UK’s ASB Issues Convergence Standards

The Accounting Standards Board (ASB) has issued six standards, which represent a major step towards aligning the text of UK accounting standards with that of International Financial Reporting Standards (IFRS) as part of the ASB’s strategy for convergence with IFRS. The six standards are: FRS 22 (IAS 33) ‘Earnings per Share’, FRS 23 (IAS 21) ‘The Effects of Changes in Foreign Exchange Rates’, FRS 24 (IAS 29) ‘Financial Reporting in Hyperinflationary Economies’, FRS 25 (IAS 32) ‘Financial Instruments: Disclosure and Presentation’, FRS 26 (IAS 39) ‘Financial Instruments: Measurement’ and lastly ‘Amendment to FRS 2 Accounting for Subsidiary Undertakings: Legal Changes’. Five of the standards supersede existing requirements in the UK and the Republic of Ireland. By contrast, FRS 26 introduces for the first time requirements for the measurement of financial instruments. It implements in full the measurement and hedge accounting provisions of IAS 39 as published by the International Accounting Standards Board. The ASB has not applied the version of IAS 39 as adopted by the European Commission (‘amended IAS 39’), which carves out certain provisions in order to restrict the use of the full fair value option and to permit a wider application of hedge accounting.


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