TT230: Like it or not, FRS102 is coming!
For accounting periods starting on or after 1 January 2015, UK & Ireland company financial statements which currently use full Financial Reporting Standards will be prepared under the new FRS102 accounting standards. Companies with accounting year ends of 31 December 2015 will be the first to experience the new rules (unless you early adopted, of course).
If a company is small it can currently adopt the Financial Reporting Standard for Smaller Entities, but there will also be a replacement to that standard with effect from 1 January 2015 – however, read on for details.
So what’s the big deal?
FRS102 replaces all previous FRSs, SSAPs and UITF abstracts and brings UK accounting standards more into line with the international standards (IFRSs). There are substantial differences to the current UK GAAP and options are available upon transition.
It should also be highlighted that prior year comparatives will need to be restated in line with FRS102. Balances and transactions including the brought forward values in the prior year will need to be reviewed for potential adjustments.
FRS 102 is mandatory for medium and large companies. Small companies may adopt the new FRSSE (“FRSSE 2015”) for periods commencing on or after 1 January 2015. Between the old and new FRSSE there is not much change; however, this FRSSE is only valid for one year before a revised section (Section 1A) of FRS 102 comes into force. Small companies will then have to make another transition to FRS102, but alternatively they may adopt FRS102 early.
In general there are many changes to the way companies will need to account for the numerous items within the financial statements. As you would expect, there are transitional rules which help ease the transfer to the new accounting standard. These rules specify the exact nature of how the conversion will be performed, but they also offer opportunities for one-off adjustments to be made which could improve a company’s reported financial results.
Over the coming weeks we will be releasing further Topical Tips on six key areas of FRS102 focusing on how the new rules will affect your financial statements and the opportunities available upon transition. These areas are:
• Changes to the financial statements – new notes, new structures and additional accounting policies
• Tangible Fixed Assets & Investment Properties (inc. Deferred Tax)
• Intangible Fixed Assets
• Software and Development
• Basic Financial Instruments: cash, loans, trade debtors and creditors
With 35 sections in total there are other areas you may have heard about including accruing for employee benefits (e.g. holiday pay), pension disclosures and other financial instruments.
Speak to a Barnes Roffe partner today for a tailored review of how FRS 102 may affect you.Talk to Barnes Roffe today