Proposals for a Public Benefit Entity Standard for Tier 2 Entities
News types: Consultation Announcement
Published: 18 March 2011
ASB PN 361
The Accounting Standards Board (ASB) of the FRC has today published Financial Reporting Exposure Draft (FRED) 45. This sets out proposals to be included in a Financial Reporting Standard for Public Benefit Entities (FRSPBE) to accompany the proposed Financial Reporting Standard for Medium-size Entities (FRSME).
The FRSPBE has been developed because IFRS based standards are written for the ‘for-profit’ sector and do not address some transactions that are specific to the public benefit entity sector.
It is proposed that the FRSPBE will be mandatory for entities which meet the definition of public benefit entity that apply the proposed FRSME.
A public benefit entity has been defined as:
An entity whose primary objective is to provide goods or services for the general public, community or social benefit and where any equity is provided with a view to supporting the entity’s primary objectives rather than with a view to providing a financial return to equity providers, shareholders or members.
Issues which have been addressed include:
The FRSPBE has been developed because IFRS based standards are written for the ‘for-profit’ sector and do not address some transactions that are specific to the public benefit entity sector.
It is proposed that the FRSPBE will be mandatory for entities which meet the definition of public benefit entity that apply the proposed FRSME.
A public benefit entity has been defined as:
An entity whose primary objective is to provide goods or services for the general public, community or social benefit and where any equity is provided with a view to supporting the entity’s primary objectives rather than with a view to providing a financial return to equity providers, shareholders or members.
Issues which have been addressed include:
- Concessionary loans;
- Property held for the provision of social benefits;
- Entity combinations;
- Impairment of assets;
- Funding commitments; and
- Incoming resources from non-exchange transactions (donations etc).
Roger Marshall, Chairman of the ASB said:
“The proposals in FRED 45 clarify how some PBE sector specific transactions should be accounted for. Many of the proposals mirror the requirements in existing literature and Statements of Recommended Practice, and therefore are consistent with current practice.”
FRED 45 also contains a consequential amendment which will in effect reinstate the requirements of FRS 30 ‘Heritage Assets’ into the FRSME.
The ASB is grateful to the members of the Committee on Accounting for Public Benefit Entities for their efforts in developing these proposals.
The consultation period will run until 31 July 2011. It is proposed that the new Standard will be effective at the same time as the FRSME which is currently proposed for annual reporting periods beginning on or after 1 July 2013.
The consultation period for the draft FRSME ends on 30 April 2011. The ASB will be considering the responses it receives to the draft in May 2011 and will post on its website its tentative decisions as this redeliberation work progresses.
Notes to Editors
- The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment.
- The role of the ASB is to oversee the financial reporting requirements for UK entities. This is done by maintaining and improving UK Financial Reporting Standards (FRS) and influencing the development of international standards. The ASB achieves this by collaborating with accounting standard-setters from other countries and the International Accounting Standards Board (IASB).
- The ASB has ten Board members, of whom one (the Technical Director) is full-time, and the remainder, who have a variety of experiences as preparers, auditors and users of financial reports, are part-time.