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New UK GAAP is here and if you haven’t already started thinking about the impact of FRS102 on your business, then the time really is now.
Also referred to colloquially as new ‘UK GAAP’ or ‘UK IFRS’, FRS102 is the main new UK accounting standard which will soon replace all of the current FRSs and SSAPs.
Virtually all UK companies will be affected in some way by the changes. Small companies i.e. companies who satisfy two of the three following criteria (turnover less than £6.5m, gross assets of less than £3.26m and employees less than 50), will continue to prepare their accounts under the Financial Reporting Standard for Smaller Entities (FRSSE). However, a new FRSSE is also on its way and the new rules for small companies will be drawn from FRS102.
Companies that are currently required by law to prepare their accounts under the International Financial Reporting Standards (IFRS) will be unaffected. Everyone else however, will be required to adopt the new standards.
FRS102 comes into effect on a mandatory basis for accounting periods beginning on or after 1 January 2015, although earlier adoption is permitted. This means that, in all likelihood, the first dated accounts that we will see adopting the new
standard will have 31 December 2015 year ends.
However, this also means that, for a number of companies, the transition date will have already passed, since the comparative period in the first set of FRS102 compliant accounts will need to be restated to reflect the new rules. A balance sheet will therefore need to be prepared as at 1 January 2014 and 1 January 2015 for those earliest sets of accounts. This means that company owners and directors need to be thinking right now about what these changes might mean.
You may think that these do not affect you. However the changes that are coming may substantially affect your reported profits, tax charges and distributable reserves. The language used is also different, so you will see reference to receivables and payables; not debtors and creditors. Property, plant and equipment, rather than fixed assets and a number of other terminology changes. There are a number of ways in which the your reported profit will be subject to change and, although we can’t list all 335 pages here, over this series of blogs we'll cover some of the key points and advise you on what you should be doing.
Alternatively, you can also download our fact sheet here. If you'd like a more detailed chat about FRS102 and its implications, taking into account your personal circumstances, get in touch.
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