Persimmon

Disclosure of judgements and estimates

At the end of 2017, the FRC published a thematic review which focused on the disclosure of critical judgements and sources of estimation uncertainty, a requirement of IAS 1 Presentation of Financial Statements. This review was carried out in part because, in its 2016-17 corporate reporting review, the FRC found that companies were not making sufficiently clear disclosures in this area.

Unfortunately, despite this, judgements and estimates still represent an area of difficulty for companies, remaining the area most commonly raised by the Corporate Reporting Review Panel in reviewing company accounts during 2017–18. Common issues include poor explanations, a failure to separate judgements and estimates clearly and discussion of judgements and estimates that were not considered by the company to be significant or material. In some cases the FRC noted that disclosures elsewhere in the accounts suggested that significant judgements were made but these were not included in or referred to in the IAS 1 disclosures.

As a result of this, the FRC can be expected to continue its scrutiny of these disclosures and to challenge companies that do not provide clear, specific disclosures that meet the requirements of IAS 1.

This report analyses the disclosures about judgements and estimates which have been included in the consolidated annual reports of 20 UK listed companies selected at random from the FTSE 350.

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.
 

Alternative Performance Measures (APMs)

In this Common Practices report we look at what APMs are; how companies are using them; and what they mean for the users of accounts when comparing them to others. This report examines the APMs that are stated within recent company and group accounts for a sample of 20 companies. Our selected sample covers year ends from 30 June 2017 to 31 March 2018. All companies report under International Financial Reporting Standards (IFRS) as adopted in the EU. Throughout this report, we look at some of the recommendations put forward by the European Securities and Markets Agency (ESMA) in their guidelines setting out best practice on APMs in 2015, which became effective from 3 July 2016, as well as the observations made by the FRC, assessing whether and how companies have implemented them. 

Persimmon plc Monitor

Persimmon plc Annual Report 2017
CR Monitor Issue: 
2018/0604
Company covered: 
Persimmon plc
Period End: 
31 December, 2017
Report issued on 05 June 2018 covered the following practice issues:
Pronouncements
Extended disclosure in respect of IFRS 9 and 15.
Change
Government policy identified as a new area of principal risk.
Change
Extended disclosure in respect of auditor and management responsibilities included in the auditors’ report.
Change
Changes to directors share-based payments highlighted in post balance sheet events note.

New standard disclosure - IFRS 16 "Leases"

This report revisits the findings of the CR Emerging Issues Report "Disclosure of the impacts of IFRS 16 "Leases", and assesses 20 companies with 31 December 2017 year ends, to understand if some of the trends of the previous report are repeated. After the last report, we expected to see more companies early adopting, as well as more providing qualitative commentary on their expected materiality position post-implementation. We will assess whether this is the case. 16 of the 20 companies reviewed were in the original sample.

New standard disclosure - IFRS 15

IFRS 15 Revenue from Contracts with Customers (IFRS 15) is one of two major new standards being applied from financial periods beginning on or after 1 January 2018 (the other being IFRS 9 Financial Instruments). In the years leading up to this, there has been an increased focus by the Financial Reporting Council (FRC) on the disclosures setting out the impact of forthcoming accounting standards in the financial statements, as required by IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (IAS 8).

The FRC commented on these disclosures in its Annual Review of Corporate Reporting for the 2016-17 year-ends (annual review), and noted in its year-end advice letter to audit committee chairs and finance directors (FRC advice letter) (attached as an appendix to the report), that it expected to see a ‘step change’ in the quality of the disclosures assessing the impact of new accounting standards in the 2017-18 financial statements.

This report analyses the disclosures assessing the impact of IFRS 15 which have been included in the consolidated financial statements of 20 UK listed companies selected at random with a focus on industries where IFRS 15 has most impact.

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.

Disclosure of the impacts of IFRS 16 "Leases"

IFRS 16 “Leases” will fundamentally change accounting by lessees as it requires assets previously off balance sheet under operating lease arrangements to be brought on balance sheet as is currently the case for finance leased assets. As a result on application companies will recognise both additional assets and additional liabilities. Consequently there will also be knock on effects in the income statement as operating lease charges are replaced by a depreciation charge and a finance expense. This report analyses the financial statements of a range of companies to firstly establish whether there has been any early adoption and secondly to establish what companies are disclosing in respect of IFRS 16 and its future impacts.