Search

One of the obstacles to implementing what Harry Lambert outlines in his excellent article (Cover Story, 1 September) is not just the complexity of tax descriptions but also the strong [...]

Pensions are rarely out of the headlines, and rightly so given their importance to the financial well being of employees and the companies they invest in. A couple of years [...]

The article offers an overview of the Accounting Standards Board's (ASB) fundamental review of the financial reporting of pensions, starting from its first principles.

'Future Events' is a new research study that is expected to foster renewed debate on issues that are related to accounting and have been the subject of controversy for a protracted length of time. The study was aimed at investigating the implications of the conceptual frameworks that are being used by the different accounting bodies that participated. Delegates from the Accounting Standards Board, the International Accounting Standards Committee and national accounting standard-setters from Australia, Canada and the US were in attendance during the study. One of the most interesting results of the study focused on the definition of assets and liabilities. The study acklowedged that although the various bodies had a uniform definition, the main issue is actually related to the identification of the future flows of benefits that should be considered in recognizing and measuring assets and liabilities.

The Accounting Standard Board's Financial Reporting Exposure Draft No 3, 'Accounting for Capital Instruments,' recommends accounting principles for capital instruments. This is in response to the growing confusion regarding appropriate accounting treatment for the numerous emerging instruments, including auction market preferred shares, convertible capital bonds and convertible debt with premium put options. Some of the proposals contained in FRED 3 referred to the definition of liabilities, the recognition of debt and non-equity instruments, the disclosure of the analysis of the total funds of shareholders, the restriction of the uses of the share premium account, and the separate accounting of the debt and equity components of convertible debt.

The Accounting Standards Board has released a paper entitled 'Accounting for Capital Instruments' which is intended to improve the accounting of the liability and equity aspects of capital instruments. The paper provides an assessment of the equity and non-equity positions of stockholders' interests, as well as subsidiaries' minority holdings. The accounting of costs related to the issue of capital instruments is also discussed. The paper's proposals are generally consistent with those published in the E40 Financial Instruments exposure draft of the International Accounting Standards Committee.

The Accounting Standards Board plans for convergence of UK and International Accounting Standards. The government's proposal is that many companies will have the choice of using either IFRSs or UK standards and one of the principles on which the proposals are based is that there can be no case, in the medium term, for the use in the UK of two sets of accounting standards which means that UK accounting standards must be brought into line with IFRS.

There is not much of a distinction between operating leases and finance under SSAP 21. Consequently, lessors, lessees, and accountants must scurry to prepare for the changes. The revisions represent an end to leasing as a financial source, as the slow reduction in the amount of capital allocation which is provided as capital allowances in the initial year of the asset's life, along with the drop in tax rates, brings a drop in value of the allowances.

Financial Reporting Standard (FRS) 7 provides a guide for the accounting treatment of adjustments made to fair value if onerous contracts exist at the time of a company's acquisition. While FRS 7 does not provide specific guidelines for handling all situations, it does elaborate on the basic accounting principles that have to be followed in such cases. These principles, clear-cut as they are, can be used to arrive at a sensible way to treat any adjustments made as a result of an onerous contract or commitment. Illustrative examples of how to apply FRS 7 to onerous contracts are provided. These examples include cases when the acquiring company was unable to terminate existing contracts that were disadvantageous to its interests.

The Accounting Standards Board (ASB) has recently introduced Financial Reporting Standard (FRS) No 4, 'Capital Instruments.' According to the new standard, all capital instruments that contain an obligation to transfer economic benefits are to be treated as liabilities. Instruments that cannot be classified as liabilities are to be reported within shareholders' funds. Shares that are redeemable, or have a restricted right to dividend or capital are to be classified as non-equity. Debt and non-equity instruments are to be initially recognized at the amount of the net proceeds. In FRS 4, the ASB also considered such matters as the determination of the maturity of liabilities, the accounting for the renegotiation of debt and the disclosure proposed in Financial Reporting Exposure Draft No 3.

The current value system was the focus of the Accounting Standards Board's (ASB) two recently published discussion documents. Both papers, 'Measurement in Financial Statements' and 'The Role of Valuation in Financial Reporting,' propose the increased use of current values in accounting. The second publication contends that the current system of stating assets at historical cost is highly unsatisfactory. The major flaw of the historical cost system is that it sets the values of assets at the date of acquisition so that these values lose their relevance at a later date. In view of historical costing's disadvantages, the second discussion paper proposes alternative valuation bases. 'Measurement in Financial Statements,' a chapter of the ASB's Statement of Principles, contains a comprehensive discussion of issues associated with the valuation of assets and liabilities.

The Accounting Standards Board has just made available to the public two chapters that will make up most of its Statement of Principles. The first of these chapters gives the definitions of the financial statement's seven elements. These elements are assets, liabilities, gains, losses, equity, owners' contributions and distributions to owners. The chapter, likewise, discusses the relationship between assets and liabilities. The second chapter deals with the recognition of credit or debit items in the financial statement. It enumerates three conditions that must be met for the appropriate recognition of such items. In addition, it offers specific criteria for the recognition of gains in the profit and loss account.

Transcription factors of the nuclear factor of activated T cells (NFAT) family play a key role in antigen receptor–mediated responses in lymphocytes by controlling induction of a wide variety of cytokine genes. The GTPases Ras and Rac-1 have essential functions in regulation of NFAT transcriptional activity in the mast cell system, where Fcε receptor type 1 (FcεR1) ligation results in induction of multiple NFAT target genes. This report examines the precise biochemical basis for the Rac-1 dependency of FcεR1 activation of NFAT in mast cells. We are able to place Rac-1 in two positions in the signaling network that regulates the assembly and activation of NFAT transcriptional complexes in lymphocytes. First, we show that activity of Rac-1 is required for FcεR1-mediated NFATC1 dephosphorylation and nuclear import. Regulation of NFAT localization by the FcεR1 is a Rac-dependent but Ras-independent process. This novel signaling role for Rac-1 is distinct from its established regulation of the actin cytoskeleton. Our data also reveal a second GTPase signaling pathway regulating NFAT transcriptional activity, in which Rac-1 mediates a Ras signal. These data illustrate that the GTPase Rac-1 should now be considered as a component of the therapeutically important pathways controlling NFATC1 subcellular localization. They also reveal that GTPases may serve multiple functions in cellular responses to antigen receptor ligation.

We have investigated the polymorphism in intron 2 of the interleukin-1 receptor antagonist gene and identified two new alleles of the system. We have shown that the polymorphism is caused by the variable copy number of an 86-bp sequence, by using the polymerase chain reaction and primers immediately flanking the repeat region, and by direct sequencing. The repeat region contains three potential protein-binding sites and therefore the variable copy number may have functional significance.