FRS 8: shining light into a few dark corners

Article Abstract:

The reporting of all material associated with related party transactions is mandated by Financial Reporting Standard (FRS) No. 8, 'Related Party Disclosures.' The standard requires reports to include the names of the transacting related parties, a description of how the parties are related, a description of the deal, the amounts involved and other aspects of the transaction that can promote a better understanding of the financial statements. FRS 8 also provides a definition of the term 'related parties' and categorizes these parties into two. The first category includes those that are related parties, such as group companies, associates and joint ventures and the directors and pension funds of the reporting entity. The second category comprises of those that are presumed to be related, such as key management, 20% stockholders and their close kin.

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A standard of substance

Article Abstract:

Financial Reporting Standard (FRS) No. 5, 'Reporting the Substance of Transactions,' seeks to ensure the strict reporting of the substance of an entity's transactions in its financial statements. It can be invoked to block deliberate or inadvertent moves for the legal form to override substance, as well as to thwart attempts to override the spirit of an existing accounting standard through the clever manipulation of words. It can also be applied to new types of transactions not covered by extant standards. Taking 137 pages and nine years to complete, FRS 5 is the Accounting Standard Board's largest and most influential standard to date. It covers five important areas: recognition, derecognition, linked presentation, offset and quasi-subsidiaries.

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The gathering momentum for change

Article Abstract:

A working party formed by the London District Society of Chartered Accountants (LSCA) has recommended several changes to financial reporting procedures. The LSCA Technical Committee's proposals cover the valuation of assets, the clarification of what constitutes non-vendible and vendible assets, the provision of a statement explaining dividend policy, and the use of ratios in financial statements. The LSCA Committee took into consideration relevant reports from the Accounting Standards Board and the Institute of Chartered Accountants of Scotland before issuing their recommendations.

Accounting, auditing, & bookkeeping, Reports, Great Britain, Institute of Chartered Accountants of Scotland

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