Financial reporting continues to be influenced by the COVID-19 pandemic

11th Dec 2020
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With coronavirus continuing to cause disruption worldwide, amendments have been made to UK and Irish GAAP by the Financial Reporting Council, with Covid-19 being the catalyst for these changes.

Rent Concessions

A number of lessors provided rent concessions to lessees, meaning that they have a portion of their lease payments waived due to the virus.

It was previously debated how these concessions should be accounted for, with one argument requesting the concession to be shared across the remaining lease term – as leases usually are. However, amendments made by the FRC bring clarity to the subject, and confirm that in their opinion the concession should be recognised in the term on which it falls.

Section 20 of FRS 102 and Section 15 of FRS 105 have been revised to include amendments to the operating of lease payments relating to Covid-19  are to be identified systematically with the term that the lease payment modification is intended to recoup.

These amendments relate to reductions due up until 30th June 2021.

It is important to note that rent concessions differ from the situation where the lessee has been granted a rent deferral and therefore the changes in UK GAAP would not apply to deferrals.

These changes we’re introduced to be effective from 1st January 2020, early adoption is permitted, as long as it does disclose this fact.

Has anything changed at CaseWare?

We now include an optional additional paragraph within our default accounting policies for lessors and lessees to state any temporary rent concessions occurring as a consequence of Covid are recognized and the change has been intended to compensate.

Our Operating leases note has also been updated to incorporate an optional table where users can disclose any amendments to their lease payments which have arised as a result from the pandemic for both the current and prior year. We’re hoping and have considered this as just a short term requirement to reporting and therefore have not created a new mapping number at this stage.

Our next ePack release for our AccountsAdvanced template which is due imminently, will see inclusion of these changes.