This page gives a brief summary of all current UITF projects, including the date of publication and the comment deadline. More detailed information including draft Abstracts can be found in UITF Information Sheets. Each project is linked to the relevant Information Sheet. Information on recently completed UITF projects also appears on this page.
Share-based payments – group and treasury share transactions
Abstract 44 ‘FRS 20 (IFRS 2) – Group and Treasury Share Transactions’ was issued on 2 February. It has the effect of implementing IFRIC Interpretation 11.
FRS 20 ‘Share-based Payment’ is a converged standard with IFRS 2, and so this abstract is necessary to keep the accounting requirements of each standard the same. The abstract addresses whether certain share-based payment transactions, including transactions in which a supplier to a subsidiary is provided with equity instruments of the parent, should be accounted for as cash-settled or equity-settled. The ASB has noted the potential compliance burden on subsidiaries in respect of the cash-settled treatment the Abstract requires for awards made by subsidiaries over the parent company and has indicated that it is minded to consider an amendment to FRS 20 to remove this burden. The UITF will consider whether it is necessary to develop additional guidance in respect of transactions between group entities.
Waste electrical and electronic equipment
Abstract 45 ‘Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment’ was issued on 13 February 2007.
The Abstract ,which is based on IFRIC Interpretation 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’) were laid before Parliament on 12 December 2006 and entered into force on 2 January 2007.
IFRIC 6 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, i.e. a pay-as-you-go arrangement. 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.
Implementation issue for entities complying with FRS 26.
The UITF has considered a potential conflict between parts of FRS 3 ‘Reporting Financial Performance’ and FRS 26 ‘Financial Instruments: Recognition and Measurement’, relating to the treatment of gains and losses on certain financial assets, for entities within the scope of FRS 26 and recommended to the ASB a limited amendment to FRS 3. The ASB will be asked to approve the issue of an exposure draft at a meeting in March.
Equivalence for the purposes of section 228A of the Companies Act 1985
Abstract 43 'The Interpretation of equivalence for the purposes of section 228A of the Companies Act 1985' was issued on 23 October 2006.
With effect for accounting periods commencing on or after 1 January 2005, the Companies Act 1985 has been amended to include a new section 228A. This exempts, subject to certain conditions, an intermediate parent undertaking from the requirement to prepare consolidated accounts where the parent entity is not established under the law of an EEA state. The new exemption extends to UK companies an optional exemption in the EU Seventh Company Law Directive that was not taken up when its provisions were originally enacted through the Companies Act 1989. The new exemption complements the well established exemption in section 228 for intermediate parent undertakings where the parent entity is established under the law of an EEA state.
Exemption is conditional upon compliance with various conditions, including that the intermediate parent and all of its subsidiaries are included in consolidated accounts for a larger group drawn up in accordance with the provisions of the Seventh Directive or in a manner equivalent to consolidated accounts so drawn up. Questions have been raised as to whether financial statements drawn up in accordance with International Financial Reporting Standards, US GAAP and other GAAPs meet the requirement for ‘equivalence’ with the Seventh Directive. .
Retirement benefit schemes with a promised return on contributions
A draft Abstract 'Retirement Benefit Schemes with a Promised return on Contributions or Notional Contributions' was issued in July 2004. The draft, in Information Sheet 67, sets out for UK use the text of a draft Interpretation of IAS 19 'Employee Benefits' (IFRIC D9) issued by the IASB's International Financial Reporting Interpretations Committee (IFRIC).
The draft Abstract provides proposed guidance on how a reporting employer applies the requirements of FRS 17 'Retirement Benefits' to certain retirement benefit schemes that promise employees a specified return on contributions. An example is a scheme that provides a benefit equal to specified contributions plus the growth on the assets in which the contributions are invested, but there is the promise of a return of at least 4 per cent a year. The IFRIC decided at its meeting in November 2006 to remove this item from its agenda because the issues are expected to be addressed as part of the IASB’s project on employee benefits. Accordingly, the UITF will not be issuing an Abstract on this topic.
