[Global Financial Insights] FRC Releases 2024 Annual Review on Corporate Governance Reporting and More

This week’s Global Financial Insights covers significant updates in financial reporting and auditing practices:

1. FRC 2024 Corporate Governance Review: The FRC’s 2024 review stresses the need for high-quality explanations under the ‘comply or explain’ approach and highlights new requirements for risk management and internal controls reporting starting in 2026. Resources will be provided to support the companies’ transition.
2. IASB November 2024 update: The IASB’s November 2024 meeting refined proposals for Management Commentary, simplifying disclosure objectives and aligning materiality with the Conceptual Framework. They also decided to provide disclosure relief for the third edition of IFRS for SMEs, to be issued in 2025.
3. IASB November 2024 Taxonomy update: The IASB’s November 2024 meeting discussed updates to the IFRS Taxonomy, including detailed modelling for Management-Defined Performance Measures (MPMs) and adjustments to the Statement of Profit or Loss presentation.
4. FASB ASU on induced conversion: FASB issued an update to clarify induced conversion guidance under Subtopic 470-20, addressing concerns around cash conversions and non-convertible debt. The update takes effect for periods starting after December 15, 2025, with early adoption allowed.
5. FASB seeks feedback on expense disaggregation standard: FASB proposed amendments to clarify the effective dates for ASU No. 2024-03 on income statement expense disaggregation. The standard will be effective for public business entities after December 15, 2026, with early adoption allowed, and is open for public comment for 15 days.
6. FASB PIR Report on revenue recognition: FASB’s post-implementation review of the Revenue from Contracts with Customers standard confirms that most stakeholders view its benefits as outweighing compliance costs. The report highlights insights on implementation support and feedback-driven improvements.

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