ASB Proposes the Wider Application of Standards on Financial Instruments
The Accounting Standards Board (ASB) has today published FRED 30 Second Supplement Financial Instruments: Extension of Scope.

In 2002 the ASB proposed, in FRED 30, that the IASB's two financial instrument standards should be issued as UK standards but should apply to certain UK entities only. The FRED 30 Second Supplement published today proposes that those standards should apply more widely than was proposed in FRED 30.

The new proposals when taken together with FRED 30 mean that the ASB now intends that, for accounting periods beginning on or after 1 January 2005: all listed entities using UK standards, and other entities choosing to adopt fair value accounting, should apply the measurement and hedge accounting requirements of IAS 39 Financial Instruments: Recognition and Measurement;and all entities should apply the requirements of IAS 32 Financial Instruments: Disclosure and Presentation. As is its usual practice, the ASB will exempt from the final standards those entities applying the Financial Reporting Standard for Smaller Entities.

Introducing the FRED Supplement, Mary Keegan, ASB Chairman, said: comprehensive standards addressing financial instruments are essential if an accounting standards regime is to be credible. Now that the IASB has issued its revised versions of IAS 32 and IAS 39, it is time for us to start implementing them in the UK. A consistent approach to the measurement of financial instruments is very important, as is the greater use of fair values, particularly for derivatives, so we are proposing that all listed entities should be required to apply the international standard on the subject as a first step to wider application. We are also proposing, in line with the longer-term intention stated in 1998, to require all entities to provide risk and fair value disclosures about their financial instruments. This will ensure that UK companies disclose information on financial instruments on a comparable basis.