Experian

Brexit Disclosures

As the Brexit uncertainty continues, we look at how Brexit has been disclosed in a sample of FTSE 350 annual report and accounts.

As things currently stand, ‘exit day’ is still scheduled to be on 29 March 2019, although the likelihood of this date slipping appears to be increasing. The Government has issued the statutory instrument (SI 2019/145), Accounts and Reports (Amendment) (EU Exit) Regulations 2018, which effectively cuts the UK’s ties with the EEA (European Economic Area). The changes proposed will be made to the Companies Act 2006 and secondary legislation, making EEA states third countries under UK law. The Government has also issued another SI The Statutory Auditors and Third Country Auditors(Amendment) (EU Exit) Regulations 2019 dealing with statutory auditors and third country auditors. 

The Government has issued a number of additional pieces of guidance on how companies should operate in the event of a no-deal Brexit occurring on 29 March, on topics ranging from competition, insolvency and intellectual property, to the recognition of professional qualifications.

The Financial Reporting Council (FRC) and the Department for Business, Energy and Industrial Strategy (BEIS) have published letters for auditors and accountants to share information in case there is no deal for leaving the EU by Friday 29 March 2019.

It remains to be seen when these changes will actually come into force, and if further discussions with the European Union will change proposals that have been made. Needless to say our technical team will follow developments closely and ensure legislation and commentaries on the Croner-i Tax and Accounting platform are updated as soon as possible.

UK Corporate Governance Code

Corporate governance has faced immense scrutiny recently following the high-profile collapses of BHS in 2016 and Carillion in January 2018, with MPs, the media and the public blaming the actions of the directors and auditors and all asking the same question… where was the board?

MPs, shareholders and the public have also been asking how effective the Financial Reporting Council’s (FRC) Corporate Governance Code has been in deterring poor corporate governance at the UK’s largest companies, following a raft of corporate failures. In July 2018 the FRC released a new UK Corporate Governance Code, (the Code) for listed companies in the UK. It also issued an update on its Guidance on Board Effectiveness. The Code is applicable to all companies with a premium listing, whether incorporated in the UK or elsewhere.

The new Code applies to accounting periods beginning on or after 1 January 2019, so with that in mind, this Common Practices report looks at how companies have been reporting on the current Code. We look at some good examples of reporting and look at the “explanations” made regarding compliance with the Code. We also discuss what’s new in the 2018 Code to enable readers to prepare for the upcoming changes.

The annual reports of 25 UK listed companies with year-ends between 31 December 2017 and 30 September 2018 were selected at random for review, across a range of industries. The full list of sample companies detailing company name, period end, auditor and industry classification can be found at the end of this report.

Segment Reporting

The requirement to disclose information on operating segments has been around for a number of years, firstly under IAS 14 Segment Reporting, and currently under IFRS 8 Operating Segments which has been applicable for entities with publicly traded debt or equity instruments (or those which are about to publicly trade) since 2009.
 
This report looks at the operating segment disclosures in the consolidated financial statements of 20 UK listed companies selected at random.
 

Experian plc Monitor

Experian plc Annual Report 2018
CR Monitor Issue: 
2018/1014
Company covered: 
Experian plc
Period End: 
31 March, 2018
Report issued on 16 October 2018 covered the following practice issues:
Pronouncements
Extended disclosure in respect of the expected impacts of IFRS 9 "Financial instruments", IFRS 15 "Revenue from contracts with customers" and IFRS 16 "Leases".
Change
Disclosure of changes to segmental reporting disclosures.
Change
Discussion of key audit matters included in audit report.
Change
Reassessment of deferred tax linked to reduction in US tax rate.
Change
Introduction of related party disclosures in respect of associated undertaking.

Fair value measurement information under IFRS

IFRS 13 “Fair value measurement” sets out a single consistent framework for measuring fair value within IFRS financial statements and outlines a standardised set of disclosures in respect of fair value measurements. IFRS 13 has been mandatory now for some years, with application being required for annual reporting periods beginning on or after 1 January 2013. This report sets out the results of how requirements of the standard have been put into practice, both in terms of measurement and disclosure, in the consolidated financial statements of 139 large public limited companies with year ends between 31 March 2016 and 1 April 2017. It is not an exhaustive study of all aspects of IFRS 13 application and its conclusions are limited to our findings in respect of the areas analysed within the financial statements reviewed.

Experian plc Monitor

Experian plc Annual Report 2017
CR Monitor Issue: 
2017/1011
Company covered: 
Experian plc
Period End: 
31 March, 2017
Report issued on 31 October 2017 covered the following practice issues:
Change
Results of discontinued operations reflected separately on the face of the income statement.
Change
Goodwill arising on business acquisition attributed to the assembled workforce and future growth potential.
Change
Graphical representations introduced to audit report to explain the application of materiality and audit scope.
New
Reconciliation of changes in segment revenue showing the impact of organic revenue growth introduced.

Experian plc Monitor

Experian plc Annual Report 2016
CR Monitor Issue: 
2016/1001
Company covered: 
Experian plc
Period End: 
31 March, 2016
Report issued on 3 October 2016 covered the following practice issues:
Change
Change in income statement format to include non-GAAP measures.
Change
Amortisation expense split into "Benchmark" and "Non-benchmark" expense.
Change
Extended corporate governance code disclosures.
New
Disclosure of contingent liability following data security breach.
Restatement
Contingent consideration included in fair value hierarchy represents correction of a prior year error.
Change
Related party disclosures extended to include transactions with pension plan.

The classification of acquisition transaction costs, an emerging issue under IFRS

This report focuses on companies’ presentation of acquisition-related costs both in the income and cash flow statements. More specifically it considers where such costs are reflected in the income statement and whether they are identified as operating or investing in nature within the cash flow statement.  

Experian Group Ltd Period End 31 March 2007

UK GAAP invoked to account for demerger under IFRS
Irish IT service provider Experian accounts for the installation of a new parent company as a merger and treats the demerger of a subsidiary of the former parent as a $5.6 billion dividend in specie.


Replacement of share options leads to income statement charge
Irish IT services company Experian recognises a $23 million charge for share-based payments as terms change consequent on a demerger.