Pensions

Work is continuing to develop a discussion paper that will take a fresh look at - and stimulate discussion on - the principles that might be reflected in a future accounting standard on pensions. The project is being led by the ASB as part of the PAAinE initiative that is a partnership including EFRAG and European standard-setters (see page 6). It is expected that the discussion paper will be published later in the year.

As reported in Inside Track 51, staff papers setting out different viewpoints on a number of topics that have been discussed with the Pensions Advisory Panel and the EFRAG Working Group were added to the ASB and EFRAG websites in April. They can be accessed via the following link: http://www.frc.org.uk/asb/technical/projects/project0065.html. ASB staff gave an update and discussed major issues with EFRAG TEG at its meeting on 31 May. In the last quarter, the ASB and the advisory groups have begun to consider draft sections of the discussion paper.

Conceptual Framework

As reported previously in Inside Track, the IASB and FASB are developing a common conceptual framework that they can both use in preparing new and revised accounting standards.

As noted on page 1, the first DP set out the preliminary views of the two Boards on the objective of financial reporting and the qualitative characteristics of decision-useful financial reporting information. In recent months, the Boards have continued to consider the responses to that DP and are expected to issue an Exposure Draft (ED) in the fourth quarter of 2007.

The Boards are taking forward work on a number of other phases of the project; for example, a DP on the reporting entity is scheduled to be issued during the third quarter of 2007. In addition, work has begun on the elements and measurement phases of the project. The ASB has been actively monitoring the progress of the discussions held on these topics and has taken part in roundtables and other discussions with the IASB on these topics.

Leases

The IASB and FASB are continuingto consider how a single 'right of use' model can be developed for leases. Under this model, the lessee would recognise an asset representing its right to use the leased item for the lease term and a corresponding liability for the lease rentals. The boards recently discussed the scope of the project, the treatment of lessee options to extend or terminate a lease, the measurement basis for the asset and liability arising in a simple lease example, and the timing of initial recognition of this asset and liability. A discussion paper is planned for issue in 2008.

Financial statement presentation

The IASB is expected to issue an amendment to IAS 1 shortly, making the changes proposed in the first phase of this project. These include the requirement for all non-owner changes in equity to be included in either a single statement of performance or a two-statement form, and income statement and a separate statement of other income and expenditure.

The IASB, jointly with the FASB, are continuing to consider proposals for the revised presentation of all financial statements, including the separation of income statement and balance sheet items into 'business' and 'financing' elements. A discussion paper on these proposals is expected later this year.