2022 Audit Transparency Report
Shaping the future of the audit profession
Audit regulatory transparency is vital in creating and maintaining trust between the firm, its clients, and the general public. At Deloitte, quality and integrity are deeply rooted in our culture, as is the commitment to the quality of our work. It is not only what we do, but who we are.
In line with this, Deloitte has developed global compliance processes to ensure that every service provided to our clients complies with the regulatory requirements applicable to the client concerned. These processes are applied consistently across our business.
We are living in a fast-changing environment especially when it comes to technological advancement. Technology continues to be a catalyst in improving audit processes and increasing efficiency in the profession. Deloitte Kenya is at the forefront in embracing technology in our work and we are excited to be part of the digital evolution. We continue to transform the way we audit through re-imagination, embracing technology, and adapting to the changing environment. Deloitte Kenya is committed to continuously building a culture of quality and excellence in audit in the region and beyond.
IFRS 16 Leases Updates 2020
Welcome you to IFRS 16 Latest developments, a snapshot of the recent amendments to IFRS 16 Leases, as well as some other relevant topics.
- Due to Covid-19 many lessors have granted rent concessions
to their lessees. In the first part of this publication, we analyse the
challenges lessees and lessors may face when accounting for these
concessions, and the IASB’s response in alleviating some of them.
- Covid-19 has numerous accounting impacts. We bring your
attention to the potential effect on the carrying value of Right of Use
Assets under IFRS 16 and impairment considerations.
- Lastly, a non-Covid-19-related update: the IASB continues
its IBOR reform project and has issued an Exposure Draft proposing to
amend, amongst others, IFRS 16.
Lessees may elect to apply a practical expedient if the rent concession meets the following criteria. In this case, lessees won’t have to assess whether the rent concession is a modification and won’t have to apply modification accounting.
- The rent concession needs to be a direct consequence of Covid-19;
- The revised consideration for the lease is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
- Any reduction in lease payments affects only payments originally due on or before 30 June 2021 (even though subsequent increases can fall beyond that date); and
- There is no substantive change to other terms and conditions of the lease.
Interest Rate Benchmark Reform – Phase II 2020
The International Accounting Standards Board (“IASB”) published Interest Rate Benchmark Reform Amendments to IFRS 9, IAS 39 and IFRS 7 representing the finalisation of Phase II of the project on 27 August 2020 to address issues that might affect financial reporting when an existing interest rate benchmark is replaced with an alternative benchmark interest rate, i.e. replacement issues.
The accounting issues arising before an existing interest rate benchmark is replaced with an alternative risk-free rate, i.e. pre-replacement issues, have been considered previously by the IASB and were addressed in Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7), published in September 2019 (“Phase I amendments”). This Phase I amendments provide temporary exceptions to specific hedge accounting requirements, to avoid entities having to discontinue hedging relationships solely due to the uncertainty arising from the reform.
The Phase II amendments discussed in the following slides compliment, do not supersede, the Phase I amendments. The Phase II amendments apply to all entities and are not optional and effective for annual periods beginning on or after 1 January 2021 with early application permitted. The amendments are applied retrospectively and include the potential reinstatement of hedge relationships that were discontinued solely due to changes directly required by the reform.