The UK’s Financial Reporting Council (FRC) has published five new standards which will form the fundamental basis of new UK Generally Accepted Accounting Practice (UKGAAP).
The Financial Reporting Standard for Smaller Entities (FRSSE) has been withdrawn and small entities and now covered by FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland for accounting periods beginning on or after 1 January 2016.
UKGAAP is keeping itself in line with the rest of Europe and indeed the world with these changes. The new accounting standards are heavily based upon the standards being applied by the UK’s listed companies, International Financial Reporting Standards (IFRS) and means that non-listed entities will closely reflect the financial statements of their listed counterparts.
The five standards follow up from the previously released, FRS 100 Application of Financial Reporting Requirements which sets out the new reporting regime. The new standards are:
- FRS 101 Reduced Disclosure Framework available to certain UK IFRS reporters.
- FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.
- FRS 103 Insurance Contracts – requirements and guidance for insurance contracts.
- FRS 104 Interim Financial Reporting for entities that apply FRS 102.
- FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime.
These changes have received mixed response although many companies only need to consider one or two of the above. In some cases the changes have little or no effect whereas others can see a massive difference in some figures.
Changes can often cause some degree of confusion but this has been amplified by the differing introduction dates of these standards. FRS 102 is applicable for periods commencing on or after 1 January 2015 but as stated earlier the FRSSE is not withdrawn until a year later. In theory, two identical companies could produce somewhat different financial statements, where one uses the FRSSE (for its last time) and the other uses the new FRS102.
Further articles will cover the impact of changes.
For future –
- Micro-entity accounts – improvement or detrimental – HMRC must accept – bankers don’t have to. Related party transactions etc
- FRS 102 – fair value accounting – tax effect and reporting