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These new requirements will boost the resilience of the UK economy, ensuring it continues to attract talent and investment.

The Financial Reporting Council (FRC) has welcomed the Government’s publication of the draft statutory instrument on corporate reporting, which strengthens reporting requirements.

The new requirements will introduce an annual resilience statement, setting out how a company is managing risk, a triennial audit and assurance policy statement, explaining how the company proposes to assure non-financial reporting over the following three years, an annual statement about distributable profits, and an annual statement on steps taken to prevent and detect material fraud.

High-quality corporate reporting contributes to building the environment of trust, transparency, and accountability necessary for fostering long term investment, financial stability, and business integrity. 

These new requirements will boost the resilience of the UK economy, ensuring it continues to attract talent and investment.

The FRC has said to remain committed to building on the UK’s reputation for delivering high-quality corporate reporting by working with government and regulatory partners to develop a focused, modern reporting regime that enhances the UK’s global reputation for high reporting standards, supporting investment and growth while making it easier for companies to comply with their corporate reporting obligations. 

Currently, the FRC is developing guidance, informed by stakeholder outreach and a public consultation, to help companies in complying with the new reporting requirements which it expects to publish before the reporting requirements come into effect.

Mark Babington, FRC executive director of regulatory standards, said: “The publication of this draft statutory instrument demonstrates the government’s continued commitment to audit and corporate governance reform. These enhanced reporting requirements will strengthen transparency and accountability in business by providing key information to investors and other stakeholders.

“The new resilience statement, in particular, will give valuable insight into how companies are building resilience amidst current economic challenges. We at the FRC welcome these steps to boost the quality of corporate reporting and enhance the UK’s reputation for high reporting standards.”

Writes Sofia Floris in Accountancy Today

The world’s major accounting firms are stepping up investments in new Indian facilities away from bigger cities as global demand for cheaper back office operations grows and smaller towns move up the economic value chain.

For decades, large multinational corporations have rushed to India’s biggest metropolises, chiefly Mumbai, Delhi and Bengaluru, to set up massive operational centres that employ millions, lured by vast, low-cost talent pools, particularly in IT.

Business service exports have become a critical part of India’s economy but the sector has been hit by a slowdown in global demand for software and challenges in big urban centres such as rising costs, high attrition and slow progress in getting workers to return to the office after the pandemic.

A report by Ernst & Young in June said it expects multinationals to set up “global capability centres” for all types of industries in tier-2 cities such as Jaipur, Vadodara, Kochi, and Chandi ..

A report by Ernst & Young in June said it expects multinationals to set up “global capability centres” for all types of industries in tier-2 cities such as Jaipur, Vadodara, Kochi, and Chandigarh. The number of such centres could expand to 2,400 by 2030 from 1,600, adding 2.6 million jobs and over $100 billion to the economy.

That means more professional opportunities and potentially higher salaries in areas away from more globally connected business centres

Diksha Mehta, 27, a mathematics graduate from the north Indian city of Patiala is among thousands of new hires, who recently joined Deloitte’s cyber security team – providing consultancy for an Australian bank and retail clients in Europe

“I was preparing for a career in academics but was delighted when I got a job offer along with four classmates,” she said at Deloitte’s Gurugram office, on the outskirts of New Delhi, where hundreds have joined in recent months.

Rising wages, declining accounting graduates in developed countries after the pandemic and amid visa restrictions have helped India emerge as a powerhouse for global business services like taxation, data analytics, cybersecurity and customer management

India is among the world’s top exporters of services, doubling its share in global services trade to over 4% from 2% in 2005, according to WTO estimates

“Global giants are finding it easier and more competitive to shift work to small locations in India,” said Debasish Mishra, chief growth officer, Deloitte South Asia, noting the vast pool of English-speaking accounting, engineering and science graduates

Deloitte, with a workforce of over 100,000 in India, says it will hire 50,000 more staff over three years, and expand its footprint in new towns while KPMG plans to hire over 20,000 over the next three years.

PwC hired close to 12,500 in the fiscal year ended March and expects to hire the same number this year, said Padmaja Alaganandan, the firm’s India chief people officer

All of that could provide relief for the labour market amid slowing hiring in the manufacturing and IT sectors due to global growth concerns.

Prime Minister Narendra Modi has set a service exports target of $400 billion for the current fiscal year, about 25% more than the previous year.

Sunil Talati, president of government-aided Services Export Promotion Council, said total services exports could overtake goods exports in the next five years to $750 billion

RISING WAGES
In Bhubaneswar, the capital of the eastern state of Odisha, Deloitte, PwC, and IBM have opened offices to serve Indian and global clients.

Swagatika Parmanik, 25, left her job as a software professional to join Deloitte as a consultant in Bhubaneswar, a city of about 1 million built around mining and farming.

The new position has given her a more than 50% pay hike and her flexible working arrangements that allow her stay at her parents’ home, 40km f ..

The new offices have also encouraged educational institutions to start new courses and property developers to launch building projects.

A report by Knight Frank consultancy last week said demand for office space has risen sharply in smaller cities, driven by expanding operations of global accounting and multinationals, pushing up rents by up to 10%.

Domestic accounting firms are also moving to smaller towns and raising wages.

The Services Export Promotion Council’s Talati, whose audit firm employed around 400 auditors and consultants in Gujarat, said many firms faced a shortage of certified accounting professionals ..

“Retaining good employees is not an easy task as big companies are doubling the salaries,” said Kshitij Patel of Manubhai & Shah LLP, an Ahmedabad-based accounting firm, working for local and overseas clients.

“With the Big Four and other global firms coming to our cities, we are going even deeper to open offices in smaller cities.”

From the Economic Times July 12^th 2023

The accountancy profession is struggling to hire experienced auditors and new talent, as salary pressures and excessive workloads are felt across the board.

With the demand for auditing services continuing to rise, many firms across the UK are facing a staff deficit – particularly when trying to find qualified professionals to fill key roles.

The post-pandemic skills and talent shortage, backed by an uncertain economic outlook, have exacerbated the issue, as highlighted by the annual audit quality inspection (AQI) reports, published by the Financial Reporting Council (FRC), last week.

Staffing and retention issues were cited as one of the key areas for improvement across Tier 1 firms, with the majority being scrutinised for their ‘lack of audit professionals’ and mounting recruitment challenges.

According to the audit watchdog, the profession was riddled with ‘resourcing difficulties, resulting in a limited and competitive market’.

‘Attrition has fallen across all firms during the year, but resource constraints still exist. To respond, firms have developed a reassessment of their recruitment strategies to attract a broader demographic and explore other non-traditional routes of entry’, the report said.

For Big Four firm EY, the FRC cited management challenges and substantial workload as an ongoing weakness within the firm’s culture, with employees lacking a ‘clear connection’ with on-site coaching.  

Challenges in working patterns and mitigating a healthy work-life balance remain prominent within the profession, with long hours and limited flexibility continuing to grind those in practice.

Traditional ways of working are becoming increasingly less attractive to new talent, particularly with the rollout of hybrid-working, which has shifted to the default for many companies since the pandemic.

EY has since developed a ‘new index’ to track the work intensity placed on their employees, which includes dialogue with teams across the business to understand what reducing work intensity means, and what the barriers might be.

It has also expanded access to coaching support, which will include the launch of a ‘quality enablement network’ of senior managers.

Staff retention was also referenced by the audit watchdog, which recorded ‘serious problems’ within KPMG’s framework.

Facing an uncertain economic outlook, potential candidates are demanding higher wages, better perks, and greater flexibility, like with post-pandemic shifts like hybrid working.

For those currently in practice, accounting teams are feeling burnt out at the prospect of long hours and burdensome tasks – leaving many open to considering new positions, and even complete career changes.

Firms like Mazars were also scrutinised for providing ‘limited access to staff support, with limited processes in place to ensure that staff bonuses were appropriately considered.

Combining training with genuine development opportunities, with a strong access to support, is integral for employee retention, and greater standardisation in addressing this stood as a key complaint by the FRC across all Tier 1 firms assessed.

Insufficient recruitment decisions were also recognised, as seen for BDO, which displayed a ‘complete lack of’ complete interview templates for potential candidates.

The firm has since implemented ‘further training programmes’ to counter this issue. 

Article from Accountancy Daily 12/07/23

The International Sustainability Standards Board (ISSB) has issued its inaugural standards, FRS S1 and IFRS S2.

IFRS S1 is based around General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 is based on Climate-related Disclosures.

IFRS S1 provides a set of disclosure requirements designed to enable companies to
communicate to investors about the sustainability-related risks and opportunities they face over the short, medium and long term.

IFRS S2 sets out specific climate-related disclosures and is designed to be used with IFRS S1.

For the first time, the standards create a common language for disclosing the effect of
climate-related risks and opportunities on a company’s prospects.

The standards will be officially launched by ISSB chair Emmanuel Faber at the IFRS
Foundation’s annual conference today and through a week of events hosted by stock exchanges around the world,

The Association of International Certified Professional Accountants (AICPA) and the Chartered Institute of Management Accountants (CIMA) have both praised the new standards.

Barry Melancon, CPA, CGMA, the CEO of AICPA and CIMA, said: “Clear, consistent and globally accepted reporting standards are essential for high quality sustainability accounting, and the disclosure baselines released today move us closer to that goal. We’re in a new era in corporate reporting.

“Investors, lenders, regulators and other stakeholders are demanding broader sets of business information, and capital markets are looking for the same level of rigour in reporting for sustainability as for financial information. As this global framework matures, we expect professional accountants to play a critical role in delivering consistency and trust in both sustainability reporting and assurance.”

AICPA and CIMA are among the sponsors of a forum at the New York Stock Exchange.

Liam J Moran writes in Accountancy Today