An overview of the New UK GAAPFRS 102 and other reporting issues

Sage 2

An Overview of the New UK GAAPIntroduction

Amy NoblettCompliance Domain Specialist

Sage 3

Agenda1. The need for change2. The new standards3. Financial statements under FRS 1024. Key differences5. First-time adoption of FRS 1026. Reduced disclosures7. Changes to company law8. Impact on financial reporting standards9. Practical considerations

Sage 4

An Overview of the New UK GAAPThe need for change

• Consistency with IFRS• Reflects more up to date thinking• More proportionate reporting• Cost effective

Why?

• Majority of large and medium-sized UK entities• Entities that don’t apply EU-adopted IFRS• Entities that don’t apply FRSSE

Who?

• Accounting periods beginning on or after 1 January 2015

• Early adoption permitted• Transition date

When?

Sage 5

An Overview of the New UK GAAPThe new standards

• Which standards to apply• Application of SORPs• Transitional arrangements

FRS 100

• Disclosure exemptions from EU-adopted IFRS for qualifying entitiesFRS 101

• Succinct financial reporting based on IFRS for SMEs• Replaces current FRSs, SSAPs and UITFs • Includes reduced disclosures for qualifying entities

FRS 102

• Insurance contractsFRS 103

Sage 6

An Overview of the New UK GAAPFinancial statements under FRS 102

• Statement of financial position• Statement of comprehensive income or income

statement• Statement of changes in equity• Statement of cash flows

Primary statements

• Accounting policy changes• Statement of compliance • Transition note

Notes to the accounts

Sage 7

An Overview of the New UK GAAPKey differences

• Comprehensive accounting guidance• Classified as ‘basic’ or ‘other’• Derivatives on-balance sheet

Financial instruments

• Current service cost and net interest cost recognised in P&L with remeasurements in other comprehensive income

Defined benefit pension plans

• Revaluation gains and losses taken to profit or loss rather than reservesInvestment property

• More intangibles likely to be recognised separately from goodwill• Finite useful lives for goodwill and intangibles• Merger accounting only permitted for group reconstructions

Business combinations

• Timing difference plus approach could result in larger deferred tax liabilitiesDeferred tax

Sage 8

An Overview of the New UK GAAPFirst-time adoption of FRS 102

• Establishing transition date• Preparing the transition balance sheet

− Retrospective application generally applies− Exceptions where retrospective application is

not permitted− Exemptions available

• Consideration of timescales

Sage 9

An Overview of the New UK GAAPReduced disclosures

• Exemptions for qualifying subsidiaries and ultimate parents

• Areas affected:− Cash flow statement− Financial instruments− Share-based payments− Related party transactions− Share capital

• Certain requirements if exemptions are taken

Sage 10

An Overview of the New UK GAAPChanges for small companies

Small companies

Company Law:Small companies

regime

Accounting Standards:

FRSSE

Sage 11

An Overview of the New UK GAAPChanges to company law

• What’s changed?• Size thresholds

• Filing requirements• Disclosure requirements• Amendments for micro-entities• What next?

Small Medium

Net turnover £10.2m (£6.5m) £36m (£25.9m)

Balance sheet total

£5.1m (£3.26m) £18m (£12.9m)

Employees 50 250

Sage 12

An Overview of the New UK GAAPImpact on financial reporting standards

• Continued consistency between revised legal frameworks and the financial reporting frameworksWhy?

• Draft FRS 105• Based on the recognition and measurement

requirements of FRS 102FRED 58

• FRSSE withdrawn• New section of FRS 102 for small entitiesFRED 59

• Draft amendments to FRS 100 and FRS 101FRED 60• Expected to be finalised in July 2015• Mandatory for accounting periods beginning on or after

1 January 2016What next?

Sage 13

An Overview of the New UK GAAPPractical considerations

Staff training Software systems

Cost of transition Client management

An overview of the New UK GAAPSage Support

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