The impact of FRS102

UK and Irish accounting standards are in the midst of the most significant overhaul for decades. From 2016, previous standards are being replaced by a single new standard, FRS 102, which is based on more complex international accounting standards. The introduction of FRS 102 will mean changes to accounting treatment that could have a substantial impact on your own accounts.

We have published further guidance for service, manufacturing and property management companies.

Click here if you are a:

Service business

Manufacturing business

Property Management Company

For further information about how FRS102 will affect your business, please contact Martin Wharin, Business Services Partner at Hart Shaw on 0114 251 8850 or martin.wharin@hartshaw.co.uk.

An end to FRSSE

Sheffield based Chartered Accountants, Hart Shaw has welcomed news that the Financial Reporting Council (FRC) has issued a number of changes with the aim of simplifying the reporting of company accounts.

FRSSE is no more and according to the FRC, the changes – which are effective from 1 January 2016 – are largely in response to the implementation of the new EU Accounting Directive. They include:

• A new standard – FRS 105; the Financial Reporting Standard applicable to the Micro-entities Regime
• A new section – 1A Small Entities of FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland

The FRC has also published an Overview of the Financial Reporting Framework, which describes the framework applicable for accounting periods beginning on or after 1 January 2016 and includes key differences between the FRSSE and the new requirements set out in FRS 105 and section 1A of FRS 102.

Martin Wharin, Business Services Partner at Hart Shaw said: “These changes to accounting standards will have a positive impact upon small businesses. I believe that they will effectively cut red tape for small companies. They also respond to the new legal framework for disclosure in small company reporting, providing guidance for applying it and improving transparency relating to financial instruments.

“In addition, they play a role in improving the cost-effective reduced disclosure framework for listed groups by permitting International Financial Reporting Standards-based presentation requirements in subsidiaries’ financial statements,” Martin added.

The FRC added that it expects to issue revised editions of FRS 100, Application of Financial Reporting Requirements, FRS 101, Reduced Disclosure Framework, and FRS 102, in September.

If you would further information please contact Martin on 0114 251 8850 or martin.wharin@hartshaw.co.uk.

 

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Is your SME ready for FRS102?

Small and medium-sized enterprises (SMEs) are reminded that a new accounting standard could affect their financial affairs.

The proposed changes of the new UK GAAP [Generally accepted accounting principles], known as FRS102, will align the requirements of FRS102, which is generally used by smaller firms, with those of the relevant International Financial Reporting Standard; as used by larger organisations.

The Financial Reporting Council (FRC) said the changes were needed as the complexity of the existing rules had led to ‘potential unintended consequences’ which meant that they were not only more arduous to apply, but they could also result in ‘inappropriate accounting outcomes’.

The FRC has launched a consultation on amendments to accounting standard FRS102 in a bid to simplify rules surrounding share and share option awards for smaller firms. In its draft, called FRED61, the FRC has set out amendments to the standard, which deals with share-based payment transactions with cash alternatives. The FRC is looking to make the changes for accounting periods beginning on or after 1 January 2015. When a business adopts FRS 102, comparative accounts for the year prior to conversion will also be needed. The comment period on this proposal closes on 1 June 2015.

For more information please Martin Wharin, Business Services Partner on T: 0114 251 8850 or email: martin.wharin@hartshaw.co.uk.

 

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Sheffield City Region Breakfast Club – Tuesday 18th February 2014

After the success of the first two events towards the end of 2013, Hart Shaw Chartered Accountants and Reynolds Trade Credit are continuing the Sheffield City Region Breakfast Club throughout 2014, with the aim of bringing together more key decision makers from local businesses in the Sheffield City Region.

The format of these events is open networking followed by a short discussion on relevant business issues.

After a break over the Christmas and New Year period, we are delighted to announce the next event, which is taking place at the Aston Hotel on the Sheffield / Rotherham border on Tuesday 18^th February 2014 between 8:00am and 9:15am.

The topic for discussion at this event is the Transition from UK GAAP to FRS102 where Martin Wharin from Hart Shaw will discuss how the introduction of FRS102 will impact on the financial statements of any entity currently preparing accounts under UK GAAP. For companies preparing their first accounts under FRS 102 for the year ending 31 December 2015, the date of transition is now live.

As ever, we aim to keep the presentation time short, focusing on the main purpose of the group which is to encourage like-minded decision makers to share their experiences and discuss solutions to everyday business issues.

Full details are:

• Date: Tuesday 18^th February 2014
• Time: 8:00am for breakfast sandwiches and open networking, followed by a brief presentation, with Q&A and further networking until 9:15am
• Venue: Aston Hotel, Britannia Way, Rotherham, S60 5BD

The breakfast club is FREE to attend and you are very welcome to bring a guest or a colleague.

To confirm your attendance please contact Brendan Hall at Hart Shaw on T: 0114 251 8872 or email: brendan.hall@hartshaw.co.uk. Places are limited so please book early to avoid disappointment.

We look forward to seeing you there.

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Start preparing now for FRS 102

The Financial Reporting Council has replaced current UK GAAP with FRS 102, with effect from periods beginning on or after 1 January 2015, with earlier adoption permitted. FRS 102 is based on the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) and has been amended for use in the UK.

The introduction of FRS 102 will have an impact on the financial statements of any entity currently preparing accounts under UK GAAP.

Large parts of FRS 102, dealing for example with inventories, property, plant and equipment and business combinations, are broadly similar to existing UK GAAP.  However, there are many parts of FRS 102 which will bring in changed or new requirements, for example the sections dealing with financial instruments, deferred tax, investment properties and specialised activities.

Many entities with relatively straight forward business transactions may find the impact slight, possibly extending only to changed format and disclosure requirements.  On the other hand, some large groups with complex overseas operations and complex financial instruments will be affected to a large degree and need to study the new requirements very carefully.

The adoption of FRS 102 will also lead to some changes in the format of the financial statements and the disclosures required, but not as much as first envisaged.

The formats for the balance sheet (now to be called the statement of financial position) and profit and loss account (to be called the statement of comprehensive income and income statement) must comply with the requirements of the Regulations to CA 2006, as well as the particular requirements of Sections 3 to 6 of FRS 102, and therefore the change is mostly the fact the title has changed rather than any major layout changes.

However, the format of the statement of cash flows is quite different from that in FRS 1.  In addition, the statement under FRS 102 should reconcile to cash and cash equivalents, as opposed to cash under FRS 1.

For many entities, the total amount of disclosure may not be significantly greater as compared with existing UK GAAP.  However, several of the disclosure requirements are different in detail from the equivalent under existing UK GAAP, for example those relating to inventories and leasing commitments.

The starting point for applying FRS 102 will be to restate the opening balance sheet at the start of the comparative period for the first accounts prepared under FRS 102.  This is known as the date of transition.  If a company prepares its first accounts under FRS 102 for the year ending 31 December 2015, its date of transition will be 1 January 2014. FRS 102 includes provisions to ease the transition.

For further information on how this is likely to affect your business please contact Martin Wharin, Business Services Partner on T: 0114 251 8850 or email: martin.wharin@hartshaw.co.uk.

 

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Transition from current UK GAAP to FRS 102 from January 2015

Businesses will need to be aware a new Financial Reporting Standard applicable in the UK and the possible effects on your financial statements for the profit and loss account and balance sheet for the 2015 year end; as they will form part of the comparative figures for the 2016 year end.

In addition the effect on the 2014 balance sheet will also need to be considered; this will affect the comparative cash flow statement.

The FRS replaces all the current accounting standards, and is in effect a ‘one stop shop’ for accounts treatment.  However, contrary to the opinion expressed in some publications, the impact is minimal and we have enclosed a summary of the major changes to current accounting treatment for your information.

Click here for a full break down of the changes.

Please feel free to contact us should you wish to discuss how this will affect your business in more detail.

 

Martin Wharin, Business Services Partner

T: 0114 251 8850, Email: martin.wharin@hartshaw.co.uk

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