Developing a replacement to existing UK GAAP has long been an objective of the UK’s Financial Reporting Council. For periods beginning on or after 1 January 2015, three new Financial Reporting Standards (FRS 100, 101 and 102) come into force, bringing with them a number of new options for all UK entities and groups. With all of these new standards now published, companies should now be thinking carefully about the impact that these will have on their financial reporting.
FRS 100 “Application of Financial Reporting Requirements” sets out rules and guidance on how to select the appropriate accounting framework for a particular entity or group.
FRS 101 “Reduced Disclosure Framework” introduces a new reduced disclosure framework enabling most subsidiaries and parents to use the recognition and measurement bases of IFRSs in their individual entity financial statements, while being exempt from a number of disclosures required by full IFRSs.
FRS 102 “The Financial Reporting Standard Applicable in the UK and Republic of Ireland” is the ‘main’ standard which replaces current UK GAAP. It also includes disclosure exemptions for certain qualifying entities in their individual entity financial statements.
FRS 102 - the main replacement for current UK GAAP - was published on 14th March 2013. The application of this new standard is expected to present a number of challenges for businesses, not only in terms of financial reporting but extending to tax, distributable reserves, staffing, systems and more.
The challenges will vary from business to business depending on industry, structure and size. Listed companies will want to take the opportunity to re-evaluate the choice of accounting framework used to prepare their individual parent and subsidiary financial statements. Unlisted groups and entities will need to decide whether to move up to full IFRSs or transition to the replacement for current UK GAAP, FRS102, taking into account the wider implications of the options on offer.
Deloitte has produced a number of publications including ukGAAP 2014 in your pocket - a guide to FRS 102’, a useful pocket guide comparing FRS 102 to full IFRSs and existing UK GAAP, and ‘Choosing your GAAP’, which looks at the broader implications of changing accounting frameworks.
Our integrated team of accounting and taxation specialists can assist you in assessing and understanding the various impacts of these new standards. If you would like further, more detailed information or advice, copies of the publications mentioned above or to discuss how these changes could affect your business, please contact your usual Deloitte partner or one of the contacts listed to the right.