THE FRC has proposed amendments to its FRS102 accounting standard to address fears an overhaul of reporting standards will add millions to corporate liabilities.
The had been fears FRS102 would force private companies in the UK to book their defined benefit (DB) pension obligations along the lines of IFRIC 14, the international standard that applies to listed companies, resulting in extra liabilities on their balance sheet, sister title Professional Pensions reports.
Responding to informal consultations, the FRC has issued an exposure draft to clarify that no additional liabilities will be raised as a result of the change to FRS102 under new GAAP, as the new standard will be “consistent with current practice”.
FRC director of accounting and reporting Anthony Appleton said the amendment was necessary “to clarify that FRS102 will mean companies continue to account for DB pensions under old GAAP”.
The currently UK standards will be phased out by January 2015 to be replaced by FRS102, commonly known as ‘new GAAP’.
“It came to light that there had been a diversity of views about how to recognise liabilities of DB pension schemes under FRS102. These amendments straighten that out,” said Appleton.
“We noted a strong consensus in favour of this in our informal consultations,” he added.
PwC pensions actuary Paul Allen agreed that there would be “less divergence” in accounting practices as a result of the amendments.
“The issue I’ve been seeing is that because the wording of FRS102 is intentionally briefer,” he added, “that does leave potential for different interpretations.”
FRS102 will be replacing almost 3000 pages of the current GAAP with just over 300 pages.
The FRC are inviting comments to be received by 21 November 2014 and expects to issue the final amendments to FRS 102 in early 2015.
Loss of 400 jobs expected from closure of Clydesdale and Yorkshire Bank branches
Suzanne Baxter is to step down next month following the departure of CEO Ruby McGregor-Smith
James Gregory appointed following promotion of incumbent CFO
Industrial group continues acquisition spree and secures 740 jobs