FREDs 36 to 39 Business combinations and others
Comments from ACCA
November 2005
The Association of Chartered Certified Accountants (ACCA) is pleased to have this opportunity to comment on the above exposure drafts (ED). The EDs were considered by ACCA’s Financial Reporting Committee and I am writing to give you their views.
I attach copies of our responses to the IASB on their EDs proposing amendments to IFRS3, IAS27, IAS37 and IAS19. As you can see our overall reaction is that IASB should not issue standards based on these EDs because we are not sure that the proposed standards represent cost effective solutions and because they have been developed without following IASB’s own due process.
ASB’s Options for implementation
We support continued convergence of UK standards with those of IASB where this is appropriate. As noted above, however, we do not support the IASB amendments. We would prefer therefore that ASB pursued Option 3 (as set out in FRED36) to converge UK standards in respect of IAS36 & 38 but to leave the others not implemented.
Other issues
We would propose that for the time being FRS6 and 7 should be left in place until the position is clearer internationally in the development of IFRS3 and the IASB’s SME project. This would mean for now both the impairment-only and the amortisation routes would be open for the present. In a similar way existing guidance in UK standards should be left in place for now concerning entities under common control and on assets held for disposal.
In replacing existing UK standards with IAS36 and 38 we suggest the ASB look again at the very extensive disclosure requirements in paragraphs 134 and 135 and consider deleting most of them from the UK version, as these seem less appropriate for unlisted companies. ASB should include the consequent amendments on the residual value for depreciation purposes by way of the complete replacement of FRS15 by IAS16.