Save content
Have you found this content useful? Use the button above to save it to your profile.
Postbox
istock_lofilolo_tp.jpg

FRS 102: Your thoughts please

by
9th May 2016
Save content
Have you found this content useful? Use the button above to save it to your profile.

With many practitioners gearing up for the move across to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, the Financial Reporting Council (FRC) are keen to receive feedback on the implementation of the standard.

It is expected that there will be plenty of questions on implementation of the standard, certainly in the first couple of years. In complex situations it may be advisable to seek advice from the technical advisory department of your professional body, or from a reputable training organisation as mistakes in interpretation can be both embarrassing and costly.

Some key differences to watch out for on implementation of the new standard (of which there are several articles outlining these differences) are in relation to:

  • Accounting policies
  • Deferred tax
  • Cash flow statement
  • Employee benefits
  • Financial instruments (loans at below market rate among related parties is becoming a big issue)
  • Foreign currency (no use of contracted rates)
  • Intangible assets and goodwill (be careful with the ten-year amortisation rule in FRS 102)
  • Investment property
  • Revenue recognition (this is more to do with the relaxed terminology; revenue recognition practices should not change from previous UK GAAP)

Review of FRS 102

The FRC are seeking views from practitioners on FRS 102 which they can use to inform the development of proposals for change. Any changes will be subject to a formal consultation, which is expected to be at some stage in 2017 in advance of a planned ‘effective from’ date of 1 January 2019.  This review will take on board feedback from accountants in terms of:

  • what went well;
  • what didn’t go so well;
  • what could be improved within the standard; and
  • areas of the standard that prove challenging.

The FRC have created an e-mail address where you can send feedback, which is [email protected]. The comments the FRC receive will be used to inform the development for proposals for changes to the accounting standard.

Comments can be provided to the FRC at any time during the triennial process, and those which are received by 31 October 2016 will be taken into consideration during the formal proposals for change.

Comments which are received post 31 October 2016 will be considered at a later stage in the review process. 

Tags:

Replies (4)

Please login or register to join the discussion.

avatar
By Nigel Hughes
11th May 2016 11:25

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.

Thanks (3)
avatar
By fozia
11th May 2016 15:30

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.

Thanks (1)
Replying to fozia:
avatar
By Nigel Hughes
11th May 2016 16:37

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

Thanks (1)
avatar
By TerryD
12th May 2016 11:30

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.

Thanks (0)