Consistently inconsistent on private finance

Article Abstract:

The UK Accounting Standards Board's (ASB) FRS 5, 'Reporting the Substance of Transactions: the Private Finance Initiative' (PFI), seeks to clarify the highly debated issue of how to account for PFI schemes. These schemes have failed to make significant progress since their launch in 1992 largely because accountants, financial advisers, project companies and public sector clients have failed to reach a real consensus on how to account for PFI transactions. The ASB's exposure draft, which differs in some aspects from the guidance issued earlier by the UK Treasury, is a significant step towards the resolution of the PFI accounting problem, but it still offers plenty of opportunities for inconsistency of interpretation. The areas that may be vulnerable to varying interpretations include third party use, residual value and the exclusion of construction risk from the accounting analysis.

Finance, Private sector, Accounting Standards Board

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Earnings per share: contingently issuable shares; employee share schemes; special dividends

Article Abstract:

The UK's Accounting Standards Board (ASB) has issued a supplement to Financial Reporting Exposure Draft (FRED) No 16, 'Earnings per Share,' in response to requests for further clarification. Commentators identified several areas that need additional guidance, including the practical application of the general principles regarding contingently issuable shares, and the impact of the proposals on employee share schemes. The ASB's supplementary guidance includes amendments to the some of the content of FRED 16, including the definition of 'special dividend,' the statement of standard accounting practice, and the Explanation section. Three options in dealing with earnings per share are discussed.

Pension, health, and welfare funds, Pension Funds, Stock Ownership Plans, Accounting and auditing, Dividends, Employee stock ownership plans, Earnings per share

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