The Financial Reporting Council (FRC) recently issued changes to the UK financial reporting framework which represent a new challenge for all entities currently reporting under UK or Irish GAAP. 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. 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.
The shift away from current UK GAAP 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. The first mandatory non-UK GAAP financial statements are required for 31 December 2015 year ends, with a 1 January 2014 transition balance sheet. This might seem a long way off, but the time quickly passes when all intervening steps are considered, and conversion to a new framework must take place alongside normal activities. In addition, if companies plan early, they could choose to move from current UK GAAP earlier, should there be a benefit to do so.
These pages provide an overview of the recent UK financial reporting framework developments and identify some key actions needed now to prepare for the change.
There are a number of issues to consider in determining what framework to adopt and when to convert, including consideration of impacts for distributable reserves, tax payments and the related tax charge, IT systems, processes and controls. Conversion projects require careful management to ensure that decisions on accounting frameworks align with the entity’s strategic direction.
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The Future of UK GAAP
Web seminar on the new framework
As part of our Future of UK GAAP – Are you ready? series, we hosted a free web seminar on 13 December 2012 to discuss FRS 100 ‘Application of Financial Reporting requirements’ (“FRS 100”) and FRS 101 ‘Reduced Disclosure Framework’ (“FRS 101”) .
Our panellists discussed the new standards, and provided an update on the debate on FRS 102 (New UK GAAP), expected to be released in Spring 2013. They also discussed the business and taxation implications beyond accounting, and the strategic decisions you need to take now we have two final standards, and the release of FRS 102 is imminent. They addressed a number of questions, including 'Why should companies take action to plan now, and what are the benefits of early adoption of the revised framework?
Listen to a recording of the web seminar.
