The Financial Reporting Council (FRC) concluded its triennial review of UK GAAP last week by publishing amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.
In 2015 the FRC fundamentally reformed financial reporting in the UK and the ROI by replacing all extant accounting standards, with FRS 102 the cornerstone of the new UK GAAP. It was perhaps no surprise that such a radical change experienced a few teething issues. The triennial review process began in March 2017 with a number of incremental improvements and clarifications proposed.
Many of the amendments we saw last week are editorial in nature or clarify existing guidance. However, there are five more important changes, namely:
The amendments also incorporate the proposals of FRED 68 Payments by subsidiaries to their charitable parents that qualify for gift aid. In addition, changes to the disclosure requirements of FRS 105 for micro-entities in the UK have also been made to reflect UK legal requirements that came into effect from 1 January 2016.
Preparers and their advisors will need to get to grips with the detailed amendments to FRS 102 sooner rather than later. Most of the amendments are not mandatory until accounting periods beginning on or after 1 January 2019, although the changes to FRS 105 are applicable for accounting periods beginning on or after 1 January 2017. But early adoption is available, and the options will require careful consideration. It is possible to adopt the changes to the accounting for directors' loans and gift aid on a standalone basis, but otherwise early adopters have to apply the changes to FRS 102 in full.
Overall, we think that members will welcome the changes as targeted, pragmatic simplifications with a focus on balancing cost-effectiveness with the usefulness of the information reported.
The Financial Reporting Faculty will be producing a variety of resources over the coming weeks and months to assist businesses transition to the revised regime. This includes a webinar in March presented by Jenny Carter, director of UK Accounting Standards at the FRC and Danielle Stewart, Head of Financial Reporting at RSM, where they will discuss the key changes and provide some practical insights.