Hit the road Positive leadership for troubled times - ICAEW

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FINANCE & MANAGEMENT FINANCIAL REPORTING You can find out more on the latest from the Financial Reporting Faculty, including UK GAAP and IFRS standards and consultations, at icaew.com/frf THE FUTURE OF UK GAAP The consultation on the future of UK GAAP closed on 30 April. The ASB will be working their way through their extensive mailbag and gradually moving towards issuing the final standards that will replace much of existing UK GAAP. It is hoped that these new standards will be published before the end of the year. If they are, entities with calendar year-ends will be able to adopt them for accounting periods beginning on or after 1 January 2013; however the new standards will not be mandatory until 2015. To find out more about the ASB’s proposals and to read ICAEW’s response to them visit icaew.com/FutureOfUKGaap. This page also contains a host of other useful information including the Financial Reporting Faculty’s FAQs on the proposed changes and recordings of recent faculty events and webinars. ON-GOING IASB PROJECTS The long-awaited, new IFRSs on leasing, revenue recognition and financial instruments are unlikely to arrive any time soon. According to the latest IASB work plan, all we can expect in the first half of 2012 is a “review draft” of its general hedge accounting standard. New exposure drafts on leasing; impairment of financial assets; classification and measurement of financial assets; and macro hedging are now not expected THE BIG UPDATE The Tax Faculty has issued TAXGUIDE 2/12, its latest memorandum of bilateral meetings and correspondence with HMRC, with particular emphasis on employment taxes and NICs. Coverage includes: Policy and technical areas – around cars, both conventional and electric, used for business; readily convertible assets (RCAs); company directors’ SSP; and mariners. Cross border issues – including NIC matters arising from changes to EU regulations on 1 May 2010; short trips overseas; forms E101/A1; voluntary payment of Class 2 NIC; concurrent employment and self-employment in different countries; and self-employment abroad. Administrative and operational matter – including P11D; nil/ annual/ quarterly PAYE schemes; NIC arrears; requests for lists of PAYE/NIC payments; NIC technical inquiries to HMRC; copy code numbers; and slow post and email issues. The TAXGUIDE is available at ion.icaew.com/TaxFaculty/24293 until the second half of the year. This means that new standards on each of these topics – and revenue recognition – are now not expected before 2013. WHERE NEXT FOR IASB? The IASB is currently working its way through the 250 or so comment letters that it received in response to its recent consultation on its future agenda. The consultation has yet to conclude, but in a number of recent speeches IASB chairman Hans Hoogervorst has alluded to some common themes that are emerging. While nothing is certain at this stage, the direction of travel is becoming clearer. While there have been widespread calls for a period of calm after the rapid change of recent years, many respondents urged the IASB to prioritise completing its on-going projects on revenue recognition, leases and financial instruments and to finalise revisions to the conceptual framework. Other common themes include a desire to tackle what many see as “disclosure overload” and a feeling that the IASB must decide on a firmer theoretical underpinning of the concept of other comprehensive income. So the overriding message seems to be that the IASB should finish the important projects in progress – then take their foot off the accelerator for a little while, only attending to the issues that need fixing and no more. A number of smaller projects – such as agriculture, business combinations under common control, hyperinflation and rate-regulated industries – also featured highly on many respondents’ wish lists. These projects may well be on the IASB’s future agenda. IFRS UPDATE WEBINAR On 27 June the Financial Reporting Faculty will host an IFRS update webinar. It will give an overview of recent IFRS developments and details on the outcome of the IASB’s recent consultation on its future work programme. The webinar is free for Financial Reporting Faculty members; non-faculty members pay £25. EMPLOYMENT LAW This section is an extract from the monthly bulletin of law firm Herbert Smith – but does not constitute legal advice and should not be relied upon as such. See herbertsmith.com REDUNDANCY SELECTION POOLS Employers should take extra care when deciding whether a redundancy selection pool of just one person is appropriate. The EAT has confirmed that, where the employer has genuinely applied its mind to the issue, it is difficult but not impossible for an employee to challenge a selection pool as unfair. Tribunals will scrutinise more closely the use of a selection pool that is the same size as the number of roles to be made redundant, so employers will need to have strong reasons for not using a wider pool. In Capita Hartshead v Byard the employer employed four actuaries – but the selection pool only included the actuary whose clients had defected, on the grounds that there was a risk of losing more clients if they were transferred between actuaries. The EAT upheld the Employment Tribunal’s (ET) ruling that the selection pool of one was unfair, given that the risk of client departure was slight, the other actuaries did similar work and the claimant’s work had been praised. Employers should take care not to exaggerate the commercial risks in selecting from a wider pool. In contrast, in Halpin v Sandpiper Books the EAT ruled that it was not unfair to use a selection pool of just one 30 MAY 2012 FINANCE & MANAGEMENT
TECHNICAL RED TAPE UPDATE The new financial year on 6 April brought changes to employment red tape. Here are some of the new rules. employee when it was ceasing its operations in China and the claimant was the only individual employed in China. CONSULTATIONS: FLEXIBILITY IN THE PIPELINE? Under EU-derived law, employers are required to consult in good time about ways of avoiding or minimising collective redundancies and mitigating the consequences. But in USA v Nolan the European Court of Justice (ECJ) has been asked to decide whether consultation is required before an employer makes a strategic business decision that may lead to redundancies or only once the employer has made that decision (so that consultation only covers the redundancy proposals themselves). Current UK law takes the former, more onerous approach, at least where there is a business closure (UK Coal Mining v NUM). The ECJ’s judgment is expected this Summer, and the Advocate-General’s Opinion (which is not binding on the ECJ but is often followed) has just been published. If adopted by the Court, it would be good news for employers. The Opinion rejects the suggestion that consultation is necessarily required prior to a strategic business decision to Unfair dismissal Employees whose period of continuous employment starts on or after 6 April 2012 will have to accrue two years’ service, instead of one, to be eligible for unfair dismissal, unless they have prior continuous service – for example, if they’ve been transferred under TUPE. Tribunals The maximum deposit order a tribunal can make if a party wishes to proceed with a weak case has increased from £500 to £1,000. The maximum costs a tribunal can award without detailed assessment has risen from £10,000 to £20,000. Witness statements are now to be taken as read unless the tribunal judge directs otherwise. Witness expenses are no longer state-funded. The tribunal will have power to direct parties to pay and order the losing party to reimburse the successful party for these costs. Unfair dismissal cases are being heard by a judge alone unless the judge directs lay members should also sit. Statutory benefits The flat rate of statutory maternity pay, paternity pay and adoption pay has increased from £128.73 to £135.45. Statutory sick pay has gone from £81.60 to £85.85. The weekly earnings threshold is now £107 (from £102). Apprenticeships Under the Apprenticeships, Skills, Children and Learning Act 2009 employers can now use an apprenticeship agreement (a contract of service rather than a common law contract of apprenticeship) provided it includes the information prescribed by the Apprenticeships Regulations 2012. These require the agreement to contain the basic terms of employment given to employees under section 1 of the Employment Rights Act 1996 and to include a statement of the skill, trade or occupation for which the apprentice is being trained. close a workplace, even if in practice this means that consultation would be limited to ways of mitigating the consequences. However, an employer could still be in breach of the obligation to consult if a strategic decision (for example a closure decision by a parent company) were made without leaving the employer any time in which to contemplate redundancies and genuinely consult. This suggests a slightly different focus – on whether the consultation has been effective rather than on issues of timing. It will be interesting to see whether the ECJ agrees. CONSULTATIONS AND CONSIDERATIONS Board gender diversity The European Commission is consulting on possible action at EU level, including legislative measures, to redress the continuing gender imbalance on corporate boards in Europe. It is expected to take a decision on further action later in 2012. In the UK, Lord Davies’s first annual progress report following his independent review shows that last year saw the largest ever annual increase in the number of women on boards. Women now account for 15.6% of all FTSE 100 directorships, up from 12.5%. Executive remuneration A Government consultation paper on proposals to increase shareholder voting rights in relation to executive remuneration for UK incorporated listed companies includes four key measures: An annual binding vote on future remuneration policy. The possibility of requiring a higher than 50% majority to approve future remuneration policy. An annual advisory vote on the implementation of the remuneration policy over the previous year. A binding vote on exit payments of more than one year’s base salary. The Government expects legislation on the new shareholder voting rights to come into force in spring 2013, with the provisions applying to reporting years ending after 1 October 2013. FINANCE & MANAGEMENT MAY 2012 31
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