Comments from ACCA to the Financial Reporting Council (FRC), September 2009. ACCA is pleased to have this opportunity to comment on the financial reporting exposure draft (FRED) on the above subject. The FRED was considered by ACCA's Financial Reporting Committee and I am writing to give you their views on the specific questions raised within it.
Proposals set out in this FRED seek to implement the amendments made by the IASB from its annual improvement project. Do you agree with the ASB proposals for the implementation of these changes to UK GAAP?
If not, please explain why.
We support the consequential amendments to UK standards in order to retain their converged status with IFRS. We did not raise any specific concerns about these particular improvements to IFRS during their improvement deliberations.
In addition, the FRED proposes amendments specific to the UK GAAP. Do you agree with the ASB proposals for the implementation of these changes to UK GAAP?
If not, please explain why.
The proposed amendments to FRS11 extending the disclosure requirements on discount rates used and around assumptions used by management, are an improvement and consistent with IFRS, and we therefore support them.
Constituents often make the point in their comment letters that the ASB should ensure that FRS that are converged with IFRS should remain so and that any amendments made by the IASB should flow through into UK GAAP. Some argue that there are significant benefits for both preparers and users in ensuring consistency between both sets of standards. Overall, the ASB believes that the changes proposed in this FRED will lead to an improvement in the quality of financial reports prepared under UK GAAP.
Do you agree with the Board's assertion that these proposals will have a positive effect on the quality of financial reporting?
If not, please explain why.
As noted above, we did not raise any specific concerns about these particular improvements to IFRS. In addition, we can see that many of the proposed improvements to FRS do offer additional guidance and clarification, and would be an improvement. As they are not significantly altering or adding to the requirements of current FRS, they would not be a major cost for preparers. We also agree that it is in the wider interest for both preparers and users to ensure consistency with both sets of standards. Should there be any specific issues which relate to the UK financial reporting environment, these should be communicated at an earlier stage, via the IASB's consultative process.
Are there any other changes to UK GAAP that the Board should consider in its next cycle of annual improvements?
If so, what are they and how do you think financial reporting will be improved if those issues are addressed?
Other than any changes required to keep in line with the IASB improvements project, we do not believe that any further changes to UK GAAP need to be considered in its next cycle of improvements. The Board should focus on the longer term objective of outlining the future of UK GAAP, and consider broader and more significant changes in this context only.
The ASB considers that the benefits of implementing the proposals in this FRED will outweigh the costs involved. Do you agree?
If not, why not? It would be helpful if any significant costs that would arise on implementation of the proposals could be identified and quantified.
As mentioned above, we agree that some of the proposals, regardless of retaining consistency with IFRS, do improve UK financial reporting standards, without imposing a significant burden on preparers.