The Accounting Standards Board (ASB) has today issued an exposure draft of amendments to Financial Reporting Standard (FRS) 20 (IFRS 2) ‘Share-based Payment – Group Cash-settled Share-based Payment Transactions’. A consequential amendment is proposed to UITF Abstract 44 (IFRIC Interpretation 11) ‘FRS 20 (IFRS 2) – Group and Treasury Share Transactions’. This follows similar proposals issued in December 2007 by the International Accounting Standards Board (IASB).

The IASB proposals respond to requests for guidance on how a group entity that receives goods or services from its suppliers (including employees) should account for the following arrangements:

• Arrangement 1—the entity’s suppliers will receive cash payments that are linked to the price of the equity instruments of the entity
• Arrangement 2—the entity’s suppliers will receive cash payments that are linked to the price of the equity instruments of the entity’s parent.

Under either arrangement, the entity’s parent has an obligation to make the required cash payments to the entity’s suppliers. The entity itself does not have any obligation to make such payments.

The proposed amendment clarifies that the standard applies to arrangements such as those described above even if the entity that receives goods or services from its suppliers is not the entity within the group that has the obligation to make the required share-based cash payments. The proposed amendment to IFRIC 11 and UITF 44 specifies that the entity should measure the goods or services in accordance with the requirements for cash-settled share-based payment transactions.

Following the issue of the IASB exposure draft, the ASB is proposing to make corresponding changes to FRS 20 and UITF 44 to keep it in line with the international standard. The ASB believes that the proposals set out in this exposure draft should not impose significant additional costs of preparation, but would welcome the views of constituents.

Comments on the exposure draft are requested by 31 March 2008.

1. The ASB is an operating body of the Financial Reporting Council (FRC), the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance. Its functions are exercised principally by its operating bodies (the ASB, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board and the Accountancy and Actuarial Discipline Board) and by the Committee on Corporate Governance.
2. The main role of the ASB is to issue accounting standards. The ASB collaborates with accounting standard-setters from other countries and the International Accounting Standards Board (IASB) both in order to influence the development of international standards and in order to ensure that its standards are developed with due regard to international developments. 
3.  The ASB has eleven Board members, of whom two (the Chairman and the Technical Director) are full-time, and the remainder, who represent a variety of interests, are part-time.
4. The Exposure Draft can be downloaded, free of charge, from the FRC website at http://www.frc.org.uk/asb/publications/documents.cfm. Hard copies of the Exposure Draft can be obtained at a cost of £10.00 (the same price as the IASB’s equivalent Exposure Draft), post-free, from FRC Publications, 145 London Road, Kingston upon Thames, Surrey KT2 6SR (020 8247 1264). Web: www.frcpublications.com.
5. Press enquiries should be addressed to Ian Mackintosh (Chairman) on 020 7492 2434, David Loweth (Technical Director) on 020 7492 2420 or Simon Peerless (Project Director) 020 7492 2424.