AICPA & CIMA suggest policy action to tackle inflation 

AICPA & CIMA, together as the Association of International Certified Professional Accountants, have set out proposals which could help bring down inflation faster. 

The AICPA & CIMA inflation report which includes research from among their members, finds that the current inflation problem has multiple drivers outside of monetary policy and the war in Ukraine. These include issues in labour markets and the supply side of the economy, which could be addressed through policy changes. An increase in productivity would mitigate against inflation by allowing the supply side of the economy to grow and meet demand in a non-inflationary manner. 

The report highlights how management accountants are already supporting their businesses in dealing with the consequences and effects of high inflation, and how their skill sets are supporting effective mitigation strategies for their businesses. 

It identifies several additional areas where action could be taken, including: 

  • Addressing the labour shortages which are putting pressure on wage demands while limiting the productive capacity of businesses and increasing costs of goods and services 

  • Increasing resilience in supply chains and clearing supply chain backlogs to help unclog the global economy 

  • Reducing the tax burden for businesses while they are already under pressure from rising prices 

  • Providing specific support for SMEs badly hit by inflation to help drive economic recovery 

  • Providing certainty and stability around regulation and tax to help business’s scenario planning and investment decisions 

  • Ensuring fiscal and monetary policy work together to tackle inflation. 

AICPA & CIMA management accounting chief executive, Andrew Harding, said: “We welcome the government’s commitment to tackling inflation. A combination of fiscal, business and monetary policy action is needed to tackle the problem. Ensuring the UK has the workforce capacity it needs has to be a priority. Our research with members very clearly shows that if we are to deal with the problem for the long term then we need to deal with persistent labour and skills shortages.”

IAASB appoints vice chair 

The International Auditing and Assurance Standards Board (IAASB) has appointed Josephine Jackson to serve as its vice chair. 

Jackson is Director of International Audit and Assurance Standards Policy at the UK Financial Reporting Council and leads the FRC’s ESG Group. She is entering her second term as member of the IAASB and previously served as a board member Technical Advisor. 

In addition to Jackson’s appointment, the IAASB has also gained two members: 

  • Neil Morris is the global head of assurance and ESG methodology at KPMG with more than two decades of experience in South Africa and the UK. 

  • Greg Schollum is the Deputy Controller and Auditor-General of New Zealand, a position he has held since 2015 after first joining the Office of the Auditor-General in 2004. 

Commenting on the appointments, IAASB chair Tom Seidenstein said: “I am delighted to welcome our new IAASB members and congratulate Josephine on behalf of the IAASB. Greg and Neil bring new experience and perspectives to the IAASB, and we look forward to including their thinking in deliberations at our next IAASB meeting in March. I also look forward to partnering with Josephine to help guide the IAASB through its important work in the public interest.”

Finding a way to finance nature 

Markets for carbon, biodiversity and other environmental services are widely expected to grow in the coming years. Ecosystems Knowledge Network (EKN), is undertaking a review which will include a survey and consultation and will be repeated annually, which aims to provide a UK-wide view of this area of enterprise. It is designed to help nature projects and those wishing to support them. 

The term ‘nature finance’ describes the emerging opportunities for those who look after land, water and nature to attract new sources of revenue and investment from these markets and other private sources, says EKN nature-based finance specialist, Henry Crabb: “Currently, we have little idea of the growth of projects engaged in nature finance,” he explains. “In what some call the ‘wild west’, there are clearly opportunities, but their procurement has been unclear and projects are often working in isolation beyond national grant support.” 

However, with mandatory requirements for nutrient neutrality and biodiversity net gain, the once mythical ‘stacking’ of saleable ecosystem services is now attainable, says Crabb: “At least 70 investment readiness [capacity of an enterprise to understand and meet the specific needs and expectations of investors] projects are already under way across England, with numerous others elsewhere across the UK. They are all looking for ways to harness opportunities for revenue and investment”. 

To gain a better understanding of the current opportunities and challenges to project development, EKN will be carrying out a campaign from 12 January to 10 February. Its 5–10 minute survey will cover the types of revenue stream under consideration, steps towards investment readiness, and the sort of organisations involved. 

It aims to review the state of the nature finance project pipeline in the UK, and will monitor opportunities and challenges to project development in subsequent reviews. 

A report, the 2023 Nature Finance Review, will be published in April, bringing together the survey and consultation work.

FRC announces 2023-2026 plan 

The Financial Reporting Council  announced its 2023-2026 draft 3-Year Plan which sets out its priorities for the next three years and the resources it will need to achieve them. 

The plan incorporates a balanced yet assertive approach and reflects the delay of anticipated legislation to create the Audit, Reporting and Governance Authority (ARGA), which has had an impact on the associated increase in capacity, cost and headcount previously expected to occur in 2023. 

Overall, the budgeted cost of the FRC and the UK Endorsement Board will increase to £67.9m, up from £59.8m last year, with a 9.7% increase in budgeted headcount by March 2024. 

The FRC has used 2022 to focus on the changes it can make with the powers it already has. The 2023-26 plan includes the completion of activities publicised in the FRC’s July Position Paper as well as looking ahead to the creation of new statutory powers and functions for ARGA, currently expected to occur in 2024. 

FRC chief executive, Sir Jon Thompson, said: “Despite the continued delay to the legislation required to create ARGA, 2022 was another busy period for the FRC as we continue to focus on the changes we can make using our existing powers and remit."

FASB Not-for-Profit Advisory Committee gains members 

The US’ Financial Accounting Standards Board (FASB) has appointed two members to its Not-for-Profit Advisory Committee (NAC), effective 1 January 2023. 

The role of NAC is to obtain input from the not-for-profit sector on existing financial repoting guidance, current and proposed technical agenda projects, and longer term or pervasive financial reporting matters affecting those organisations. 

The new NAC members are: 

  • Mai-Anh Fox, chief financial officer, Ford Foundation 

  • Kerri Tricarico, senior associate vice president financial operations and controller, New York University. 

Both members have been appointed for a four-year term, ending on 31 December 2026. 

FASB chair Richard Jones said: “Mai-Anh Fox and Kerri Tricarico bring strong backgrounds in not-for-profit financial reporting and analysis to the NAC. We look forward to the unique perspectives they will bring to the group’s robust discussions on matters that affect not-for-profit stakeholders.” 

More from FASB

Taxpayers advised to go ahead with digitalisation 

Tax return specialist software company Apari reminds taxpayers that the Government’s digitalisation plans will still happen despite a further delay to HMRC‘s Making Tax Digital roll out. 

MTD’s introduction has again been postponed, with the new date now two years away in April 2026. HMRC says this latest deferral will give businesses and individuals, accountants and HMRC more time to transfer to the new system. 

The Treasury has cited difficult economic conditions for business as one of the main reasons for the delay, adding that implementing the change gradually will help maximise MTD’s benefits. MTD for Income Tax aims to make the process more real-time and less error prone. 

Anish Mehta,  APARI’s chief product officer and part of HMRC’s MTD team before joining APARI, said HMRC recognised that pushing back MTD would negatively impact on many software developers. 

He added: “Our MTD software was the first to gain recognition by HMRC. In our 1:1 conversations with HMRC senior leadership, they recognised that APARI is good to go.” 

“Despite this move, APARI will continue to work closely with HMRC’s team on the roll out. HMRC is still committed to its 10-year tax administration strategy and didn’t want this delay. MTD is yet another casualty of the current political situation we’re in.” 

As well as the two-year wait, there are also changes to when various categories of taxpayer will be caught by MTD. Those with combined business and property turnover of more than £50,000 will be first to have to keep digital records and update HMRC every quarter. One year later, the rules will apply above £30,000 of turnover. For those with turnover below £30,000, a decision on when MTD should apply will be made in the next six months. 

Anish said “This means there is now a sliding scale of when groups will be mandated to adopt MTD. Some 740,000 UK taxpayers will switch to MTD in April 2026 while 1.6m people will be covered from April 2027. The millions of taxpayers with turnover between £10,000 and £30,000 are yet to have their fate determined.” 

He added that despite this latest news, digitalisation of tax is still the future. “By 2025-26 the Government will have spent almost £900 million on building the MTD system, which is a measure of its commitment to the programme”.