2008 has been relatively quiet in terms of financial reporting changes. However, IFRIC has recently published interpretations for IFRIC 15 and 16, while the ASB has updated the FRSSE.



The ASB has issued a new version of the FRSSE. This incorporates the changes to the small companies accounting and reporting regime resulting from implementation of the Companies Act 2006. There are no changes to accounting requirements.

The FRSSE (effective April 2008) replaces the FRSSE (effective January 2007) for periods beginning on or after 6 April 2008. The direct interaction with company legislation means that earlier adoption is not permitted.


IFRIC 15 'Agreements for the construction of real estate'

IFRIC 15 standardises the accounting treatment for the recognition of revenue by real estate developers for sales made 'off-plan'. The interpretation provides guidance on how to determine whether the related construction contract should be accounted for using IAS 11 'Construction contracts' or IAS 18 'Revenue recognition'. This interpretation applies for periods beginning on or after 1 January 2009 and applies retrospectively.

Smith & Williamson commentary

This interpretation is unlikely to have much impact in the UK due to the way in which such arrangements are typically structured.

Where a change in accounting treatment does arise as a consequence of adopting IFRIC 15, this is expected to mostly result in a shift from recognising revenue using the percentage completion basis to recognition at a single point in time.

IFRIC 16 'Hedges of a net investment in a foreign operation'

IFRIC 16 clarifies a number of issues relating to hedge accounting, including the following.

  • A parent entity may designate as a hedged risk only those foreign exchange differences arising between its own functional currency and that of its foreign operation. Using a different presentation currency does not create an exposure to which hedge accounting can be applied.
  • When applying hedge accounting in group accounts, the hedged item and the hedging instrument can be held by different entities within the same group.
  • IAS 39 'Financial Instruments: recognition and measurement' should be applied to calculate the amount of the reclassification to profit and loss from the foreign currency translation reserve in respect of the hedging instrument. However, IAS 21 'The effects of changes in foreign exchange rates' must be applied in respect of the hedged item.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.