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Something clearly has to be done to exclude group and directors' interest free subordinated loans from the financial instruments regime. To apply imputed interest and revaluation rules to what is basically flexible capital, is a nonsense.
Problems we have faced with implementing FRS:
1. Too many standards and option are on the table (early adoption) for SMEs, that software providers are struggling and indeed companies house have not got templates in place for the early adopters and seem clueless about when this will be available. We are having to resort to paper filing while they sort it out.
2. There should be a simplification of FRS102 section 1A, abridged accounts which actually is too lengthy in terms of the accounting policy notes.
3. The accountancy policy notes is ridiculously long for FRS102 full accounts as the definition of Financial Instrument has exploded.
4. SMEs should have a simplified FRS between the FRS102 and FRS105, not be a subsection of a larger FRS, as if it was an afterthought.
So I set to this morning and emailed them about the directors loan thing - having failed to respond in a disciplined fashion when FRS102 was first exposed. It would be good if they could receive a lot of comments from the SME sector who are roundly ignored by the FRC
I agree with the point above about directors' loans, and I would add intra-group indebtedness to it. I also agree that section 1A is a nonsense (it makes it harder for a small entity to work out what is required than it is for a large one, and that must be wrong) - a complete FRS for small entities is required - they could call it FRSSE....
To that list I would add the requirement for properties owned by one group company, but let to another, to be treated as investment properties by the owners (but not, of course, in the consolidation) - this provides no useful information and adds unnecessary time and cost to the accounts preparation.
I'm not sure that I agree with the point about Accounting Policies: I think that the software providers are making a meal of this when the overall requirements are little changed. There is no need to cut and paste large chunks of FRS 102 into the Accounting Policies (might as well just attach the whole thing!). They should be concise, meaningful, and relevant.