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# International Financial Reporting Standards Foundation

## ANNUAL REPORT

For the year ended

31 December 2013

## INDEPENDENT AUDITOR'S REPORT TO THE TRUSTEES OF THE INTERNATIONAL FINANCIAL REPORTING STANDARDS FOUNDATION

We have audited the accompanying financial statements of the International Financial Reporting Standards Foundation, which comprise the statement of financial position as at 31 December 2013, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the year ended 31 December 2013, and a summary of significant accounting policies and other explanatory information.

This report is made solely to the Foundation's Trustees, as a body, in accordance with Section 13 of the Foundation's Constitution. Our audit work has been undertaken so that we might state to the Foundation's Trustees those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Foundation and the Foundation's Trustees as a body, for our audit work, for this report, or for the opinions we have formed.

### Trustees' responsibility for the financial statements

The Foundation's Trustees are responsible for the preparation of the financial statements that give a true and fair view in accordance with International Financial Reporting Standards, and for such internal controls as the Trustees determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

### Auditor's responsibility

Our responsibility is to audit and express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require us to comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

### Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Foundation as at 31 December 2013 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
United Kingdom
10 April 2014

## STATEMENT OF COMPREHENSIVE INCOME

|  | 2013 |  | 2012
YEAR ENDED 31 DECEMBER 2013 | Notes | £'000 |  | £'000
INCOME |  |  |  |
Standard-setting |  |  |  |
Contributions | 3 | 21,372 |  | 20,030
Other income |  | 374 |  | 149
|  | 21,746 |  | 20,179
Publications and related activities |  |  |  |
Revenue from publications and related activities | 4(a) | 5,621 |  | 5,324
|  | 27,367 |  | 25,503
EXPENSES |  |  |  |
Standard-setting |  |  |  |
Salaries, wages and benefits | 5 | (16,947) |  | (15,571)
Trustees' fees | 6 | (653) |  | (631)
Travel, accommodation and related expenses | 7 | (1,858) |  | (2,113)
Occupancy expenses | 8 | (1,400) |  | (1,367)
Other costs | 9 | (1,046) |  | (1,236)
Reduction in provision for HMRC tax settlement | 15 | 88 |  | 290
|  | (21,816) |  | (20,628)
Publications and related activities |  |  |  |
Cost of publications and related activities | 4(b) | (3,399) |  | (3,208)
|  | (25,215) |  | (23,836)
OPERATING INCOME |  | 2,152 |  | 1,667
Finance income | 11 | 390 |  | 883
Finance costs | 11 | (162) |  | (126)
INCOME BEFORE TAX |  | 2,380 |  | 2,424
Income tax expense | 14 | - |  | -
COMPREHENSIVE INCOME FOR THE YEAR |  | 2,380 |  | 2,424

## Statement of changes in equity

YEAR END 31 DECEMBER 2013 |  |  |  |  |
Retained surplus at beginning of year |  | 10,839 |  | 8,415
Comprehensive income for the year |  | 2,380 |  | 2,424
RETAINED SURPLUS AT END OF YEAR |  | 13,219 |  | 10,839

The accompanying notes form part of these financial statements.

## STATEMENT OF FINANCIAL POSITION

|  | 2013 |  | 2012
AS AT 31 DECEMBER 2013 | Notes | £'000 |  | £'000
ASSETS |  |  |  |
Current assets |  |  |  |
Cash and cash equivalents |  | 7,048 |  | 8,379
Contributions receivable | 3 | 1,339 |  | 1,674
Trade and other receivables | 13(b) | 688 |  | 716
Prepaid expenses |  | 603 |  | 668
Inventories |  | 137 |  | 153
Bonds at fair value | 12 | 672 |  | 760
Forward currency contracts at fair value | 12 | 157 |  | 371
|  | 10,644 |  | 12,721
Non-current assets |  |  |  |
Bonds at fair value | 12 | 5,685 |  | 4,023
Forward currency contracts at fair value | 12 | 373 |  | 40
Leasehold improvements, furniture and equipment | 10(a) | 709 |  | 793
|  | 6,767 |  | 4,856
TOTAL ASSETS |  | 17,411 |  | 17,577
LIABILITIES |  |  |  |
Current liabilities |  |  |  |
Trade and other payables |  | 338 |  | 265
Payroll taxes payable |  | 581 |  | 627
Accrued expenses |  | 1,124 |  | 1,285
Provision for HMRC tax settlement | 15 | - |  | 94
Contributions received in advance | 3 | 350 |  | 2,695
Rent incentive |  | 82 |  | 82
Publications revenue received in advance |  | 780 |  | 871
Forward currency contracts at fair value | 12 | 66 |  | -
|  | 3,321 |  | 5,919
Non-current liabilities |  |  |  |
Forward currency contracts at fair value | 12 | - |  | 15
Lease reinstatement obligation | 10(b) | 562 |  | 413
Rent incentive |  | 309 |  | 391
|  | 871 |  | 819
TOTAL LIABILITIES |  | 4,192 |  | 6,738
NET ASSETS |  | 13,219 |  | 10,839

The accompanying notes form part of these financial statements.

The financial statements were approved by the Trustees of the IFRS Foundation on 10 April 2014 and authorised for issue on 10 April 2014.

Michel Prada

Chair of the Trustees

## STATEMENT OF CASH FLOWS

|  | 2013 | 2012
YEAR ENDED 31 DECEMBER 2013 | Notes | £'000 | £'000
OPERATING ACTIVITIES |  |  |
Cash received |  |  |
Contributions |  | 19,497 | 19,385
Publications and related activities |  | 5,604 | 5,276
Funding for Asia-Oceania office | 3 | 315 | 613
Interest |  | 129 | 259
Foreign exchange settlements |  | 142 | 88
Other receipts |  | 25 | 29
Cash paid |  |  |
Salaries, wages and benefits |  | (16,162) | (15,994)
Publications and related activities direct costs |  | (3,444) | (2,942)
Trustees' fees |  | (612) | (724)
Other expenses |  | (4,975) | (4,025)
NET CASH FROM OPERATING ACTIVITIES |  | 519 | 1,965
INVESTING ACTIVITIES |  |  |
Matured bonds receipts |  | 700 | 3,226
New bond purchases |  | (2,385) | (3,307)
Purchase of leasehold improvements, furniture and equipment |  | (66) | (488)
NET CASH DECREASES FROM INVESTING ACTIVITIES |  | (1,751) | (569)
Effects of exchange rate changes on cash and cash equivalents |  | (99) | (14)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |  | (1,331) | 1,382
Cash and cash equivalents at the beginning of the period |  | 8,379 | 6,997
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD |  | 7,048 | 8,379

The accompanying notes form part of these financial statements.

## NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December 2013

### 1. Legal form and objectives

Incorporated in the State of Delaware, USA, on 6 February 2001, the International Financial Reporting Standards Foundation (IFRS Foundation) is a not-for-profit charitable organisation with its primary operations based in London.

The objectives of the IFRS Foundation are:

(a) to develop, in the public interest, a single set of high quality, understandable, enforceable and globally accepted financial reporting standards based upon clearly articulated principles. These Standards should require high quality, transparent and comparable information in financial statements and other financial reporting to help investors, other participants in the world's capital markets and other users of financial information make economic decisions.

(b) to promote the use and rigorous application of those Standards.

(c) in fulfilling the objectives associated with (a) and (b) to take account of, as appropriate, the needs of a range of sizes and types of entities in diverse economic settings.

(d) to promote and facilitate adoption of IFRS, being the Standards and Interpretations issued by the International Accounting Standards Board (IASB), through the convergence of national accounting standards and IFRS.

The governance and key management responsibilities of the IFRS Foundation rest primarily with its Trustees, who provide oversight of the IASB and its related bodies, the IFRS Interpretations Committee and the IFRS Advisory Council. A Monitoring Board, consisting of capital market authorities for financial reporting, provides a formal public accountability link between the Trustees and public authorities.

### 2. Accounting Policies

(a) Basis of preparation

These financial statements have been prepared in compliance with International Financial Reporting Standards. The policies have been consistently applied to all years presented, unless otherwise stated.

In 2009 the IFRS Foundation elected to apply IFRS 9 Financial Instruments earlier than the effective date.

(b) Contributions

Contributions are recognised as income in the year designated by the contributor. The estimated fair value of donated services, if any, is recognised as contribution income provided the services can be reliably measured and would normally have otherwise been purchased.

(c) Publications

Subscriptions to the IFRS Foundation's comprehensive package and eIFRS products are recognised as revenue on a time-apportioned basis over the period covered by the subscriptions. Royalties and permission fees are recognised as revenue on an accrual basis. Publications cost of sales comprises printing, salaries, promotion, technology and various related overhead costs.

(d) Inventories

Inventories comprise IFRS publications, which are carried at the lower of the cost of printing, on a first-in-first-out basis, and their net realisable value. Inventories of publications that have been superseded by new editions are written off.

(e) Depreciation

Leasehold improvements, furniture and equipment are initially measured at cost, and then depreciated on a straight-line basis. Leasehold improvements are depreciated over the period of the lease. All other assets are depreciated over 5 years, except computer equipment, which is depreciated over 3 years.

(f) Office accommodation - operating leases

The IFRS Foundation's leases of office space are classified and accounted for as operating leases. Lease payments for office space, including amounts for the cost of reinstating a building on expiration of the lease, are recognised as an expense on a straight-line basis over the non-cancellable term of the lease. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis.

(g) Foreign currency translation

The IFRS Foundation's presentation and functional currency is sterling. Transactions denominated in currencies other than sterling are recorded at the exchange rate at the date of the transaction. Monetary assets and liabilities are translated into sterling at the exchange rate at the end of the reporting period. Exchange differences are recognised in the statement of comprehensive income.

(h) Financial instruments

Bonds and derivatives (forward currency contracts) are recognised at fair value and subsequently measured at fair value through profit or loss. The IFRS Foundation manages and receives information on its investments in bonds on a fair value basis. The IFRS Foundation uses forward currency contracts to manage its foreign currency risk.

All other financial instruments are recognised at fair value plus transaction costs and subsequently measured at amortised cost.

(i) Provisions and contingencies

Provisions are recognised when the following three conditions are met: (1) the IFRS Foundation has a present obligation (legal or constructive) as a result of a past event, (2) it is probable that an outflow of resources with economic benefits will be required to settle the obligation, and (3) a reliable estimate can be made of the amount of the obligation.

The amount of a provision represents the best estimate of the expenditure required to settle the obligation at the end of the reporting period.

(j) New standards and interpretations issued

The financial statements have been drawn up on the basis of accounting standards, interpretations and amendments effective or early adopted at the beginning of the accounting period on 1 January 2013.

IFRS 13 became effective on 1 January 2013 and has been applied. The IFRS Foundation has concluded that there are no other relevant Standards or Interpretations in issue that are not yet adopted that will have a material impact on the IFRS Foundation's financial statements.

### 3. Contributions

Since 2006, the Trustees have sought to establish national financing regimes, proportionate to a country's relative GDP, that establish a levy on companies or provide an element of publicly supported financing. However, voluntary systems remain in place in some jurisdictions.

Contributions received before 31 December 2013, amounting to £350,000 (2012: £2,695,000), which were specifically designated by the contributors for use by the IFRS Foundation in subsequent years, were recognised as current and non-current liabilities, depending upon the designation by the contributor. Contributions received after 31 December 2013, amounting to a total of £1,339,000 (2012: £1,674,000), specifically designated by the contributors for use by the IFRS Foundation in 2013, were recognised as revenues at the end of 2013 and included as contributions receivable. A full list of contributors can be found on pages 45-48 of the full annual report.

Separate funding of £315,000/¥50,000,000 (2012: £613,000/¥81,000,000) was received towards the set-up and operations of the Asia-Oceania office located in Tokyo; £352,000 (2012: £130,000) has been recognised in other income to offset the current year's operating expenses.

### 4. Publications and related activities*

(a) Revenue from publications and related activities
| 2013 | 2012
| £'000 | £'000
Sales of subscriptions and publications | 3,238 | 3,065
Royalties and permission fees | 2,137 | 2,031
Other income | 246 | 228
TOTAL | 5,621 | 5,324

(b) Cost of publications and related activities
| 2013 | 2012
| £'000 | £'000
Staff salaries and related costs (see note 5) | 1,954 | 1,717
Cost of goods sold | 451 | 542
Depreciation | 32 | 39
Other costs, including occupancy expenses | 962 | 910
TOTAL | 3,399 | 3,208

*Related activities include the Education and IFRS Taxonomy Initiatives.

### 5. Salaries, wages and benefits

The IFRS Foundation had an average of 136 employees (including IASB members and interns) during 2013 (2012: 127).

| 2013 | 2012
| £'000 | £'000
Staff costs, included in standard-setting expenses: |  |
Salaries and other costs, including IASB members | 16,186 | 14,964
Contributions to defined contribution pension plans | 761 | 607
| 16,947 | 15,571
Staff costs included in publications expenses (see note 4) |  |
Salaries and other costs | 1,828 | 1,604
Contributions to defined contribution pension plans | 126 | 113
| 1,954 | 1,717
Total | 18,901 | 17,288

The Trustees' Human Capital Committee is responsible for reviewing, bench-marking and making recommendations on salary and benefit levels. These recommendations are reviewed and approved annually by the Trustees as a whole. Effective April 2013, the Trustees approved annual remuneration levels resulting in the following IASB gross salaries covering all compensation and benefits: £548,600 for the IASB Chairman (2012: £537,800); £483,600 for the IASB Vice Chair (2012: £ 474,100), and; an average of £451,400 for other full-time members (2012: £440,200).

In addition to the Trustees, the IASB Chairman and the IASB Vice-Chairman, the key management personnel includes the Executive Director at an annual gross salary of £220,000 (2012: £200,000). The IFRS Foundation pays monthly contributions, at rates between 8 per cent and 10 per cent of gross salary, into a group personal pension scheme for participating staff.

### 6. Trustees' fees

The Trustees are remunerated by an annual fee and are reimbursed for the expenses of their travel on IFRS Foundation business; there were 22 Trustees in 2013 (2012: 21). In 2013 the fee for the Chairman of the Trustees was £200,000 (2012: £200,000). Trustees are renumerated by an annual fixed fee of £20,000 with an additional £7,000 paid to the committee Chairs.

### 7. Travel, accommodation and related expenses

| 2013 | 2012
COST INCURRED BY: | £'000 | £'000
IASB Members | 537 | 674
Trustees | 454 | 543
IFRS Interpretations Committee, IFRS Advisory Council and other advisory bodies | 389 | 409
Other IFRS Foundation staff | 478 | 487
TOTAL | 1,858 | 2,113

### 8. Occupancy expenses

| 2013 | 2012
| £'000 | £'000
Rent | 786 | 786
Service charges | 205 | 205
Rates, insurance and energy | 446 | 450
Depreciation | 241 | 211
| 1,678 | 1,652
Less amounts included in publications costs | (278) | (285)
TOTAL | 1,400 | 1,367

### 9. Other Costs

| 2013 | 2012
| £'000 | £'000
Communication and technology | 465 | 520
Audit, legal and taxation fees | 196 | 254
External relations | 49 | 90
Recruitment activities | 102 | 158
Other | 234 | 214
TOTAL | 1,046 | 1,236

### 10. Property, plant and equipment

(a) Leasehold improvements, furniture and equipment

| Leasehold improvements | Furniture, equipment | TOTAL
| £'000 | £'000 | £'000
COST |  |  |
At 1 January 2013 | 1,246 | 1,041 | 2,287
Additions | 150 | 66 | 216
Disposals/retirements | - | (64) | (64)
Exchange rate movements | (24) | (46) | (70)
At 31 December 2013 | 1,372 | 997 | 2,369
ACCUMULATED DEPRECIATION |  |  |
At 1 January 2013 | 862 | 632 | 1,494
Charge for the year | 83 | 158 | 241
Disposals/retirements | - | (64) | (64)
Exchange rate movements | (2) | (9) | (11)
At 31 December 2013 | 943 | 717 | 1,660
NET CARRYING AMOUNT AT 31 DECEMBER 2013 | 429 | 280 | 709
NET CARRYING AMOUNT AT 31 DECEMBER 2012 | 384 | 409 | 793

(b) Lease commitments

Lease commitments relate to operating leases for office space with lease terms expiring in September 2018 in London and 2022 in Tokyo, and with options to extend for a further 10 years in London. All operating lease contracts contain market review clauses. Payments on the leases, excluding service charges and property rates, are as follows:

| 2013 | 2012
PAYMENTS | £'000 | £'000
Within one year | 839 | 855
In two to five years | 3,161 | 3,419
More than five years | 217 | 947
TOTAL | 4,217 | 5,221

The IFRS Foundation is committed to make payments to cover the cost of reinstating the London and Tokyo buildings when the leases expire in September 2018 and September 2022 respectively. The estimated amount assumes that the London reinstatement work would take place in 2018, subject to the option to extend the lease for a further 10 years, which could affect the timing of any outflow. In 2013 the lease reinstatement provision was increased by approximately £149,000 to make adjustments for estimated increases for the London and Tokyo offices. Also in 2013, the IFRS Foundation terminated renting office space in New York. Temporary space is now rented as required.

### 11. Finance income and finance costs

| 2013 | 2012
FINANCE INCOME | £'000 | £'000
Interest income | 103 | 127
Fair value gains on forward foreign exchange contracts | 145 | 647
Fair value gains on bonds | - | 35
Exchange gains | 142 | 74
TOTAL | 390 | 883

| 2013 | 2012
FINANCE COSTS | £'000 | £'000
Fair value losses on forward foreign exchange contracts | (77) | (126)
Fair value losses on bonds | (85) | -
TOTAL | (162) | (126)

### 12. Financial instruments

For accounting purposes, the IFRS Foundation categorises its financial instruments based on their measurement, namely financial instruments at fair value through profit or loss or financial instruments at amortised cost. Bond values are quoted on active markets, described as Level 1. The fair value of forward foreign exchange contracts is bank-provided and based on price models using observable exchange rates, described as Level 2.

Financial instruments at fair value through profit or loss

| Fair value | Notional value | Fair value | Notional value
| 2013 | 2013 | 2012 | 2012
FINANCIAL ASSETS | '000 | '000 | '000 | '000
Bonds, including acccrued interest (Level 1) | £6,357 | £6,333 | £4,783 | £4,673
Forward foreign exchange contracts USD (Level 2) | £453 | $24,800 | £230 | $19,500
Forward foreign exchange contracts Euro (Level 2) | £77 | €5,000 | £181 | €3,300
FINANCIAL LIABILITIES |  |  |  |
Forward foreign exchange contracts USD (Level 2) | - | - | £(5) | $5,800
Forward foreign exchange contracts Euro (Level 2) | £(66) | €3,300 | £(10) | €3,300

The IFRS Foundation measures all other financial instruments at amortised cost. The carrying amount of these instruments is a reasonable approximation of their fair value. These financial instruments include:

- Financial assets: cash and cash equivalents; contributions receivable; and publication related receivables.
- Financial liabilities: trade and other payables.

### 13. Financial risk management

The IFRS Foundation's activities and holdings of financial instruments, expose it to financial risks namely liquidity, interest rate, credit and currency risks. This note describes the organisation's objectives, policies and processes for managing those risks and the methods used to measure them.

(a) Liquidity and interest rate risk
The IFRS Foundation manages its working capital to ensure sufficient cash resources are maintained to meet short-term liabilities. The IFRS Foundation has no bank borrowings.

Cash holdings: Management seeks to keep an amount in cash equal to or exceeding the upcoming quarter's expenditure. Cash is held either on current or on short-term deposits at floating rates of interest. Part of the cash at bank is held in Euros, Japanese Yen and US Dollar accounts.

Bond holdings: The Trustees have invested surplus funds of the IFRS Foundation in sterling-denominated, fixed rate bonds of international organisations, with AAA ratings at the time of purchase; these funds are reserves for continuing operations. The IFRS Foundation manages and receives information, from its advisors, on its investments in bonds on a fair value basis that includes value changes attributable to interest rate risk. Information is provided on that basis to the Trustees and key management personnel. Bonds can be converted into cash if necessary.

b) Credit risk
The IFRS Foundation is not exposed to material credit risk as investments are with highly rated and established institutions and contributions are due primarily from large regulatory or governmental bodies. For publications and subscriptions sales the IFRS Foundation does not generally offer credit. For licensing and royalty arrangements some credit risk arises. If accounts receivable are unpaid six months or more after the invoice date, the IFRS Foundation considers the amount impaired and recognises a bad debt provision. At 31 December 2013 the amount provided for was £68,000 (2012: £55,000).

(c) Foreign currency risk
The IFRS Foundation's expenses arise largely in sterling, whereas the organisation receives funding and future financing commitments, under various funding regimes, primarily in US Dollars and Euros. Some expenses are incurred and paid in US Dollars and Euros after which the net contributions in those currencies are exchanged for sterling. This exposes the organisation to currency risk.

The Trustees have implemented a strategy to mitigate the foreign exchange fluctuations and timing risks connected with these expected future net contributions. The IFRS Foundation generally forward sells approximately 90 per cent of its expected net US Dollar contributions and 50 per cent of its expected net Euro contributions to fix a sterling equivalent. Foreign currency is sold forward on a two-year rolling basis.

As at 31 December 2013 the IFRS Foundation had sold forward, on a two-year rolling basis, US Dollar $24,800,000 at a weighted average rate of 1.598 (2012: $25,300,000 at a weighted average rate of 1.602). It had also sold forward, on a two-year rolling basis euro €8,300,000 at a weighted average rate of 1.009 to sterling (2012: euro €6,600,000 at a weighted average rate of 1.186).

All non-current forward contracts expire in 2015 (2012: expire in 2014).

(d) Foreign currency sensitivity
As a result of its use of forward contracts as described above, the IFRS Foundation is exposed to the currency risk associated with the expected remaining 10 per cent of projected net US Dollar contributions and 50 per cent of projected net Euro contributions that are not covered by the forward contracts.

A potential 10 per cent increase in average exchange rates for sterling would have produced estimated losses on the remaining actual net US dollar contributions received during the year of £127,000, and on the remaining actual net euro contributions received during the year of £296,000. To the extent that projected contributions in either currency change, the IFRS Foundation actively manages the amount of each currency forward sold.

### 14. Taxation

For US tax purposes, the IFRS Foundation is classified as a not-for-profit, tax-exempt organisation.

In 2006 the IFRS Foundation reached an agreement with the UK authorities regarding the status of taxation on its publications and related revenues. For 2013 the taxation expense is calculated on that basis, and is estimated to be £0 (2012: £0). On the basis of activity for 2013 and from previous years, at the end of 2013 the IFRS Foundation is carrying forward a loss for UK tax purposes of £4,496,000 (2012: £3,626,000). Consistently with IAS 12 Income Taxes, the IFRS Foundation does not recognise this loss as a deferred tax asset, because of the uncertainty of being able to utilise these losses in the future.

### 15. Reduction (increase) in provision for HMRC Tax settlement

In May 2011 the UK tax authority (HMRC) began a review of the IFRS Foundation's records related to the employment taxation of staff and secondees from other jurisdictions, as well as for other more general taxation matters. The HMRC requested and the IFRS Foundation agreed to, total payments on account of £82,000 (2012: £76,000), on a without prejudice basis pending final resolution and settlement.

An initial estimate of the total liability in 2011 was £460,000. In 2012 this provision was reduced by £290,000 after HMRC agreed with the IFRS Foundation's tax treatment of one significant issue. During 2013 the review was brought to a final conclusion. The HMRC determined a final tax liability of £82,000, without penalty, on the remaining issues and accepted the payments on account in full settlement. As a result, a reduction in provision of £88,000 (2012: £290,000) has been recognised in the Statement of Comprehensive Income.

### 16. Approval of financial statements

These financial statements were approved by the Trustees of the IFRS Foundation on 10 April 2014 and authorised for issue on 10 April 2014, and at that date there were no significant events after the reporting period.

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