THE FRC has launched a consultation on amendments to accounting standard FRS 102 in a bid to simplify rules surrounding share and share option awards for smaller firms.
Its exposure draft – FRED61 – sets out draft amendments to the standard, which deals with share-based payment transactions with cash alternatives, WSB reports.
The FRC said the changes were needed as the complexity of the existing rules meant there were “potential unintended consequences” which meant they were both more onerous to apply and could result in “inappropriate accounting outcomes”
The proposed changes would align the requirements of FRS 102, which is generally used by smaller firms, with those of the relevant International Financial Reporting Standard, used by larger list organisations.
The amendments would also generalise the requirements to include those cases where the settlement method is dependent on an external event.
FRC executive director of codes and standards Melanie McLaren said: “Stakeholders recently informed us of unintended consequences when entities apply FRS 102 to certain types of share option arrangements. This proposal addresses these issues and aligns FRS 102 more closely with IFRS.”
The FRC is looking to make the changes for accounting periods beginning on or after 1 January 2015. The comment period on this proposal closes on 1 June 2015.
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