NFIs: treatment and disclosure

Article Abstract:

The 1980s saw an increase in the use by UK firms of new financial instruments (NFIs). A survey of 300 UK companies was conducted to determine the accounting treatments and disclosure practices of the firms for two types of NFIs, convertibles and interest rate management instruments. Convertibles are hybrid securities combining aspects of fixed interest stock and ordinary shares and is traditionally treated as borrowing, while convertible preference shares were treated as funds of shareholders. Convertible loan stock interest is treated on balance sheets as deductible expenses before the final before-tax profit is calculated. The balance sheet treatment of preference dividends is as an appropriation of after-tax profits. Disclosure of interest rate management instruments, including collars, floors, and options is voluntary, and the survey reveals that there is virtually no disclosure by surveyed companies.

Accounting and auditing, Options (Finance), Securities, Corporation reports, Company reports, Interest rate swaps, Convertible preferred stocks

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Consultation paper: the professional conduct review

Article Abstract:

The Institute of Chartered Accountants in England and Wales' Consultation Paper: The Professional Conduct Review, is presented. Areas of the professional conduct review covered by the paper include the definition of misconduct, the duty to report misconduct, and consent orders.

Reports, Institute of Chartered Accountants in England and Wales

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