FRED3: Accounting for Capital Instruments

Article Abstract:

Financial Reporting Exposure Draft No 3 (FRED3), 'Accounting for Capital Instruments,' addresses the issue of accounting for instruments used to raise finance. It was issued by the Accounting Standards Board (ASB) in response to the lack of uniformity in the accounting treatment of the various capital instruments that have emerged over the years. FRED3 aims to ensure that capital instruments are treated clearly and consistently in financial reports, that capital instrument-related costs are properly allocated, and that relevant information as to where and how companies raise capital is included in the statements. The draft recommends accounting principles to be applied on capital instruments and their associated costs. The ASB will continue to receive comments on the draft until Mar 15, 1993.

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Deriving sense from financial instruments

Article Abstract:

The Accounting Standards Board has moved closer to its goal of introducing a 'fast-track' disclosure standard on financial instruments with the publication of Financial Reporting Exposure Draft (FRED) 13, 'Derivatives and Other Financial Instruments: Disclosures.' The proposed standard requires brief but coherent narrative and numerical disclosures on the reporting entity's use of financial instruments and risk position that will meet the information needs of report users. FRED 13 provides a framework for the disclosure of financial risks and plans for manage these risks. However, it gives companies the freedom to decide which financial instruments and risks to focus on. The proposed standard is widely supported by commentators.

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Financial Reporting Standard 13: Derivatives and Other Financial Instruments: Disclosures

Article Abstract:

The Accounting Standards Board's Financial Reporting Standard (FRS) No 13, 'Derivatives and Other Financial Instruments: Disclosure,' requires the disclosure of adequate information about the effects of financial instruments on the reporting company's risk profile, the impact of the attendant risks on its finances and performance, and the management of such risks. The new standard covers all companies, except insurance enterprises, with one more capital instruments listed or publicly traded on a bourse or market. It also applies to all banks and other financial institutions. FRS 13 takes effect for accounting periods that conclude on or after Mar 23, 1999. Earlier adoption is not compulsory but is recommended.

Disclosure statements (Accounting)

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