Wednesday, 14th February, 2007: The Accounting Standards Board (‘ASB’) has today published an Exposure Draft (‘ED’) entitled ‘Half-Yearly Financial Reports’, and is inviting public comment thereon.
The document sets out proposed revisions to the ASB’s current Statement on interim reports. The ED has been issued in the context of EU Member States’ requirement to transpose the Transparency Directive (‘the Directive’) into national law by 20th January 2007. The ED seeks to provide guidance to those UK and Irish issuers that:
- are required by the Directive to prepare half-yearly financial reports (i.e. all issuers coming within scope of the Directive);
- are not required to, and choose not to, prepare same in accordance with International Accounting Standard (IAS) 34 ‘Interim Financial Reporting’. (In accordance with the provisions of Article 5 of the Directive, where an issuer within the remit of the Directive is required to prepare consolidated financial statements, those consolidated financial statements must be prepared in accordance with IFRS and the required half-yearly financial report must be prepared in accordance with IAS 34).
Given the possibility that Irish issuers not required to, or not choosing to, use IAS 34 in preparing their half-yearly financial reports may be required by Regulation to apply the final ASB Statement in preparing such reports, the ED may assume considerable importance from the perspective of affected issuers. In that context, the Authority considers the development of the document by the ASB to be a welcome and positive development and, through its role as observer at the ASB, has been monitoring and providing input to the development of the document, particularly having regard to certain important considerations from an Irish perspective. Among the considerations of note in an Irish context are:
- The Directive’s requirements only apply to issuers listed on a regulated market. While many fund and debt issuers are listed on a regulated market in Ireland (i.e. on the Irish Stock Exchange), this is not necessarily the case to the same extent in the UK. Accordingly, the proportion of Irish issuers that may be affected by the final ASB Statement may be higher than in the UK.
- The Directive is being implemented in Ireland through a combination of primary legislation (i.e. the Investment Funds, Companies and Miscellaneous Provisions Act, 2006) and secondary legislation (i.e. the Transparency (Directive 2004/109/EC) Regulations, 2007). It is expected that the requirements relating to half yearly financial reporting will, upon enactment of the legislation, supersede section 6.9 (‘Half-yearly reports’) of the Irish Stock Exchange’s Listing Rules. In contrast, in implementing the Directive’s requirements regarding half-yearly financial reporting, the UK intends doing so via the Financial Services Authority’s Listing Rules. As a consequence, the final ASB Statement may have differing legal status in the two jurisdictions.
- Michael Kavanagh
- Head of Financial Reporting Supervision
- Irish Auditing and Accounting Supervisory Authority (IAASA)
- Willow House
- Millennium Park
- Naas, Co. Kildare