The IFRS Foundation’s financial statements are prepared in accordance with IFRS Standards. Financial highlights of the accompanying financial statements are as follows:
In 2017, contributions were £
In addition, there were unrealised exchange gains on forward foreign exchange contracts of £
Because of the United Kingdom’s decision to leave the European Union, currency exchange rates have experienced volatility, which is expected to continue. For more information on how the IFRS Foundation manages its currency risk refer to Note 7.
Overall publications and related activity revenue increased by 8%, or £473,000, from 2016. Licensing fees and revenue amounted to £
The cost of publications and related expenses increased by 10%, or £302,000, to £
Total operating expenses were £
There was a temporary decrease in headcount in 2017 owing to the timing gaps between leavers and their replacements leading to remuneration costs being lower than expected.
As of 31 December 2017, the IFRS Foundation’s reserves were £
In 2018, the IFRS Foundation will continue to manage its operating expenditure prudently and effectively and will actively pursue further initiatives to enhance the organisation’s income. The 2018 plan includes the relocation of the Central London office to Canary Wharf in August; however, the organisation’s operating requirements are not expected to increase significantly because of the move or other operational factors.
These financial statements cover the year ended 31 December 2017. They have been prepared in compliance with IFRS Standards, including Interpretations, that were effective or applied early on 1 January 2017.
The financial statements were approved and authorised for issue by the IFRS Foundation Trustees on
We have audited the financial statements of IFRS Foundation (Foundation), which comprise the statement of financial position as at 31 December 2017, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Foundation as at 31 December 2017, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS Standards).
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the ‘Auditor's Responsibilities for the Audit of the Financial Statements’ section of our report. We are independent of the Foundation in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
This report is made solely to the Foundation's Trustees, as a body, in accordance with our letter of engagement dated 23rd October 2017. 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.
The Trustees are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
The Trustees are responsible for the preparation of financial statements that give a true and fair view in accordance with IFRS Standards, and for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Trustees are responsible for assessing the Foundation's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Foundation or to cease operations, or have no realistic alternative but to do so.
The Trustees are responsible for overseeing the Foundation's financial reporting process.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
We communicate with the Trustees regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
United Kingdom
Date: 30 April 2018
Year ended 31 December 2017
|
|
2017 |
2016 |
||
|
Note |
£'000 |
|
£'000 |
|
|
Income |
||||
|
Contributions |
5 |
|
|
|
|
Revenue from publications and related activities |
6 |
|
|
|
|
Other income |
5 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
||||
|
Technical and operational activities |
||||
|
• Board member and staff costs |
1 |
(
|
|
(
|
|
• Other technical and operating costs |
1 |
(
|
|
(
|
|
• IFRS Advisory Council, IFRS Interpretations Committee and other Advisory bodies |
1 |
(
|
|
(
|
|
Publications and related activities expenses |
6 |
(
|
|
(
|
| Trustee oversight |
2 |
(
|
|
(
|
|
Premises, occupancy and related expenses |
3 |
(
|
|
(
|
|
|
|
(
|
|
(
|
|
Net operating income |
|
|
|
|
|
Finance income |
9 |
|
|
|
|
Finance costs |
9 |
(
|
|
(
|
|
|
|
(
|
||
|
Income before tax |
|
|
|
|
|
Income tax expense |
4 |
|
|
|
|
Comprehensive income for the year |
|
|
|
|
Year ended 31 December 2017
|
Retained surplus at beginning of year |
|
|
||
|
Comprehensive income for the year |
|
|
|
|
|
Retained surplus at end of year |
|
|
|
As at 31 December 2017
|
|
|
2017 |
2016 |
|
|
Note |
£'000 |
|
£'000 |
|
|
Assets |
||||
|
Current assets |
||||
|
Cash and cash equivalents |
|
|
|
|
|
Contributions receivable |
5 |
|
|
|
|
Trade and other receivables |
|
|
|
|
|
Prepaid expenses |
|
|
|
|
|
Inventories |
|
|
|
|
|
Bonds at fair value, including accrued interest |
8 |
|
|
|
|
Forward currency contracts at fair value |
7 |
|
|
|
|
|
|
|
|
|
|
Non-current assets |
||||
|
Bonds at fair value, including accrued interest |
8 |
|
|
|
|
Forward currency contracts at fair value |
7 |
|
|
|
|
Leasehold improvements, furniture and equipment |
3 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|
Liabilities |
||||
|
Current liabilities |
||||
|
Trade and other payables |
|
|
|
|
|
Payroll taxes payable |
|
|
|
|
|
Accrued expenses |
|
|
|
|
|
Contributions received in advance |
5 |
|
|
|
|
Rent incentive |
3 |
|
|
|
|
Lease reinstatement provision |
3 |
|
|
|
|
Publications revenue received in advance |
6 |
|
|
|
|
Forward currency contracts at fair value |
7 |
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
||||
|
Forward currency contracts at fair value |
7 |
|
|
|
|
Lease reinstatement provision |
3 |
|
|
|
|
Rent incentive |
3 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
Net assets |
|
|
|
|
Year ended 31 December 2017
|
|
2017 |
2016 |
||
|
|
Note |
£'000 |
£'000 |
|
|
Operating activities |
||||
|
Cash received |
||||
|
Contributions |
|
|
|
|
|
Publications and related activities |
|
|
|
|
|
Funding for Asia-Oceania office |
5 |
|
|
|
|
Interest |
|
|
|
|
|
Foreign exchange settlements |
|
|
|
|
|
Other receipts |
|
|
|
|
|
Cash paid |
||||
|
Salaries, wages and benefits |
|
(
|
(
|
|
|
Publications and related activities expenses |
|
(
|
(
|
|
|
Trustees' fees |
|
(
|
(
|
|
|
Foreign exchange settlements |
|
(
|
|
|
|
Other operating expenses |
|
(
|
(
|
|
|
Net cash from operating activities |
|
|
|
|
|
Investing activities |
||||
|
Matured bonds receipts |
|
|
|
|
|
New bond purchases |
|
(
|
(
|
|
|
Purchase of leasehold improvements, furniture and equipment |
|
(
|
(
|
|
|
Net cash from investing activities |
|
(
|
(
|
|
|
Effects of exchange rate changes on cash and cash equivalents |
|
( |
( |
|
|
Net increase in cash and cash equivalents |
|
|
(
|
|
|
Cash and cash equivalents at the beginning of the year |
|
|
|
|
|
Cash and cash equivalents at the end of the year |
|
|
|
|
The accompanying notes form part of these financial statements.
For the year ended 31 December 2017
The
The Foundation’s most important intangible asset is the intellectual property embodied in the IFRS Standards. The Foundation does not recognise this asset because the value and future economic benefits cannot be reliably measured. Accordingly, costs related to the development of IFRS Standards are recognised as an expense when they are incurred.
All other accounting policies that are relevant to an understanding of the financial statements are provided throughout the notes to the financial statements.
All accounting policies have been applied consistently to the two years presented. The financial statements have been drawn up on the basis of IFRS Standards, Interpretations and amendments effective or applied early at 1 January 2017.
In 2009, the Foundation elected to apply IFRS 9 Financial Instruments (2009) early; the Foundation has elected not to apply early subsequent versions of IFRS 9 published in 2010, 2013 and 2014. IFRS 9 (2014) has an effective date of 1 January 2018. IFRS 9 (2014) expands the current disclosure requirements. Apart from that, we do not expect any material effects on the Foundation’s financial statements.
In 2014, IFRS 15 Revenue from Contracts with Customers was issued; the Foundation has elected to not apply early it before the effective date of 1 January 2018. IFRS 15 expands the current disclosure requirements about revenue recognition. Apart from that, we do not expect any material effects on the Foundation’s financial statements.
In 2016, IFRS 16 Leases was issued; the Foundation has elected to not to apply it before the effective date of 1 January 2019. Under IFRS 16 the Foundation expects to recognise leasehold premises in the statement of financial position at approximately £3.1 million, together with a broadly similar lease liability (based on a five-year break clause).
In 2017, IFRS 17 Insurance Contracts was issued; the Foundation has elected not to apply it before the effective date of 1 January 2021. This Standard is not expected to be applicable to the Foundation.
The explanatory notes have been organised into sections that provide a more cohesive presentation of the financial reporting implications of the Foundation’s core activity—the development of IFRS Standards—how it funds that activity and how it manages the contributions from the several currencies of its funding providers. Each section presents the financial information and any material accounting policies that are relevant to understanding the activities of the Foundation.
The main costs associated with developing IFRS Standards are the salaries of the Board members and the staff. The Foundation had an average of
|
|
2017 |
2016 |
|
|
|
£'000 |
|
£'000 |
|
Board member salaries and related costs |
|
|
|
|
Technical and operational staff salaries and related costs |
|
|
|
|
|
|
|
|
The Trustees’ Human Capital Committee reviews, benchmarks and recommends salary and benefit levels, which are reviewed and approved annually by the Trustees as a whole. Board members gross salaries covering all compensation and benefits for 2017 were as follows: £
|
|
2017 |
2016 |
|
|
|
£'000 |
|
£'000 |
|
Audit, legal and taxation advice |
|
|
|
|
Communication and technology |
|
|
|
|
External relations |
|
|
|
|
Human resource and recruitment activities |
|
|
|
|
Meeting video conferencing |
|
|
|
|
Travel and meetings |
|
|
|
|
Other office-related costs |
|
|
|
|
|
|
|
|
In 2017 and 2016, the Foundation paid remuneration to the Chair of the IFRS Advisory Council of £
Members of the IFRS Interpretations Committee are not remunerated by the Foundation for their work on this body. However, they are reimbursed for their travel costs for attending the meetings.
Members of the Board’s other advisory bodies meet their own costs for attending meetings. No members of these bodies are remunerated by the Foundation.
The remuneration, travel and meeting costs for these committees and advisory bodies are as follows:
|
|
2017 |
2016 |
|
|
|
£'000 |
|
£'000 |
|
IFRS Advisory Council remuneration costs |
|
|
|
|
IFRS Advisory Council travel and meeting costs |
|
|
|
|
IFRS Interpretations Committee travel and meeting costs |
|
|
|
|
|
|
|
The Foundation’s management and governance is overseen by
Costs associated with Trustee activities are as follows:
|
|
2017 |
2016 |
|
|
|
£'000 |
|
£'000 |
|
Remuneration costs |
|
|
|
|
Travel and meeting costs |
|
|
|
|
|
|
|
The components of premises, occupancy and related expenses are as follows:
|
|
2017 |
2016 |
|
|
|
£'000 |
£'000 |
|
|
Rent |
|
|
|
|
Rates, insurance and energy |
|
|
|
|
Service charges |
|
|
|
|
Depreciation |
|
|
|
|
Other costs |
|
|
|
|
|
|
|
|
|
Less amounts included in publications costs |
(
|
(
|
|
|
|
|
The Foundation operates from two premises, both of which are leased. The main activities are undertaken at 30 Cannon Street in London, UK. The Foundation also has an Asia-Oceania office located in the Otemachi Financial City South Tower in Tokyo, Japan. The Foundation has commitments for operating leases for the London premises until September 2018 and for the Tokyo premises until September 2022. In January 2018, the Foundation entered a new 10-year lease for a
London premises based in Canary Wharf, this lease includes a five-year break clause. The fit out and relocation costs of the new premises are estimated to be in the range of £
The Foundation received a rent incentive at the commencement of the lease for its current London premises, which was recognised as a liability. The aggregate benefit of the incentive is recognised as a reduction of the rental expense evenly over the lease term.
The estimated costs of reinstating the premises when the leases expire are recognised as lease reinstatement obligations and are included in leasehold improvements and spread evenly over the remaining lease term. The London occupancy at 30 Cannon Street will end in 2018.
All operating lease contracts contain market review clauses. Obligations due on the leases, excluding service charges and property rates, are as follows:
|
|
2017 |
2016 |
|
|
|
£'000 |
£'000 |
|
|
Within one year |
|
|
|
|
In two to five years |
|
|
|
|
More than five years |
|
|
|
|
|
|
|
Leasehold improvements, furniture and equipment are initially
|
|
2017 |
2016 |
||
|
|
£'000 |
£'000 |
||
|
Leasehold improvements |
||||
|
Cost |
|
|
||
|
Accumulated depreciation |
(
|
(
|
||
|
Carrying amount |
|
|
||
|
Furniture and equipment |
||||
|
Cost |
|
|
||
|
Accumulated depreciation |
(
|
(
|
||
|
Carrying amount |
|
|
||
|
Total carrying amount |
|
|
||
For US tax purposes, the Foundation is classified as a not-for-profit, tax-exempt organisation. In 2006 the Foundation reached an agreement with the UK authorities regarding the status of taxation on its publications and related revenues. For 2017, the taxation expense is calculated on that basis, and is estimated to be £
At the end of 2017 the Foundation is carrying forward a loss for UK tax purposes of £
The Foundation received separate funding in 2017 of £
The Foundation receives contributions in a wide range of currencies, as follows:
|
2017 |
2016 |
||
|
|
£'000 |
£'000 |
|
|
UK Pounds |
|
|
|
|
US Dollars |
|
|
|
|
Euro |
|
|
|
|
Other |
|
|
|
|
|
|
|
For more information on how the foundation manages its currency risk refer to Note 7.
The following table presents the components of the net revenue generated by the Foundation’s publications and related activities.
|
|
2017 |
2016 |
|
|
£'000 |
£'000 |
||
|
Revenue |
|||
|
Sales of publications and subscriptions |
|
|
|
|
Licensing and waiver fees |
|
|
|
|
Other revenue, primarily conferences |
|
|
|
|
|
|
||
|
Expenses |
|||
|
Staff salaries and related costs |
|
|
|
|
Cost of goods sold |
|
|
|
|
Depreciation |
|
|
|
|
Other costs, including occupancy expenses |
|
|
|
|
|
|
||
|
Net income from publications and related activities |
|
|
|
To manage risks associated with fluctuations in voluntary contribution levels, the Trustees of the Foundation have set a target of maintaining sufficient funds to be able to meet at least 12 months of its operating costs. The Foundation’s expenses arise largely in sterling, whereas the organisation receives funding and future financing commitments, under various publicly sponsored funding regimes, primarily in US dollars and euros (refer to Note 5). 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. This note explains the financial reporting consequences of how the Foundation manages foreign currency risk.
The Trustees have implemented a strategy to mitigate the foreign exchange fluctuation risks connected with these expected future net contributions. The Foundation generally forward sells approximately
The forward foreign exchange contracts used by the Foundation to mitigate foreign exchange risk are recognised at fair value and subsequently measured at fair value through profit or loss.
The following table presents the fair value and notional value of these contracts by currency:
|
|
2017 |
2016 |
|||||
|
Forward foreign exchange contracts by currency: |
Fair value |
Notional value |
Weighted average rate |
Fair value |
Notional value |
Weighted average rate |
|
|
'000 |
'000 |
'000 |
'000 |
||||
|
Financial assets |
|||||||
|
USD (Level 2) |
£
|
$
|
|
|
|
|
|
|
JPY (Level 2) |
£
|
¥
|
|
|
|
|
|
|
EUR (Level 2) |
|
|
|
£
|
€
|
|
|
|
|
|||||||
|
Financial liabilities |
|||||||
|
USD (Level 2) |
£(
|
$
|
|
£(
|
$
|
|
|
|
EUR (Level 2) |
£(
|
€
|
|
£(
|
€
|
|
|
The fair value of forward foreign exchange contracts is bank-provided and based on price models using observable exchange rates, described as Level 2 in IFRS 13 Fair Value Measurement. All non-current forward contracts expire by 2020. The effect of these forward contracts is that the Foundation is exposed to the currency risk associated with the expected remaining
A potential 10% 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 £
The Foundation manages its working capital to ensure sufficient cash resources are maintained to meet short-term liabilities. The Foundation has no borrowings.
The Foundation has a target of keeping an amount in cash equal to or exceeding the upcoming quarter’s expenditure. Cash is held either as current or as short-term deposits at floating rates of interest. Part of the cash at bank is held in euro, Japanese yen and US dollar accounts to meet expenditure obligations. Surplus funds are invested in sterling-denominated, fixed rate bonds of governments, governmental agencies, or international organisations, with AAA ratings at the time of purchase. These funds are reserves for continuing operations and capital expenditure.
The 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. Financial results are provided on that basis to the Trustees and key management personnel. Bonds can be converted into cash if necessary.
Bonds are recognised at fair value and subsequently measured at fair value through profit or loss. The values of these bonds are quoted on active markets, described as Level 1 in IFRS 13.
Fair values and face values of current and non-current bonds are presented in the following table.
|
|
2017 |
2017 |
2016 |
2016 |
|||
|
Fair value |
Face value |
Fair value |
Face value |
||||
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|||
|
Current, including accrued interest |
|
|
|
|
|||
|
Non-current, including accrued interest |
|
|
|
|
|||
|
|
|
|
|
The Foundation measures all other financial instruments at amortised cost. Those financial instruments include financial assets with a total carrying amount of £
|
2017 |
2016 |
||
|
£'000 |
£'000 |
||
|
Finance income: |
|||
|
Interest income |
|
|
|
|
Fair value gains on forward foreign exchange contracts |
|
|
|
|
Fair value gains on bonds |
|
|
|
|
Exchange gains on forward foreign exchange contracts and cash holdings |
|
|
|
|
|
|
||
|
Finance costs: |
|||
|
Fair value losses on forward foreign exchange contracts |
(
|
(
|
|
|
Fair value losses on bonds |
(
|
|
|
|
Exchange losses on forward foreign exchange contracts and cash holdings |
(
|
|
|
|
|
(
|
(
|
|
|
|
|
|
(
|
Fair value gains and losses from bonds do not include interest income.
Copyright © 2018 IFRS Foundation
All rights reserved. Permission granted to reproduce for personal and educational use only. Otherwise, no part of this webpage may be translated, reprinted or reproduced or utilised in any form either in whole or in part or by any electronic, mechanical or other means, now known or hereafter invented, including photocopying and recording, or in any information storage and retrieval system, without prior permission in writing from the IFRS Foundation.