03 Aug 2015 9:30 AM

UK GAAP is dead! Long live UK GAAP! (Accountants in London and Guildford) - Alliotts

UK financial reporting is going through fundamental change that will have a significant effect on the accounts of most UK companies.

After what has seemed to be an extremely long gestation period the UK authorities (in the form of the UK Government and the Financial Reporting Council) have, we hope, finally set a clear path for the requirements of UK company accounting.

To help companies understand the new regime I will be publishing a series of updates covering the changes.

To start the process the table below is an overview of the reporting framework for UK company accounts that will apply for accounting periods beginning on or after 1 January 2015 and, for many, 1 January 2016.

Source Key points Application Date

International Financial Reporting Standards (IFRS) adopted by EU

Available for any entity which wishes to use it or which is required to do so

Now


FRS 100 Application of Financial Reporting Requirements

Framework under which an entity decides which UK accounting standards apply

Accounting periods beginning on or after 1 Jan 2015


FRS 101 Reduced Disclosure Framework

Reduced disclosure framework for qualifying entities (parent or subsidiary) which are included within group accounts under EU-adopted IFRS that apply the recognition and measurement requirements of EU-adopted IFRS

Accounting periods beginning on or after 1 Jan 2015


FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland

A single financial reporting standard that applies to entities that are not applying EU-adopted IFRS, FRS 101 or the FRSSE

Essentially this is the new UK GAAP

Accounting periods beginning on or after 1 Jan 2015


FRS 102 with reduced disclosures

Reduced disclosure options for qualifying entities (parent or subsidiary) which are included within group accounts under FRS 102 that apply the recognition, measurement and presentation requirements of FRS 102

There are a number of conditions for the use of the disclosure exemptions
Accounting periods beginning on or after 1 Jan 2015

The Financial Reporting Standard for Smaller Entities (effective Jan 2015) (FRSSE)

Essentially FRSSE (effective April 2008) with amendments to reflect the new reporting framework

Expected to be withdrawn for accounting periods beginning on or after 01 January 2016.  Small companies will fall under either FRS 105 (if eligible) or FRS 102 Provisions applicable to small companies
Accounting periods beginning on or after 1 Jan 2015

FRS 102 Provisions applicable to small companies (Draft)

Draft proposal to insert a new Section 1A Small Entities into FRS 102 which outlines the presentation and disclosure requirements for small companies

The recognition and measurement requirements of FRS 102 will apply in full
Accounting periods beginning on or after 1 Jan 2016

FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime (Draft)

Draft proposal for a “standalone” standard for micro-entities

Based on FRS 102 with substantial simplifications appropriate to the size of a micro-entity
Accounting periods beginning on or after 1 Jan 2016

The reporting regime set out in the table is not fixed. An entity has the option of reporting under a more comprehensive framework if it so chooses. For example, a company that may qualify as a micro-entity does not have to report under FRS 105; it can choose instead to report under FRS 102 Provisions applicable to small companies.

There are a number of factors to take into consideration when deciding which regime to use.  It may not always be sensible or, indeed, permitted to report under the least complex standard relative to the size of the entity.

Company owners are advised to speak to their advisors now and seek advice on which version of UK GAAP to adopt and whether to adopt earlier than the dates referred to in the table. In some cases they may have no choice but to adopt a specific version.  Where they do have a choice there may be a longer term advantage to choosing a higher version of UK GAAP than is strictly necessary.

If you would like to discuss the changes, please contact me on 020 7240 9971.