[Global Financial Insights] FRC Releases Report on the Quality of Key Local Audits and More

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

1. FRC Report on Local Audit Quality: The Financial Reporting Council (FRC) released its annual report on the quality of local audits, focusing on the recovery of the local audit system. The FRC inspected eight audits, mainly in the NHS, and will continue to prioritize clearing the audit backlog, extending its strategy through 2023/24.
2. IFRS Guide on Sustainability Disclosures: The IFRS Foundation released a guide to help companies identify and disclose material sustainability risks and opportunities impacting financial performance. It promotes integrated thinking, aligns materiality judgments with financial reports, and offers guidance on harmonizing ISSB Standards with frameworks like ESRS and GRI for global implementation.
3. FASB Seeks Feedback on Financial KPIs: The FASB issued an Invitation to Comment (ITC) to gather stakeholder feedback on the standardization and disclosure of Financial Key Performance Indicators (KPIs) in GAAP financial statements. Stakeholders are invited to provide input on which KPIs should be included by April 30, 2025.
4. IAC Meeting Summary – November 7, 2024: The Investor Advisory Committee (IAC) discussed FASB projects and provided feedback for the 2024 Agenda Consultation. Topics included enhanced disclosures on business combinations, company spending, lending, deposits, insurance, KPIs, and geography/product disclosures. The next IAC meeting is set for Q2 2025.
5. FASB Seeks Feedback on Government Grant Accounting: The FASB proposed new guidance for accounting government grants, aiming to incorporate IAS 20 into U.S. GAAP with improvements. The proposal covers grants related to assets and income, with disclosure requirements on grant nature, policies, and terms. Stakeholder feedback is requested by March 31, 2025.
6. SEC Charges Gambling Company with FCPA Violations: The SEC charged a gambling company for violating the Foreign Corrupt Practices Act, involving $2.5 million in bribes to Japanese officials between 2017 and 2019. The company paid a $4 million civil penalty and a $10 million criminal fine, highlighting the importance of internal controls to prevent corruption.
7. SEC Charges Executives in Indian Energy Bribery Scheme: The SEC charged three executives in a bribery scheme involving two Indian renewable energy companies. The executives paid bribes to secure a solar project, misleading investors about anti-corruption policies. The SEC seeks penalties and bans, while the DOJ has filed criminal charges.

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