United Kingdom
Financial Reporting Bulletins
2010 Publications:
Issue 14 2010 ASB Capital Management Disclosures Survey.
The ASB has recently published a short report commenting on the adequacy of financial capital management disclosures. The report considers the disclosures made under paragraphs 134 and 135 of IAS 1(R) which require companies to explain what they see as capital, how it is managed and the key ratios and other quantitative data that they use to measure capital. The report also suggests that capital management is an important factor to consider when giving a balanced and comprehensive business review as required by the Companies Act 2006 (section 417).
The study highlights a number of examples of good practice which illustrate how the disclosures might be tailored so as to provide more relevant and useful information.
Issue 13 2010 GAAP differences – an overview of the draft FRSME vs current UK GAAP and IFRS.
At the very end of October 2010, the UK's Accounting Standards Board issued an exposure draft of its proposals for the future of financial reporting in the UK. This FRB very briefly outlines those proposals and then looks at two sets of key accounting differences: those between current UK GAAP and the proposed Financial Reporting Standard for Medium-sized Entities (FRSME) and those between EU-adopted IFRS and the FRSME. Not all of the differences are summarised, and nothing can replace reading the full proposals.
If the proposals become a final standard then they will have effect for accounting periods beginning on or after 1 July 2013, but advance planning will be crucial.
These are illustrative UK GAAP financial statements of an unlisted UK company prepared in accordance with UK GAAP. They are intended to be used as a source of general technical reference as they show suggested disclosures together with their sources. They are not intended to address the particular circumstances of any particular individual or entity.
Issue 12 2010 December 2010 Year-End Reminders.
This FRB outlines the changes that must be made for both IFRS and UK GAAP accounts as at December 2010 and updates FRB 2010/06 IFRS: Reminders for 2010.
This is version 2 which has been updated for new events between 18th November and 29 December 2010. The attached pdf shows the changes made to the first version.
1) Changes include the publication by the IASB of:
- Deferred Tax: Recovery of Underlying Assets Amendments to IAS 12.
- Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters. Amendments to IFRS 1
- IFRS Practice Statements Management Commentary: A framework for presentation.
2) The need to consider the impact of the replacement of RPI with CPI as the inflation measure for determining minimum pension increases and the issue of UITF Abstract 48.
3) Changes in Directors’ Remuneration Disclosures and Corporate Governance.
Issue 11 2010 Extinguishing Financial Liabilities with Equity Instruments.
This FRB looks at UITF 47. UITF 47 applies to entities that have adopted FRS 26 and clarifies the accounting for the renegotiation of the terms of a financial liability by a debtor and creditor that results in the debtor extinguishing all or part of a liability due to the creditor by issuing its own equity instruments to the creditor. The Abstract reproduces IFRIC 19 amended to enable the Interpretation to be applied in a UK context and includes a a UK Legal Appendix that is equally valid for UK companies accounting in accordance with IFRS and IFRIC 19.
Issue 10 2010 Changes to Corporation tax rates following the 2010 Emergency Budget.
This FRB looks at the financial reporting effect of the announcement by the Chancellor of the Exchequer that he intends to reduce Corporation Tax from 28% to 24% over a period of four years.
In calculating deferred tax the rate to apply for accounting periods ending on or after 20 July 2010 (including interim accounting periods); or to reversals after 31 March 2011; should be 27% in all cases, notwithstanding the stated intention to reduce the rate further in subsequent periods.
Issue 9 2010 Financial Reporting Review Panel – Annual Report 2010.
This FRB summarises the key aspects of the Financial Reporting Review Panel’s (FRRP or ‘the Panel’) Activity Report for this year, which describes the results of their investigations.
The Panel continues to review a large number of accounts and there has been a noticable increase in the proportion of reviews that result in letters being sent to companies seeking explanation and clarification.
This FRB also emphasises the action that can be taken to minimise the risk of receiving an FRRP letter and also serves as a reminder of the procedures in the event a client receives an FRRP letter."
The Financial Reporting Council (the ‘FRC’) issued the UK Corporate Governance Code in June 2010. The 2010 Code supersedes the Combined Code on Corporate Governance (the ‘2008 Code’) for accounting periods beginning on or after 29 June 2010. Like the 2008 Code, the 2010 Code is primarily relevant to companies with a listing on the main market of the London Stock Exchange. This FRB summarises the new requirement.
Issue 7 2010: Capital Contributions
There are currently an increasing number of arrangements involving capital contributions. This FRB examines the accepted accounting practice and its basis in accounting theory.
This FRB considers the following scenarios in terms of UK GAAP and IFRS:
- Waiver of a loan from a parent to a subsidiary.
- Waiver of a loan from a subsidiary to a parent.
- Waiver of a loan from a subsidiary to a fellow subsidiary.
Issue 6 2010: Reminders for 2010
This FRB looks at IFRS that are mandatory for periods beginning after 1 January 2009. These are applicable to interims at June and September 2010 and annual accounts from June 2010. The main changes are the revised IFRS 3 Business combinations and revised IAS 27 Separate and Consolidated Financial Statements, both of which are mandatory for periods beginning on or after 1 July 2009. These and other changes are listed on the FRB under mandatory dates. Further information and references to more detailed IFRBs and FRBs are given in Appendices to the FRB.
Issue 5 2010: an overview of the IFRS for SMEs vs UK GAAP and IFRS
This FRB outlines the current position on the ASB’s project looking at the future of UK GAAP and in particular the possible adoption of the IFRS for SMEs. It considers the ASB and the European Commission projects on the IFRS for SMEs and gives an overview of GAAP differences, showing key differences first between full IFRS and the IFRS for SMEs, and then between UK GAAP and the IFRS for SMEs.
Issue 4/2010: December 2009 Year-End Reminders
This FRB discusses what is new and different for financial statements prepared as at 31 December 2009. It covers IFRS, UK GAAP and the Companies Act. IFRS appliers should be familiar with these requirements already, as they were covered in FRB Issue 5/2009.
Issue 3/2010: Amendments to FRS 25 (IAS 32) Classification of Rights Issues
This FRB discusses the amendment to FRS 25 stating that a rights issue to all shareholders for a fixed number of shares at a price fixed in a foreign currency is not classified as a derivative liability. It brings into UK GAAP a similar amendment made to IAS 32.
The ASB recently published dome research into narrative reportng. Although it is aimed at Fully Listed companies, its observations and advice should provide useful guidance for all who have to prepare narrative reports for their company.
Issue 01 2010: Improvements to Financial Reporting Standards
The ASB issued an FRS on 'Improvements to Financial Reporting Standards' in December 2009 based on the Financial Reporting Exposure Draft that it issued in June 2009. It will be necessary to consider the added disclosure requirements of FRS 11, particularly in situations where impairment losses are to be recorded. Further, it will also be necessary to identify whether to change accounting policies as a result of the other amendments to Financial Reporting Standards. The main effective date is accounting periods beginning on or after 1 January 2010.