FRED 14: provisions and contingencies

Article Abstract:

The Accounting Standard Board's Financial Reporting Exposure Draft (FRED) No 14 'Provisions and Contingencies' proposes guidelines for the recognition, measurement and disclosure of provisions and contingencies. It seeks to ensure that the accounting for these two areas is consistent and generates information that will help users of the financial statements to understand the nature, timing and other issues related to provisions and contingencies. FRED 14 incorporates some of the proposals contained in the Nov 1995 Discussion Paper 'Provisions' and includes a proposal to revise SSAP 18 'Accounting for contingencies.' The application of FRED 14's general principles to transactions and events with certain characteristics is discussed.

Accounting and auditing, Accounting Standards Board, Financial contingencies

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Out of Africa

Article Abstract:

South Africa embarked on a project to improve and harmonize its financial reporting standards with global standards in 1994 to prepare for its reentry into the international business community. The ongoing project involves the review and comparison of local accounting standards with their international equivalents. Exposure drafts are issued, then final statements are released after comment and debate. The project offers numerous benefits, including enhanced credibility of the accountancy profession, lower investment risks and cost of capital, the adoption of international equivalents in the absence of local standards, the promotion of cross-border listings, and the promotion of foreign interaction and investment in South Africa.

South Africa

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