FRS 102: How it will affect the FRSSE

Many companies in the UK choose to apply the Financial Reporting Standard for Smaller Entities (FRSSE) in preparing their financial statements, explains Steve Collings.

Financial reporting is about to undergo the biggest change it has seen for several years with the introduction of a new set of financial reporting standards (FRSs 100, 101, 102 and 103) and a new financial reporting regime brings with it some new practices that accountants must get to grips with.  This article looks at how the FRSSE will be affected with the new regime and considers some key points that will be of interest to practitioners.

The FRSSE was first introduced in 1997 and since its introduction has seen it updated five times.  Companies are currently using the FRSSE (effective April 2008) when preparing their financial statements, however with effect for accounting periods commencing on or after 1 January 2015, there will be a new version of the FRSSE (effective January 2015). Early adoption of FRSSE is permissible, although it is likely that the majority of companies will not adopt the standard earlier than its effective from date.

The FRSSE is based on current UK GAAP and is a much-loved standard by practitioners because it offers a simplistic financial reporting framework for smaller companies, is very easy to navigate and is very straightforward to apply. The good news is...

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  • Status of the FRSSE
  • Main body of the FRSSE
  • Changes to part C Definitions
  • Conclusion

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Comments

more change    7 thanks

The Black Knight | | Permalink

More change, I wonder if HMRC or companies house will notice that a changed note is missing, or the client will understand or be bothered either. Just a rule for one accountant to bully another accountant over then.

Be interesting to see what a domestic partner is defined as? Does this include the maid and girl friends or anyone you currently have sexual relations with. Or is it anyone you have joint liabilities or assets with. What about a house mate that is a friend with benefits. Brings a whole new meaning to Know your client.

You can just see the related party note:

"During the year Mr Smith (the director) spent part of the week with Mrs Tiptree (the milkman's wife) Upon discovery on the 21 february he was expelled from the family home and banned from seeing Mrs Tiptree. He then took up with Daisy Duke (the farmers daughter), following a short period of bed and breakfasting not lasting more than 30 days, and Maria Appleton (the farmers sister) but has not been found out until now that is. It's a good job this note is not required in the abbreviated accounts as otherwise the whole village would know by now."

 

 

 

made my day    3 thanks

martinbruno10 | | Permalink

Thanks Black Knight - it made my day and had a laugh.

keithas's picture

"The FRSSE is based on

keithas | | Permalink

"The FRSSE is based on current UK GAAP and is a much-loved standard by practitioners because it offers a simplistic financial reporting framework for smaller companies"

From Oxford Dictionaries: Simplistic: adjective; treating complex issues and problems as if they were much simpler than they really are.

Did you really mean that?

The interesting thing is that you could have, which paints a disparaging view of FRSSE. And of practioners!

Market value changes in investment properties and deferred tax

stuartthom | | Permalink

What about the FRS102 change to how movements in the fair value of investment properties are to be recognised i.e. through the P&L rather than through the STRGL.

And that a deferred tax liability must now be calculated on all revalued properties.

Presumably the new FRSSE will also adopt this?

 

Steve Collings's picture

Queries

Steve Collings | | Permalink

Hi,

@keithas - I did not intend to make disparaging references against the FRSSE or practitioners - indeed I, myself, am a practitioner who uses the FRSSE.  The word 'simplistic' was merely to highlight that the FRSSE is a simpler method of financial reporting (which it is).

@stuarthom Paragraph 6.53 to the FRSSE (effective January 2015) will still require changes in the market value to be taken to a revaluation reserve and NOT charged to P&L (save for deficits or a deficit reversal which is expected to be permanent which are debited/credited to P&L).

In the FRSSE (effective January 2015) at paragraph 9.4(a), deferred tax is NOT recognised on revaluation gains/losses unless (at the bal sheet date) the entity has entered into a binding agreement to sell the asset and has revalued the asset to selling price. 

Regards

Steve

 

re Queries

stuartthom | | Permalink

Thanks Steve.

Although is does seem odd that once the company becomes a medium size entity it has to start recognising valuation changes in the P&L and then calculate a deferred tax liability as well.

 

and

The Black Knight | | Permalink

keithas wrote:

"The FRSSE is based on current UK GAAP and is a much-loved standard by practitioners because it offers a simplistic financial reporting framework for smaller companies"

From Oxford Dictionaries: Simplistic: adjective; treating complex issues and problems as if they were much simpler than they really are.

Did you really mean that?

The interesting thing is that you could have, which paints a disparaging view of FRSSE. And of practioners!

and what are practioners! ? did you mean that? ;-p

Nigel Hughes's picture

Mr Smith

Nigel Hughes | | Permalink

Do you think you could get hold of Mr Smith's diet and email it round to the rest of us?

Bear in mind that if the UK complies with the latest EU directive on Company Law the FRSSE 2015, may never be used in anger and will be replaced with something simpler (no not simplistic) hard to believe I know.

Simple, not simplistic.

tomtrainer | | Permalink

keithas wrote:

"The FRSSE is based on current UK GAAP and is a much-loved standard by practitioners because it offers a simplistic financial reporting framework for smaller companies"

From Oxford Dictionaries: Simplistic: adjective; treating complex issues and problems as if they were much simpler than they really are.

Did you really mean that?

The interesting thing is that you could have, which paints a disparaging view of FRSSE. And of practioners!

I think he meant simple, not simplistic.

keithas's picture

@ The Black Knight

keithas | | Permalink

No I didn't, I misspelt it.

Domestic Partners?

CAH | | Permalink

If you live with someone who is prepared to vacuum, wash up and clean the w.c., etc.,etc, then I would class them as being truly domestic - if they don't contribute to the running of the home I guess they are just nuisance guests or mere playthings! Sorry to be frivolous on my first post!

 

As previous comments indicate the expression "domestic partner" may lead to some fascinating law cases and lots of fees for the lawyers and sexpert witnesses!