Introduction

In May 2008 the International Accounting Standards Board (IASB) issued an International Financial Reporting Standard, ‘Improvements to IFRSs’, which made amendments to a number of International Financial Reporting Standards (IFRS). The amendments arose from the IASB’s annual improvements process.

The Accounting Standards Board (ASB) has issued a Financial Reporting Exposure Draft (FRED) in response to the publication of ‘Improvements to IFRSs’. In addition to annual improvements the ASB has taken the opportunity to make other improvements to its Financial Reporting Standards (FRS), these are discussed below.

Background to the IASB’s annual improvements process

The IASB has adopted an annual process to deal with non-urgent, minor amendments to IFRSs. The process involves an annual project in which the IASB discusses and decides on proposed improvements to IFRS as they arise. The IASB then aims to publish an omnibus exposure draft of the collected proposals for public comment in October each year, with a comment period of 90 days. After the IASB has considered the comments received, it will aim to issue the amendments in final form in the following April, with an effective date of 1 January of the following year.

Issues dealt with in this process arise from matters raised by the International Financial Reporting Interpretations Committee (IFRIC) and suggestions from staff or practitioners, and focus on areas of inconsistency in IFRS or where clarification of wording is required.

The IASB issued an exposure draft of proposed Annual Improvements to International Financial Reporting Standards (IFRS) in October 2007. In response to the exposure draft the ASB issued a draft comment letter to the IASB setting out its proposed response and seeking feedback on the draft comment letter from UK constituents. The draft response also set out how the ASB intends to reflect the proposed amendments in UK financial reporting standards (FRS).

In January 2008 the ASB considered the feedback received on the draft comment letter and issued a revised comment letter to the IASB. A copy of the ASB’s final comment letter to the IASB can be downloaded here.

How the ASB proposes to address the IASB’s annual improvements process

The ASB consider the IASB’s annual improvements process at its meeting on 13 September 2007. The ASB noted that in recent years it had introduced as UK Financial Reporting Standards a number of International Financial Reporting Standards (IFRS) (i.e. FRS 26, FRS 27). In addition, the Board has amended certain UK FRS to converge with IFRS. As a consequence UK FRS might be categorised as:

In view of the various categories of UK Financial Reporting Standards the ASB decided it should:

1. improvements to IFRS that have been adopted in the UK should be proposed as amendments to the equivalent UK IFRS-based standard (category B would remain converged);
2. improvements to IFRS where the corresponding UK FRS has been amended to converge with IFRS should be proposed as amendments to the equivalent UK FRS (category C); and
3. it should evaluate all of the IASB improvements and where inconsistencies with UK FRS are identified, consider whether to amend the relevant UK FRS.

The proposals in the FRED follow the guidelines above. In addition the ASB is also proposing that other improvements to UK FRS, brought to its attention, should be considered alongside amendments arising from the IASB's annual improvements process.

Finally, the ASB notes that the IASB has made consequential amendments and editorial corrections to a number of its standards that have been introduced as UK IFRS-based standards. The ASB considers this an opportune time to reflect those editorial changes and consequential amendments in its UK-IFRS based standards.

This FRED is therefore divided into the following sections: 
 

Invitation to Comment

The Board is requesting comments on this FRED by 27 September 2008. The invitation to comment can be downloaded separately from this webpage.