Response 2 - ICAEW

ICAEW REPRESENTATION 12/25 Issued 5 February 2025

ICAEW welcomes the opportunity to comment on the UKEB Regulatory Strategy 2025/28 (Draft) published by the UK Endorsement Board on 17 December 2024, a copy of which is available from this link.

We note the UK Endorsement Board's (UKEB) successes since it was established in 2021 and congratulate the UKEB on what it has achieved in this time. With regard to the 2025/28 draft strategy, we note it is written at a high level with few details of the UKEB's workplan. While we acknowledge that a strategy document is usually presented at such a level, it is difficult to comment on matters relevant to the UKEB's strategy without sufficient information on how the UKEB determines what it will prioritise. We would have found it useful to see more detail on the UKEB's approach to prioritisation of projects, resource allocation, stakeholder engagement and assessment of the Board's impact. We recommend that this is considered in future consultations. In our view the UKEB's key contribution to the UK's long-term public good is likely to be its work to influence the International Accounting Standards Board as international accounting standards are developed and amended. With this in mind, we have made some comments on how the UKEB might prioritise its activities.

This response of 5 February 2025 has been prepared by the ICAEW Corporate Reporting Faculty. Recognised internationally as a leading authority on corporate reporting, the faculty, through its Financial and Non-Financial Reporting committees, is responsible for formulating ICAEW policy on financial and non-financial reporting issues and makes submissions to standard setters and other external bodies on behalf of ICAEW. The faculty provides an extensive range of services to its members including providing practical assistance with common corporate reporting problems.

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KEY POINTS

1ICAEW welcomes the opportunity to comment on the UK Endorsement Board's (UKEB) Regulatory Strategy 2025/28 (Draft). We note the UKEB's successes since it was established in 2021 as outlined in the Chair's introduction to the strategy and congratulate the UKEB on what it has achieved in that time.

2The draft strategy is written at a high level. While we understand that a strategy document is usually presented at such a level, we would find it useful to see more detail on the UKEB's approach to prioritisation of projects, resource allocation, stakeholder engagement and assessment of the Board's impact. Additionally, we would like to understand how the draft strategy has been informed by previous strategies and lessons learned by the UKEB in its first few years of operation. Without such information, it is difficult to provide substantial comment on the UKEB's draft strategy.

3Of the two draft strategic objectives for 2025/28, in our view the UKEB's key contribution to the UK's long-term public good is likely to be its work to influence the International Accounting Standards Board (IASB) during the development of new or amended international accounting standards. With this in mind, we have made some comments on how the UKEB might think about how it prioritises its activities and engages with stakeholders.

ANSWERS TO SPECIFIC QUESTIONS

Question 1

Do you have any comments on the UKEB’s 2025/28 (Draft) Regulatory Strategy? Please provide your rationale and any supporting comments, as necessary.

Use of resources

4We note the strategy is written at a high level, with few details of the UKEB's workplan. While we acknowledge that a strategy document is usually presented at such a level, it is difficult to comment on matters relevant to the UKEB's strategy without sufficient information on how it determines its priorities.

5We would expect the UKEB to allocate a reasonable proportion of its resources to its influencing activities. While a wide range of stakeholders can contribute to the development of international accounting standards by engaging with consultations, the UKEB is in a unique position to influence the IASB on behalf of UK stakeholders at an earlier stage ie, as the IASB develops or amends its standards.

6As noted in our response to the consultation on the UKEB's draft 2022/23 Regulatory Strategy, in our view the assessment of new and amended international accounting standards for adoption in the UK is likely to be relatively straightforward. We anticipate that, when assessing the standards for adoption in the UK, the UKEB will see the outcome of its work to influence the development of international accounting standards. Through this early influence and stakeholder engagement, we anticipate that the UKEB will minimise the risk of non-adoption and the need for carve-outs and would expect this to be reflected in the allocation of the UKEB's resources to its various projects.

7To allow us to comment further, it would be useful to have a better understanding of how the UKEB intends to prioritise and allocate its resources to the different strands of its activities. In particular, we would want to understand how the UKEB prioritises which influencing, research and thought leadership projects to undertake, and what proportion of the UKEB's resources are allocated to these activities. The UKEB may wish to consider this recommendation for more detail in future consultations.

Stakeholder engagement

8As noted in paragraph 5 above, in our view the UKEB is in a unique position of being able to influence the development of new or amended international accounting standards before they reach the consultation stage. Effective stakeholder engagement at this early stage is critical to ensure that the UKEB can provide the IASB with a complete picture of the concerns of UK stakeholders as it develops or amends standards.

9We have heard comments that stakeholders would appreciate clarity on which projects they can contribute to at this early 'influencing' stage and how they might find out about such projects. We therefore find it useful to understand how the UKEB determines the projects for which it will undertake outreach work, at what point in a project such work will be performed, and how the Board ensures stakeholders outside its advisory and working groups are aware of opportunities to contribute.

Assessing impact

10The section of the draft strategy on 'Assessing Our Impact' gives the impression that the UKEB's impact will largely be assessed through consideration of qualitative 'key elements'.

11We acknowledge that it might be challenging for the UKEB to assess the impact of certain aspects of its work. For example, it may be difficult to assess or quantify the UKEB's impact on IASB projects where it is one of several entities seeking to influence the IASB.

12That said, it is not clear how consideration of the 'key elements' outlined in the draft strategy might enable the UKEB to identify where it can improve its impact, or where its work is making the most significant impact (which we expect will be useful information when the UKEB decides what to prioritise). We encourage the UKEB to consider how it might use more specific indicators to assess its impact.

Reflection on the endorsement process

13As the UKEB has now undertaken several assessments of new and amended international accounting standards for adoption in the UK, it would be useful to understand how, and to what extent, the UKEB has adapted its strategy in response to its newly-gained endorsement experience.

14For example, by reflecting on draft Endorsement Criteria Assessment consultations, the UKEB might be able to further develop its approach to stakeholder engagement.

15As a second example, by reflecting on previous endorsement projects, the UKEB may be able to enhance its approach to the identification and endorsement of 'uncontentious' amendments to international accounting standards.

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