ASB Meeting 15 December 2011

The ASB agreed:

1. that the FRSSE would be maintained, in revised form, following the amendments to the Accounting Directives currently proposed by the European Commission;
2. that a further consultation on the FRSSE would be carried out in 2012;
3. that the objective of the disclosure on deferred tax was to provide an explanation of how an entity's future cash tax charge over the following three years was expected to differ from the standard tax rate; and

The ASB approved the draft FREDs for issue, subject to drafting amendments.

ASB Meeting 17 November 2011

Effective date

The ASB tentatively decided to defer the effective date until 1 January 2015. In making its decision the ASB took into consideration the interaction with the effective dates of new IFRSs, including IFRS 9; noting that an earlier application date could have the effect that entities wishing to adopt the reduced disclosure framework prior to IFRS 9 being effective could be required to make two sets of changes in the short-term; the ASB did not consider this to be acceptable.

FRED 45 Public Benefit Entities

The ASB completed its discussion on the responses to FRED 45 agreeing:

1. Property held for primarily for the provision of social benefit (e.g. social housing) should not be classified as an investment property. The ASB decided that this provision applied equally to public benefit entities and profit seeking entities.
2. To amend the definition of ‘value in use’ to include assets held for service potential.
3. Not to amend its proposals for concessionary loans.
4. To make a consequential amendment to the FRSSE, stating that public benefit entities applying the FRSSE pay attention to the PBE requirements in the [draft] FRSME.

FRED 44 FRSME

The ASB decided to provide guidance in the revised draft FRSME on the accounting for pension fund accounts which could then be developed further in the pension’s SORP.
The ASB decided to clarify that option pricing models were not required for the value of shared-based payments, particularly for unquoted shares.

The ASB considered a number of sweep issues and tentatively decided:

1. it was not possible under current UK company law to exempt subsidiaries of investment entities from consolidation, although the ASB supported such a move. It therefore tentatively agreed to amend the definition of held exclusively for resale to permit a wider group of subsidiaries to meet this criteria.
2. Not to provide guidance on the phrase ‘undue cost or effort’,
3. To amend the accounting requirements for group pension plans to be consistent with IAS 19 revised 2011 given the requirements are less restrictive than those in the draft FRSME.

FRSSE

The ASB decided to defer its discussion on the future of the FRSSE pending staff undertaking further research on recent EU proposals.
The ASB, however, tentatively decided on two further amendments to the FRSSE:

1. it revised the presumed life of goodwill and intangible assets to five years when an entity is unable to make a reliable estimate of the useful life.
2. it clarified that an entity shall assess, annually, whether there is any indication that an asset is impaired

ASB Meeting 20 October 2011

FRED 45 Public Benefit Entities

The ASB considered two matters arising from the FRED 45, how donated inventory should be measured and incoming resources from non-exchange transactions.

In relation to donated inventory the Board tentatively agreed that the fair value of the inventory on initial recognition should be the ‘deemed’ cost for valuing inventory. An entity that holds inventory for distribution (therefore the inventory has no selling price), should value such inventory at current replacement cost.

The Board tentatively agreed that incoming resources from non-exchange transactions should only be recognised when the resource (i.e. donated goods) can be measured reliably, and where consideration is given to the benefits and costs. Consequently, where it is not practical to estimate the value of donated goods with sufficient reliability or benefit the income is recognised when the donated goods are sold. The Board anticipates that these changes should mitigate the concerns regarding the need to recognise low value items donated to charity shops highlighted by respondents to FRED 45.

FRED 44 FRSME

The Board considered a number of issues in relation to the draft FRSME and tentatively decided:

The Board also considered various draft sections of the revised exposure draft of the FRSME, including the scope section. The Board tentatively decided that reduced disclosures permitted in the FRSME should only be available for entities that prepare consolidated financial statements in accordance with the FRSME.

Impact Assessment and Feedback statement

The Board also reviewed drafts of the Impact Assessment and Feedback Statement to its proposals. The Board discussed at length whether to include in its revised Impact Assessment a quantification of the costs, having stated in its previous FRED the benefits could not be quantified. The Board noted that given the breath of its proposals quantification to a single number might not provide useful information. The Board requested staff review the matter further.

ASB Meeting 29 September 2011

FRED 45 Public Benefit Entities

The Board considered an overview of responses to its supplementary exposure draft. The Board tentatively decided to amend the draft FRSME to incorporate the requirements in FRED 45 and not to issue separate guidance for PBEs. The FRSME would clearly identity PBE supplementary paragraphs.

The Board also requested that staff, in conjunction with its advisory committee CAPE, consider the following issues;

Application of the financial reporting requirements and the disclosure framework

The ASB considered initial drafts of two financial reporting exposure drafts:

‘Application of Financial Reporting Requirements’ and ‘Reduced Disclosure Framework’ and made the following tentative decisions:

The draft Financial Reporting Standard for small and medium-sized entities

The Board considered a paper on the accounting for government grants and noted that public benefit entities and the agriculture sector have concerns on the implications of the proposals in the draft FRSME. The Board asked staff to consider amending the draft FRSME such that current accounting practice in the UK & Republic of Ireland would not be changed. The Board decided that this would be an interim solution and that it would undertake a project to review grant accounting in the near future.

The Board agreed a number of amendments to the draft FRSME that would clarify its requirements. It also reviewed certain sections of the revised draft FRSME tentatively agreeing the proposed changes set out by staff.

Two sweep issues were considered:

ASB Meeting 8 September 2011

Re-exposure of the FRED

The ASB considered papers addressing:

In relation to changes to the draft FRSME, arising as a consequence of the ASB’s tentative decision to remove the definition of public accountability, it tentatively decided:
 

As regards the definition of a qualifying subsidiary the ASB tentatively decided that all subsidiaries should be permitted to take advantage of the reduced disclosure regime, however, subsidiaries which are financial institutions would not be permitted to take advantage of ‘IFRS 7 Financial Instrument: Disclosure’ exemptions. 

In relation to Company law formats and how these reconciled with the requirements in the draft FRSME, the ASB tentatively decided that the formats in Company law should take precedence and the draft FRSME should be amended accordingly. 

ASB Meeting 7 July 2011

The ASB considered a paper that reviewed how its tentative decisions, made on 16 June 2011, would affect the draft impact assessment. The ASB noted that its tentative decisions represented a significant change from its proposals in the FRED and that in contrast to its proposals in the FRED the implementation costs should be reduced. The Board considered it should review the project’s objectives at a future meeting in view of changes being made to the proposals.

The Board made the following tentative decisions:

   1.   To remove from FRED 43 & 44 the requirement for publicly accountable entities to prepare accounts under EU-adopted IFRS.  As a consequence the applicable of EU-adopted IRFS will not be extended beyond the current requirements in law.

   2.   To change the principles for amending the IFRS for SMEs to permit or require accounting options that exist in current UK & Republic of Ireland Financial Reporting Standards at the transition date that align with EU-adopted IRFS; and

   3.   To defer the effective date to 1 January 2014.

The Board deferred a decision on whether to introduce the proposed reduced disclosure framework set out in FRED 43. The Board requested that the staff undertake further work on the proposals in light of its decision to change the principles for amending the IFRS for SMEs.

The Board agreed to consider at its next meeting:

   1.   Any further changes that would be required to FRED 44 given its expanded scope following its decision above; this might include increased disclosures for financial institutions and publicly held companies;

   2.   The role of the SORPs;

   3.   Initial findings in relation to the Board's proposals and Company law; and

   4.   How its tentative decisions would affect its draft impact assessment.

ASB Meeting 26 May 2011

The Board received an overview of comment letters to FREDs 43 & 44. The Board agreed that the comment letters provide sufficient support for the further development of the proposal’s in the FRED.

The Board considered a project plan and agreed to consider, at its next meeting to be held on 16 June, papers addressing:

   1.   The definition of public accountability, specifically whether the Board should amend the definition as proposed in the FRED.  Any proposed amendment should evalute the impact on affected entities.

   2.   The principles for amending the IRFS for SMEs and whether the principles proposed in the FRED should be altered.

   3.   How any decisions in (1) and (2) above may affect the reduced disclosure regime; and

   4.   Feedback from the consultation on the effective date.

The Board also received a paper summarising the findings from the outreach programme relating to users of financial statements. 

ASB Meeting 5 May 2011

A second educational paper was presented to the Board that considered the recognition and measurement differences that could affect entities which current apply UK and Republic of Ireland financial reporting standards and would be required, under the proposals to apply EU-adopted IFRS, i.e. entities with public accountability.

ASB meeting 14 April 2011

The Board received an educational paper on the differences between EU-adopted IFRS and the proposed Financial Reporting Standard for Small and Medium-sized Entities. The paper was presented following feedback from the outreach programme regarding the recognition and measurement differences across the three proposed tiers for financial reporting.

ASB meeting 17 February 2011

The ASB received an update report from staff on the outreach programme which sought to raise awareness of the Board’s proposals.

1. to consult further on the specialist area of agriculture;
    
2. to amend the presentation requirement for pension benefits;
    
3. to include an exemption from consolidation for investment entities;
    
4. to amend the period of goodwill amortisation; and
    
5. to require disclosure of the fair value of non-cash assets distributed to owners.
6. Inventory and income received as a donation;
7. Funding commitments; and
8. Merger accounting.
9. To amend the disclosure framework in FRED 43 for recently issued IFRSs; and
10. To extend the application of the reduced disclosure framework to parent company individual financial statements.
11. Board also clarified that a pension fund would be required to apply IAS 26 ‘Accounting and Reporting by Retirement Benefit Plans’ and that it would not seek to restrict the options available in that standard; and
12. The Board tentatively agreed to retain (in addition to UITF 43) UITF Abstract 48 ‘Accounting Implications of retail prices index with the consumer prices index for retirement benefits’.
13. The project objective;
14. Possible amendments to the FRSME;
15. The definition of a qualifying subsidiary; and
16. Company law formats.
17. To remove from FRED 43 & 44 the requirement for publicly accountable entities to prepare accounts under EU-adopted IFRS. As a consequence the application of EU-adopted IFRS will not be extended beyond the current requirements in law;
18. To change the principles for amending the IFRS for SMEs to permit or require accounting options that exist in current UK & Republic of Ireland Financial Reporting Standards at the transition date that align with EU-adopted IFRS; and
19. To defer the effective date to 1 January 2014.
20. Any further changes that would be required to FRED 44 given its expanded scope following its decision above; this might include increased disclosures for financial institutions and publicly held companies;
21. The role of the SORPs;
22. Initial findings in relation to the Board’s proposals and Company law; and
23. How its tentative decisions would affect its draft impact assessment.
24. The definition of public accountability, specifically whether the Board should amend the definition as proposed in the FRED. Any proposed amendment should evaluate the impact on affected entities;
25. The principles for amending the IFRS for SMEs and whether the principles proposed in the FRED should be altered;
26. How any decisions in (i) and (ii) above may affect the reduced disclosure regime; and
27. Feedback from the consultation on the effective date.