FRS102 – what does it mean to me and my business? Part Three

In the final part of our series of blogs on FRS102, we find out what it all means in practice.

So, what does this mean?

There are a number of ways in which these changes could impact you and your business in a meaningful way.

The language used in covenants for existing loan arrangements may not be consistent with FRS102. You may need to speak with your lender to establish what this means for your existing facilities.

There may be a significant impact on your company profits in the year of transition which will impact on the reserves available for distribution.

As dividends can only be paid from distributable reserves this reduction in profit could affect your ability to pay dividends.

The tax treatment will largely follow these new standards which could give rise to additional tax liabilities or, if timed properly, tax savings.

Lower profits may affect banking covenants, bonus agreements and shareholder expectations. These may need advance discussions with the relevant organisations.

Lower reserves and net current assets may affect credit ratings and relationships with suppliers and lenders.

What can I do?

This need not all be as onerous as it sounds. With effective planning and thought, the impact of the changes can be effectively managed. In addition, there also ways in which these changes can be used to your benefit, by reducing
tax liabilities or improving the appearance of company balance sheets.

How can Armstrong Watson help?

At Armstrong Watson we have been planning for these changes for some time and can help in a number of ways:

  • Assisting with conversion to FRS102 in first period of accounts
  • Pre-emptive reviews in order to identify areas of potential impact / benefit
  • Preparing statutory accounts under FRS102 where independence issues prevent the incumbent auditor from assisting
  • Tax reviews to identify areas of potential saving

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've covered 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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To find out more about how we can help you or your business, call us on 0808 144 5575 and speak to a member of our team. Alternatively use our contact form to send us a message or arrange a callback.

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