FRSME v UK GAAP: a comparison

Kashflow logo
Share this content

In this article, Steve Collings outlines the notable differences between current UK GAAP and the proposed ‘Financial Reporting Standard for Mid-Sized Entities’ (FRSME) which will largely affect practitioners when this standard is introduced in the United Kingdom.

On 29 October 2010, the UK Accounting Standards Board (ASB) issued a proposal to introduce an international-based financial reporting framework for companies who are not eligible to apply the Financial Reporting Standard for Smaller Entities (FRSSE) and those who currently apply full IFRS (notably listed companies).  FRSME is proposed to replace current UK GAAP for accounting periods commencing on or after 1 July 2013, and is based on the principles in the IASB International Financial Reporting Standard for Small Medium Entities (IFRS for SMEs).  IFRS for SMEs is based on the principles in full IFRS, which have been heavily condensed in recognition of the standard’s target audience. 

Looking at the proposed FRSME, there are some notable differences which will affect practitioners who deal with those clients who could potentially fall under its scope. They fall into these areas:

  • Investment properties
  • Fixed asset (Non-current asset) revaluation
  • Borrowing costs
  • Intangible assets – development costs
  • Goodwill and intangible assets
  • Revaluation of intangible assets
  • Leases
  • Business combinations
  • Revenue recognition
  • Deferred taxation
  • Associates and joint ventures (consolidated financial statements)
  • Defined benefit pension schemes
  • Stock (inventory) valuation
  • Accounting policies

As UK standards, in their current form, will no longer exist, FRSSE users will fall back to FRSME if FRSSE does not cover a transaction or event.

FRSME, however, is a stand-alone standard and in the event that a transaction or event is not covered in FRSME, it would require the directors to develop an accounting policy for an issue not addressed by it having regard to the concepts and pervasive principles within FRSME detailed at paragraph 10.4.

Steve Collings is the audit and technical director at Leavitt Walmsley Associates Ltd. He is also the author of ‘The Interpretation and Application of International Standards on Auditing’ (published February 2011) and lectures on financial reporting and auditing issues.


Please Login or Register to read the full article

The full article is available to registered members only. To read the rest of this article you’ll need to login or register. Registration is FREE and allows you to view all content, ask questions, comment and much more.

About Steven Collings


Steve Collings, FMAAT FCCA is the audit and technical partner at Leavitt Walmsley Associates Ltd where Steve trained and qualified.


Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.