IFRS17 – Insurance Contracts

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IFRS17 – Insurance Contracts (promotional video)

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©2019 Rohan Badenhorst

The language we use in business

We find it fascinating, once again, just having skimmed through the Microsoft (MSFT) Earnings Release FY17 Q4 results released on 20 July 2017, how generally in businesses ‘natural’ language is used differently in different sectors.

In general within Commerce & Industry we tend to refer to ‘strategic partnerships’ and ‘supply-chains / arrangements’, etc.  Language crafted from legal and contractual relations.


Source: http://leadics.com/wp-content/uploads/2014/02/slide-14.png

The irony is that it is generally only the Technology sector, possibly as a more recent / younger sector, that crafts its language from the natural world.  In technology companies you don’t have supply-chains, but rather ‘ecosystems’, ‘cloud-platforms’, ‘waterfall project’ deployment, etc., etc.


Source: http://staroneit.com/theme/BACK_END/file_manager/upload/image/4.jpg

It is both fascinating and ironic that these metaphors for relationships in the technology sector borrow heavily from ‘natural language’ or nature based language; which in turn promotes sustainable business practices (we hope and trust) and sustainability more generally.


Source: https://www.opslogix.com/wp-content/uploads/2014/07/071414_2150_Whymonitory8.png

Do you find this to be a positive / true reflection of the use of business language? Your comments are very welcome. […and will no doubt be added to our ‘word-cloud’]

©2017 theMarketSoul

FRS105 – The new Financial Reporting Standard for Small Entities (in draft)

The Financial Reporting Council (FRC) has recently published FRED 58, being the Exposure Draft for FRS105, which in turn will become the new FRSSE (or replace the existing FRSSE, we believe).

Copy-spaced image of a tired businessman sitting at the office

Comments on the Exposure Draft was due by 30 April 2015, so if you missed it, we are afraid the the train has already left the station.

In a nutshell, we have some serious conceptual and philosophical concerns the FRED 58 does not address (and staff at the FRC at a recent event in London, prior to the General Election, could not provide assurances on).


Effectively FRS 105 (as it will be know), once it is ratified and adopted in parliament, will not be IFRS ‘Lite-lite‘, although it will have some of the overall principles of Fair Value Accounting contained within it.

At a fundamental level micro-entities (* as defined below) can choose to adopt either FRS 105 or FRS 102.  However, be very careful in which one you choose, as the two standards have some fundamental differences contained within them, which, later down the line (as the proverbial can is kicked up the road), might cost you additional compliance fees and time and effort, if you need to convert from FRS 105 reporting to FRS 102 (New UK GAAP).

Our concern is this:


“The overall objective of all the initiatives (driven from Brussels) is HARMONISATION.  The differences in approach between FRS 105 and FRS 102 do not underscore this fundamental principle!”

Hence, our health warning:  Think and consult carefully, before adopting either standard (FRS 102 or FRS 105) if you are a micro-entity caught in the compliance reporting net.

If you have any questions or concerns, please contact us for more details.

©2015 – Rohan Badenhorst

File 22-04-2015 16 42 57

*Definition of a micro-entity:

Micro-entities – HMRC guidance – May 2015

Micro-entities are very small companies. Your company will be a micro-entity if it has any 2 of the following:

  • a turnover of £632,000 or less
  • £316,000 or less on its balance sheet
  • 10 employees or less

If your company is a micro-entity, you can:

  • prepare simpler accounts that meet statutory minimum requirements
  • send only your balance sheet with less information to Companies House
  • benefit from the same exemptions available to small companies

Filing CIC (Community Interest Company) Annual Accounts

If you have not yet filed Annual Accounts for a CIC (Community Interest Company), then please be aware that the process and procedures for filing the Annual Accounts at Companies House is different from normal electronic filings.


 Firstly you cannot file electronic Annual Accounts.

Guidance is published here at the Companies House web site.

In order to file the Annual Accounts you will need to prepare a form CIC 34 which can be downloaded from the link.

The completed and signed (by a director or company secretary) CIC 34 form, together with a printed copy of the Annual Accounts and a £15 filing fee must be sent to Companies House well in advance of the filing deadline.  This is to avoid any late filing penalties, should Companies House reject the initial filing and you need to make any amendments that might be necessary in order to re-file the Annual Accounts.

Companies House officials were not yet able (during April 2015) to provide us with information as to when the electronic filing of CIC Annual Accounts will be possible.


Hence, just like filing Limited Liability Partnership Annual Accounts, the traditional hard copy and postage paid (preferably recorded delivery) or handing in the documents at a Companies House official Contact Centre office location, is still the only way to get the Annual Accounts filing compliance check done, for the time being.

©3resource – 2015

The conceptual notion of a ‘Business Model’ in Financial Reporting

Harmonisation of International Financial Reporting standards is a route or journey, where the road map is not yet very clearly defined. However, it is getting there.
In a recent article we drafted on IFRS, we argued that the eventual outcome of harmonisation should be the deepening of global capital markets and the spreading of risk on a wider scale. This would lead to potentially fewer liquidity crunches, like the last one we experienced in 2008 onwards.

However, this is not the only objective, but would be a welcome outcome, if the route is traversed successfully. In 2010 we drafted another article on the concerns in the US for IFRS conversion versus convergence. By stealth, however, should a group entity be listed in an IFRS regulated environment, with a US subsidiary, then by default the group financial statements would have the US GAAP output ‘automatically’ converted to IFRS compliant financial accounts.

This sets the scene for further developments and improvements in international financial reporting. A concept that is currently under review and debate is that of the ‘Business Model‘ and how this concept, together with risk management reporting is incorporated into national and international corporate reporting.
business model
(from Businessmodelgeneration/com)
EFRAG outlined in a research paper that the term ‘Business Model’ is not universally defined or applied as a consistent notion in the business world. It is distinct from Management Intent in that the two notions differ in that a business model is generally more stable focusing on the larger picture and is usually more observable and easier to verify.
However, the paper also outlines an interesting notion. A Business Model is more widely understood and stands up to better scrutiny versus Management Intent. They go on to state:
The term has ‘no universal view on relationship/distinction with strategy, business purpose, management intent, management actions‘.
We agree generally with this statement.

In conclusion, we understand a business model to be the ‘How you make money?’ question, versus the strategic dimension which includes the preceding question, which should be: ‘Where do we want to be’.

English: A model that describes the competitiv...

English: A model that describes the competitive environment of a company’s business model. (Photo credit: Wikipedia)

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