FRC Issues Exposure Draft of Limited Scope Amendments to FRED 48 (draft FRS 102) the Financial Reporting Standard Applicable in the UK and Republic of Ireland

Kimberly Watson, Editor in Chief
October 03, 2012 /

The FRC has issued an Exposure Draft of limited scope amendments to the proposed accounting standard draft FRS 102. The FRC anticipates finalising the draft FRS in early 2013 and for it to be effective for accounting periods beginning on or after 1 January 2015.

The FRC also hopes to finalise its draft FRSs 100 and 101 later this year, enabling subsidiaries and parent entities to take advantage of the reduced disclosure framework for 31 December 2012 year ends should they choose to do so.

The limited scope proposed amendments relate to the accounting for multi-employer pensions and service concession arrangements, and are only likely to affect a small proportion of entities applying UK accounting standards.

The amendment for multi-employer pensions relates to accounting in specific circumstances where there is an agreement to fund a deficit in a multi-employer pension plan. This is proposed following evidence of diversity in practice in the application of FRS 17 Retirement benefits.

In making this proposed amendment the FRC also notes the current requirements of paragraph FRS 17.9(b)(v), which requires disclosure of any implications for an employer of a deficit in a multi-employer scheme. Entities participating in multi-employer defined benefit schemes will need to give careful consideration to compliance with this requirement where they have agreed a schedule of funding for a deficit. More details are available in the technical note which can be found here.

The second amendment relates to accounting, by grantors, for service concession arrangements. This amendment is proposed in response to feedback from respondents and sets out proposed accounting requirements for grantors.

In view of the limited scope of these amendments the FRC is inviting comments over a 60 day period, ending on 3 December 2012.

Chairman of the Accounting Council, Roger Marshall, said, “These proposed amendments will reduce diversity in accounting practice when entities have entered into agreements to fund deficits in defined benefit multi-employer pension plans. In addition, grantors of service concession arrangements will now have clear principles underpinning their accounting for such arrangements.

We believe this represents the final consultation in completing our review of financial reporting standards and hope to issue the first standards later this year. ”


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