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Thanks for this
As I currently prepare most of my accounts under FRSSE this will be good as I have liked the fact that where there FRSSE wasn't clear I could go to the big brother and check out the principles. It looks like FRSME will work the same way as a simplification of the main standards which is a good thing in the long term. It should also remove the uncertainty that we currently face as users of FRSSE.
Bit of a bore but it's a function of the legislation..
All my clients were on the FRSSE. Now they will split between the FRSME and FRS102 Lite.
The FRSSE is currently 100 pages and FRS102 342 pages. I hope they make the FRS102 version usable and don't tuck away the differences from the full version in occasional small paragraphs.
????
All my clients are Micro entities.
The minimum disclosure under those rules results in a totally meaningless result, anyone doing a Co Ho search is wasting their £1.
To make sense of the accounts for the client, HMRC AND me I include a load of notes described on each page as being "for information only and not part of the statutory accounts".
Anyone filing only the minimum required with HMRC must be surely asking for trouble
Comment on Micro-Entities from A/cs Production Software Supplier
ljp of Relate Software We produce FRS 102 compliant templates and software for use by accountants in practice.We have previously advocated the single GAAP approach incorporating a reduced version of FRS 102 for small entities and the dropping of the FRSSE is consistent with this approach. The FRSME when it comes into operation in 2016 will be a further reduction of the measurement rules, but it too will bring consistency with the new GAAP. What we don’t need are both historical GAAPs and modern GAAPs both operating according to the size of the entity. This will increase the amount of work accountants will need to do with no obvious benefit to the client. Of course treating the client as a micro-entity is optional and there are many arguments in favour of rejecting micro-entity accounting, because of the reduced ability of lenders and others to identify whether the client operates a viable business in the current economic conditions. One of the key notes under FRS 102 is “Significant accounting judgements and key sources of estimation uncertainty.” Another is the nature of the financial instruments such as credit, marketing, liquidity, cash flow interest rate and foreign currency risks as well as a sensitivity analysis. This explains a lot about the viability of a client’s business. Small businesses are particularly volatile and such businesses should be required to disclose these matters. Maybe in summary we would advocate the use of FRS 102 throughout, but certain irrelevant matters can be excluded from disclosure according to size.
Incomprehensible alternatives using ludicrous acronyms
FRSSEs (various dates), FRS 102, FRSME, GAAPs of various flavours and so on and with a new Brussels-based directive also hurtling towards us down the track.
As if any of it made a jot of difference in the real world. Tell me, you Masters of the Accounting Universe, who really cares? Don't you think we could have more important stuff to occupy our chargeable (or mainly non-chargeable!) time?
You know, trivial stuff like helping clients make a profit and pay the "correct" amount of tax. Or is all that secondary to complying with ever-changing reporting legerdemain?
Answers please in an Exposure Draft not exceeding 500 pages or, If rushed, a UITF abstract (abstract as in ".existing in thought or as an idea but not having a physical or concrete existence".) Just about defines the stuff up with which we nowadays have to put..
Too True
FRSSEs (various dates), FRS 102, FRSME, GAAPs of various flavours and so on and with a new Brussels-based directive also hurtling towards us down the track.
As if any of it made a jot of difference in the real world. Tell me, you Masters of the Accounting Universe, who really cares? Don't you think we could have more important stuff to occupy our chargeable (or mainly non-chargeable!) time?
You know, trivial stuff like helping clients make a profit and pay the "correct" amount of tax. Or is all that secondary to complying with ever-changing reporting legerdemain?
Answers please in an Exposure Draft not exceeding 500 pages or, If rushed, a UITF abstract (abstract as in ".existing in thought or as an idea but not having a physical or concrete existence".) Just about defines the stuff up with which we nowadays have to put..
Will any of this nonsense stop companies going bust ? I dont think so
Did all those notes and audit reports save Northern Rock, RBS, Lloyds TSB, et al ?? , maybe not, but boy did the audit firms do well, they should hang their heads in shame
Investment properties
My concern is with the treatment of freehold investment properties held by micro-entities (turnover about £30K from rental income).
I understand that if I use FRS102, I will have to continue to revalue them every year, but the revaluation reserve will have to be transferred to the P&L account, which I think is misleading. Also, (I think) I would have to account for deferred tax on the revaluations.
The alternative is to use the micro-entities regime, which uses historical cost, less depreciation. It would be much simpler to revert to just showing the properties at cost, and not have to revalue them every year, but it is quite ridiculous to depreciate them when they are worth considerably more than cost.
One of the properties was bought in 1962 for about £16,000 and is currently worth over £200,000, so it would be ridiculous to have to start depreciating the £16,000. Does anyone have any idea what depreciation rates one would be expected to use for an investment property? Or, is it acceptable to say that (provided the property is maintained) the expected useful life is over 100 years, and the expected residual value is in excess of cost, therefore the depreciation is nil?
I think the mirco-entities regime needs to be amended to say that, where investment properties are shown at cost, there should be no requirement to depreciate them, provided that the directors are satisfied that their value is no less than cost.
Eligibility?
Sorry if I'm missing the obvious but there are three criteria for determining whether an entity qualifies as a micro-entity. However, the table taken from the consultation document shows only turnover as being relevant in determining which accounting standard can be used.
Does this mean that it is proposed that an entity may qualify as a micro-entity by being within the balance sheet total and number of employees criteria but won't be able to use FRSME as its turnover is greater than £632,000?
Thanks in advance.
the table is misleading...
I attended a course on Tuesday and brought this up. The other 2 tests (gross assets and number of employees) should still be considered - not turnover on its own. I wonder whether the table would get a little crowded with these other bits in!
Wow ...
... a course on FRSME. I would have cleared my diary to go to that.
I'm just an innocent abroad when it comes to these matters so could some wise old accountant tell me exactly who is going to notice, and more to the point, care which particular set of arcane constructs my local window cleaning company has used in reporting its annual numbers.
FRSME, EU Accounting directive, Micro entity, FRS
Who is going to be brave enough and first to file a set of Accounts under the new regulations.
Who is going to lay their understanding and cards on the table, it will not be me, or shall we all see what Iris and other Accounting software produces. and take a view.
AndrewV12?
You list a number of regs, which one(s) do you think will require bravery?
We've been filing micros (via Iris) for a few months now and I have no plans to shift from this meaning that my one or two non-micro clients are likely to need to find a new accountant in a year or two.
(OK so I'm a wuss).
Which regs
Hi Paul
Thank you for the reply, all of the new regs frighten me, you know there are always one or two Accountants that do not understand changes/ are not aware of changes/ mis-interpret changes, I just dont want to be one of them.
Andrew
Threat & Opportunity
Hi Andrew - Ah I see.
Until recently, the way I've always looked at these things is that, without changes in regs & legislation I, and most other accountants, would be out of a job, so all of this headless chicken stuff is a godsend to squeeze more money out of clients who are more bewildered (and headless) than you are.
Having now been through over 30 years of this stuff however I (and more importantly my clients) need to put it in the same bucket as VAT returns, ie there's far more interesting stuff to deal with, and so Micro accounts is now my godsend until retirement in a couple of years.
Cluck-Cluck
Cluck - Cluck
Got ya!,
See change as an opportunity. Nice one, something else to bamboozle them.
Andrew :)
Goodwill and share capital
Hi -
I am working on some micro-entity accounts and am unsure what to do with the goodwill of 2000 and share capital of 100 on the formatted accounts. Can you help explain? Do I need to amortised the goodwill? They haven't been in business for more than 2 years.