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News - 8 January 2013

Are you ready for GAAP?

The Financial Reporting Council (FRC) recently issued changes to the UK financial reporting framework which represents a new challenge for all entities currently reporting under UK or Irish GAAP (See below). Conversion to reporting under either EU-adopted International Financial Reporting Standards (IFRS) or the new Financial Reporting Standard in the UK and Republic of Ireland (FRS 102) has implications beyond an entity’s financial reporting function; in particular impacts for cash tax payments.

The first mandatory non-UK GAAP financial statements are required for 31 December 2015 year ends, with a 1 January 2014 transition balance sheet, and will require all entities (except those small enough to use the FRSSE) to report in accordance with FRS102 or IFRS. ‘Qualifying entities’ will be able to take advantage of reduced disclosure requirements under either IFRS or FRS102.

Stuart Coleman, Manager of the Tax Department of ABDS comments:
“Gaining an understanding of the business and financial impacts of change now will allow management to anticipate and resolve key strategic and operational issues in advance of the mandatory adoption date in 2015, or allow for early adoption.”

Following extensive consultation, the FRC published two standards in November 2012:

  • FRS 100 sets out the application of financial reporting requirements in the UK and Republic of Ireland.
  • FRS 101 or ‘IFRS with reduced disclosures’ outlines the reduced disclosure framework available for use by ‘qualifying entities’ choosing to report under IFRS.

In Spring 2013, the FRC will issue a further standard:

  • FRS 102 is the Financial Reporting Standard (FRS) applicable in the UK and Republic of Ireland (known as new UK GAAP), including the reduced disclosures available for ‘qualifying entities’ reporting under this FRS. This FRS is based upon the IASB’s IFRS for SME’s but has been significantly amended.
     

Tonmoy Kumar, Manager of the Accounts Department of ABDS comments:
“Conversion projects require careful management to ensure that decisions on accounting frameworks align with the entity’s strategic direction. “

If you need any help and advice with, or looking to outsource your Accounting Department, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar NOW to discuss how ABDS can help in all your business matters.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail:
abds@netaccountants.net

Great with People  Brilliant with Numbers Clear and Precise with Words

Definitions.
GAAP: Generally Accepted Accounting Principles.
The common set of accounting principles, standards and procedures that companies use to compile their financial statements. GAAP are a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting information.
FRC - Financial Reporting Council
The Financial Reporting Council is the UK's independent
regulator responsible for promoting high quality corporate governance
FRSSE:  Financial Reporting Standard for Smaller Entities.

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