The Future of UK GAAP

On 30 January the ASB launched the latest stage in its long-running consultation on the future of UK GAAP. These radical proposals entail the replacement of the current UK GAAP with a new regime.

At its core this envisages a single comprehensive new standard (to be called FRS 102 The Financial Reporting Standard) based around the IFRS for SMEs. Draft FRS 102 would apply to all UK companies (and other UK entities preparing accounts intended to show a true and fair view) except those required or opting to report under EU-adopted IFRS and small entities reporting under the FRSSE.

The proposals have undergone a number of important changes since they were last exposed back in October 2010. The main revisions are:

  • EU-adopted IFRS will no longer be extended to those entities that had been described as ‘publicly accountable’ in the previous exposure draft. As a result, the application of EU-adopted IFRS is not extended beyond the requirements of the EU’s IAS Regulation.
  • As a consequence, some extra provisions have been added into FRS 102 to cover areas such as earnings per share and segmental reporting and to improve disclosures for financial institutions.
  • A number of options, available under current UK GAAP and IFRS but omitted from the IFRS for SMEs, have been re-introduced. These include options to revalue property, plant or equipment and to capitalise certain borrowing or development costs. The treatment of grant income has also been revised to bring this back in line with current UK practice.
  • Plans for a separate standard for public benefit entities have been abandoned; instead additional guidance for public benefit entities has been inserted into draft FRS 102. Changes were also made to reflect issues raised by respondents to the consultation on FRED 45 FRS for Public Benefit Entities, notably in clarifying the treatment of donated goods or services.

Links:

FRC – The Future of UK GAAP

http://www.frc.org.uk/asb/technical/projects/project0072.html

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