UKGAAP – How it affects you
The future of UK’s Generally Accepted Accounting Principles (UK GAAP) which include all accounting standards, company law and other guidance that affect how accounts should be prepared in the UK is set to change with a new financial reporting regime introduced in its place.
Transition to this new framework will be a major change for UK businesses, with an implementation date of the 1st January 2015, there will be implications beyond accounting as well as practical and resourcing issues. Particularly where there are long-term arrangements such as bank loans which could be affected, it is worth starting to think about the impact on your business now.
The Financial Reporting Council (FRC) has issued Financial Reporting Standard (FRS) 100, FRS 101 and FRS 102 which are a suite of new standards (‘New UK GAAP’). FRS 102 replaces existing UKGAAP and brings all the current standards (over 3000 pages) into one (approximately 300 pages). This new standard will be effective from the 1st January 2015 and is applicable to all companies that are not required to adopt IFRS and are not eligible to apply the Financial Reporting Standard for Smaller Entities (FRSSE).
This means that the first accounts to be affected by new UKGAAP will be 31st December 2015 year ends. The comparatives will also have to be restated meaning the opening balance sheet on 1st January 2014 (i.e. 31st December 2013) will have to be restated.
There are some significant differences between new UKGAAP and current UKGAAP and these include:
- Investment properties
- Property, plant and equipment
- Financial Instruments (includes interest free loans)
- Business combinations & goodwill
- Defined benefit pension schemes
- Employee benefits (including holiday pay)
- Deferred tax
Once the new standard comes in there are also some options which can give your balance sheet a one off boost. If you would like to discuss what these are, please contact Michael Rigby at Leonherman on 0161 249 5040 or at firstname.lastname@example.org