Amendment to Financial Reporting Standard (FRS) 3
In March, the ASB issued an ED proposing a limited amendment to FRS 3 ‘Reporting Financial Performance’, proposing clarifications to the application of the requirements of the standard in relation to the treatment of gains and losses on remeasurement and derecognition of certain financial instruments for entities within the scope of FRS 26 ‘Financial Instruments: Recognition and Measurement’ and FRS 23 ‘The Effects of Changes in Foreign Exchange Rates’. As the amendment is intended to clarify the application of standards already in force, the proposals were exposed for a short comment period ending on 27 April. The responses are currently being considered.
Proposed Interpretation of the Statement of Principles
As reported previously in Inside Track, the ASB is aiming to publish an 'Interpretation of the Statement of Principles for Financial Reporting for Public Benefit Entities'. The Exposure Draft that was published in August 2005 attracted over 70 responses and, whilst there was general support for the project, some concerns were raised, particularly in respect of the proposed interpretations for commitments to provide public benefits and accounting for capital grants.
The Board, as advised by its Committee on Accounting for Public benefit Entities (CAPE), has considered further those parts of the proposed Interpretation dealing with these issues as well as other issues raised by respondents to the Exposure Draft, such as accounting for donated goods and services and business combinations.
The Board is hoping to publish a final version of the proposed Interpretation in the next few months.
Half-Yearly Financial Reports
In February, the ASB issued an ED of a Statement ‘Half Yearly Financial Reports’, which is designed to provide guidance for entities that are required or voluntarily choose to prepare half-yearly financial reports. The ED can be accessed on the website via: http://www.frc.org.uk/asb/press/pub1262.html.
The ED updates the ASB's 1997 Statement 'Interim Reports', in particular following the implementation in the UK of the EU Transparency Directive through the Financial Services Authority's (FSA) Disclosure and Transparency Rules (DTR). The FSA has made clear in the DTR that UK issuers reporting under UK GAAP can satisfy the requirement for the half yearly financial statements to give a true and fair view by a statement that they have been prepared in accordance with pronouncements by the ASB.
The ASB decided to revise its 1997 Statement and rename it 'Half Yearly Financial Reports' to reflect the requirements of the DTR. Other than that, the ASB has sought to make the minimum number of changes necessary, including changes in terminology. The ASB has adopted this approach in order to have revised guidance prepared in time for the first round of half-yearly financial reports that have to be prepared to the meet the requirements of the DTR. The ASB is, however, also seeking views on a proposal to add a longer-term project to its agenda on interim financial reporting.
The comment period for responses closes on 14 May 2007.
UITF issues Abstract 45
In February, the ASB issued Abstract 45 'Liabilities arising from Participating in a Specific Market 'Waste Electrical and Electronic Equipment'.
The Abstract, which is based on IFRIC 6, gives guidance on accounting for liabilities for waste management costs under the EU Directive on waste electrical and electronic equipment (the WEEE Directive). The UK Regulations implementing the WEEE Directive (S.I. 2006 No.3289 'The Waste Electrical and Electronic Equipment Regulations 2006') entered into force in January 2007.
The Abstract addresses a model of attributing waste management costs where an individual producer's obligation arises from its participation in the market during each measurement period. The consensus is that the obligating event giving rise to a liability for waste management costs is participation in the market during a measurement period, i.e. a period in which market shares are determined for the purposes of allocating those costs. This model is applied in the UK Regulations in respect of waste from private households.
The UITF reminds entities to consider disclosure - for example, in the business review part of the directors' report or in an Operating and Financial Review - of information about the effect of future obligations for waste management costs that is relevant to assessing the entity's future performance and financial position.
