement and adoption bodies in other jurisdictions, in order to improve influence and understand best practice.
4. Pro-actively participate in the development of new global accounting standards for example by undertaking research.

Leading the UK debate

7.2 The UKEB leads the UK debate on international accounting standards and reporting by:

1. Actively engaging and collaborating with UK stakeholders, where appropriate, during the process of developing its own views, with the aim of building robust and evidence-based recommendations.
2. Developing and presenting the UKEB’s own thought leadership material to promote UK views and lead the accounting debate at relevant international fora.

Participating proactively in the development of global standards

7.3 The UKEB proactively participates in the development of new global accounting standards by:

1. engaging with UK stakeholders and collecting evidence on relevant technical issues and communicating such evidence to the IASB and to other national standard-setters or regional organisations;
2. developing potential ways to improve or remedy deficiencies in international accounting standards; and
3. working proactively with others to stimulate debate on financial reporting matters on the IASB agenda at an early stage in the standard-setting process.

Representing UK views with the aim of influencing debate

7.4 The UKEB directly influences the IASB Board and maintains a global presence on the international financial reporting stage by:

1. Identifying and promoting the appointment of UK representatives to the IASB’s consultative groups.
2. Maintaining effective relationships, communication and presence with the IASB and other national standard-setters or regional organisations, to increase the understanding, awareness and support for UK views, thereby allowing the UKEB to lead on the accounting debate.
3. Communicating outcomes from international engagements to UK stakeholders, to assist in identifying concerns with international proposals.
4. Stimulating debate on a particular matter or technical issue by issuing articles, podcasts or videos.
5. Obtaining input from, and engaging with, stakeholders.

Research programme objective

7.5 Research is generally directed to identify specific issues associated with projects that are on the UKEB’s work plan. As such, research may be expected to have a problem-solving orientation,³⁶ by collecting evidence on the nature and extent of the perceived shortcomings of, and assessing potential ways to improve or to remedy a deficiency in, international accounting standards.

7.6 Other more explorative research may also be performed by the UKEB to include the consideration of broader financial reporting matters, such as how financial reporting is evolving, and to encourage international debate on financial reporting matters. This type of research may be formally added to the UKEB’s technical agenda.

7.7 Research may be undertaken by the UKEB on its own or collectively with others (such as national standard-setters or regional organisations, regulators, academics and other interested parties). In all cases, the independence of the UKEB will be maintained.

Research project

7.8 A research project may give rise to a single output or multiple outputs. The common categories of research outputs derived from the UKEB’s research programme include discussion papers, consultations or requests for information, research papers, bulletins and research studies.

7.9 The UKEB will identify issues for research and discussion and agree its proportionate approach at a public Board meeting. The UKEB approach will specify the nature of the project to be undertaken and whether the resulting research document will include the Board’s preliminary views. It will also confirm whether the document will be issued for public consultation with an invitation to comment (ITC). This will be set out in a project initiation plan, which can be revised, as necessary, as the project progresses.

UK stakeholder input

7.10 The UKEB will undertake outreach activities, relevant and proportionate to the nature and scope of the project, to obtain input from a representative range of UK stakeholders.

7.11 For research documents published on the UKEB website, with an Invitation to Comment (ITC), the consultation will be open for a period of 90 days, at the Board’s discretion. All responses to the consultation will be published on the website, unless a respondent has requested confidentiality.

7.12 The UKEB will reflect stakeholder feedback to the consultation into its final research document, as appropriate. A summary of the consultation feedback and evidence derived from other outreach activities will be published on the UKEB website project page.

8. Post-implementation reviews

Purpose

8.1 A standard adopted under Regulation 6 that is likely to lead to a ‘significant change in accounting practice’, is subject to paragraph 3 of Regulation 11 which requires the UKEB to:

1. carry out a review of the impact of the adoption of the standard; and
2. publish a report setting out the conclusions of the review no later than 5 years after the date on which the standard takes effect (being the first day of the first financial year in respect of which it must be used).

8.2 The UKEB may also decide to initiate subsequent reviews of standards where there are significant unexpected changes to financial reporting or unexpected costs or challenges arising from their application. By exception, the UKEB may initiate proportionate subsequent reviews where this supports the UKEB in fulfilling its purpose.

‘Significant change in accounting practice’ policy

8.3 Whether or not a standard adopted under Regulation 6 is likely to lead to a ‘significant change in accounting practice’ will usually depend on the expected impact on UK entities of the standard and will require judgement. The UKEB will take the following indicators into account when developing its view on this matter:

1. The scale and nature of the change to recognition and measurement;
2. The population of UK companies affected and their economic significance;
3. The population of UK companies affected which are required to prepare their accounts using UK-adopted international accounting standards.

8.4 The UKEB will explain in the [Draft] ECA/ECA whether or not the new or amended standard meets the criteria requiring a post-implementation review (PIR) and, if so, the likely timing of that review, in line with the requirements in this section.

IASB PIR influencing projects

8.5 The IASB conducts PIRs to assess the effect of a new or amended standard³⁷. This review begins after the new requirements have been applied internationally for some time, normally within five years of the effective date of the new requirements³⁸. The IASB commences its PIR with an RFI which sets out the initial identification and assessment of the matters to be examined.

8.6 In undertaking PIR influencing activities, the UKEB will agree its proportionate approach at a public Board meeting. This will be set out in a project initiation plan, which can be revised, as necessary, as the project progresses.

UK stakeholder input

8.7 The UKEB will undertake outreach activities, relevant and proportionate to the nature and impact of the project, to obtain input from a representative range of UK stakeholders.

8.8 The UKEB will promote awareness of the IASB PIR on its website and publish a Draft Comment Letter (DCL) on the UKEB website, which may be accompanied by an Invitation to Comment (ITC). The consultation will be open for a period of 30 days, at the Board’s discretion. All responses to the consultation will be published on the website, unless a respondent has requested confidentiality.

8.9 The UKEB will reflect stakeholder feedback to the consultation into its Final Comment Letter (FCL), as appropriate. A summary of the consultation feedback and evidence derived from other outreach activities will be published on the UKEB website project page.

Statutory reporting requirements

8.10 Once the IASB has completed its PIR for a standard that the UKEB determined was likely to lead to a ‘significant change in accounting practice’, the UKEB explains in a separate report³⁹ how the UKEB feedback has been addressed by the IASB, as well as any additional UK-specific impacts of adoption of that standard by the UKEB. This report will include:

1. an overview of the IASB PIR and of the UKEB’s influencing process and its timeline;
2. background information to the standard under review;
3. a summary of the evidence gathered and findings;
4. the UKEB’s conclusions from the review; and
5. recommendations or steps it plans to take, if any, as a result of the review.

8.11 If the IASB has commenced but not finalised its PIR in time for the UKEB to comply with its PIR obligations, (i.e. no later than 5 years after the date on which the standard takes effect), the UKEB will, within that timeframe, issue a report describing the impact of the adoption of the standard and its preliminary conclusions on the review⁴⁰. Once the IASB has completed its PIR, the UKEB will consider issuing an updated report.

8.12 In the case of a standard that the UKEB determined was likely to lead to a ‘significant change in accounting practice’, if the IASB does not undertake a PIR, the UKEB is nonetheless required to undertake its own review. That review must be completed no later than 5 years after the date on which the international accounting standard took effect in the UK.

8.13 If the IASB undertakes a PIR of a standard that the UKEB had determined was not likely to lead to a ‘significant change in accounting practice’, the UKEB is not required to carry out its own PIR but may decide to influence the IASB’s PIR.

UKEB PIR project

8.14 In undertaking a UKEB PIR, the UKEB will set out the scope of the review and agree its proportionate approach at a public Board meeting. This will be set out in a project initiation plan, which can be revised, as necessary, as the project progresses.

UK stakeholder input

8.15 The UKEB will undertake targeted outreach activities, relevant and proportionate to the nature and impact of the project, to obtain input from a representative range of UK stakeholders, and to help the UKEB establish the scope and potential areas for consultation during the review that may be included in its public Request for Information (RfI).

8.16 When the UKEB is satisfied that it has sufficient information to establish the scope of the review, it will issue an RfI on the PIR of the UK-adopted international accounting standard. The consultation will be open for a period of 90 days, at the Board’s discretion. All responses to the consultation will be published on the website, unless a respondent has requested confidentiality.

8.17 The UKEB will reflect stakeholder feedback to the consultation into its final report, as appropriate. The content of the final report will generally include:

1. an overview of the UKEB post-implementation review process and its timeline;
2. background information to the UK-adopted international accounting standard under review;
3. a summary of the evidence gathered and findings;
4. a summary of the outreach activities and sources of stakeholder comments (after publication of the request for information); and
5. the UKEB’s conclusions from the review.

9. Advisory and working groups

Purpose

9.1 The UKEB can appoint its own standing or ad-hoc advisory groups and working groups to provide expert, specialist technical advice and other input on UKEB projects or other technical matters (e.g. UK-specific implementation issues).

9.2 Advisory groups are established to enable the Board to hear directly from stakeholders on key matters, and either have an ongoing life or are dedicated to particularly significant projects. Working groups provide specialised technical input from stakeholders into the work of the Secretariat, which will provide updates to the Board on the input it receives.

9.3 The groups are not decision-making bodies. The groups comprise experts who can:

1. provide advice and recommendations on specific agenda projects for example by sharing:
   1. knowledge and understanding of financial reporting issues and/or concerns raised by UK stakeholders; and
   2. up-to-date insight into developments and market sentiment on financial reporting matters, helping develop a timely understanding of any concern areas;
2. deliver best practice, practical experience and expertise as well as potential solutions that can improve the quality of information; and
3. help to amplify the UKEB’s views across the UK reporting community and drive the debate of contemporary issues.

9.4 In carrying out their work, groups have regard to the UKEB’s Terms of Reference and Guiding Principles (refer to Section 3 of this Handbook).

Approval for the creation or dissolution of an advisory or working group

9.5 The establishment or dissolution of an advisory or working group is approved at a Board meeting.

Terms of reference

9.6 Each advisory group has its own Terms of Reference, setting out the group’s purpose, rules, arrangements for meetings and papers, and the most recent date of approval of the group’s ToR. Amendments to a group’s ToR must be approved at a Board meeting.

Recruitment

9.7 Recruitment is via a public advertisement, inviting applications. Appointments are based on interviews. The Board retains the option to make the occasional direct appointment; however, this would generally be in exceptional circumstances, for example when there are few experts in a particular area or no other expert is forthcoming.

9.8 The UKEB seeks to ensure that each groups’ membership is diverse in terms of skills, experience, background, gender, race, and other characteristics. The UKEB will also seek to ensure that the groups retain an appropriate balance as their membership changes.

Appendix A: Relationship between Statutory Instruments (SI) and other governance documents for the UK Endorsement Board

Contact Us
UK Endorsement Board
13th Floor, 1 Harbour Exchange | Harbour Exchange Square | London | E14 9GE
www.endorsement-board.uk

---