Countdown to 2015 and new UK GAAP - Sage at Accountex 2014
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From 1 January 2015 there will be a new UK accounting regime in operation – FRS102, the FRSSE and the micro company regulation. There will also soon have to be new company law. This presentation will touch on what needs to be done, the implementation issues that are coming up and latest developments.
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Countdown to 2015 and new UK GAAP - Sage at Accountex 2014
- 2. The global body for professional accountants Countdown to 2015 – new UK GAAP Sage Seminar, Accountex 16 May 2014
- 3. The global body for professional accountants ACCA Global body for professional accountants 162,000 members and 428,000 students 173 countries, 89 offices IFRS in main qualification since 1996 Diploma and certificate in IFRS and in IFRS for SMEs
- 4. The global body for professional accountants New UK GAAP • New UK GAAP- FRS100-103 • FRSSE • New regime for micro companies
- 5. The global body for professional accountants New UK accounting standards
- 6. The global body for professional accountants Convergence of UK GAAP and IFRS • FRS100 Overall system • FRS101 Reduced disclosure requirements for subsidiaries • FRS102 UK & RoI standard • FRS103 – insurance
- 7. The global body for professional accountants FRS102 for large and medium sized • IFRS for SMEs adapted for UK/RoI • Condensed text - principles of IFRS • Disclosure reductions and other simplifications • Where something is not covered use the framework and you may also look at full IFRS • Adaptations – formats, options in current GAAP, public benefit
- 8. The global body for professional accountants Financial instruments • 2 categories of assets and liabilities – fair value via P&L or amortised cost • Equities at fair value when reliably measured • Derivatives at fair value, FRED 54 proposals • Hedge accounting regulated – but being replaced (FRED51) • Option to use IAS39
- 9. The global body for professional accountants Business combinations • Must amortise goodwill – no indefinite life option • Default life of 5 years for goodwill – UK current maximum of 20 years • Recognition of intangibles separate from goodwill • No more merger accounting except for business combinations under common control
- 10. The global body for professional accountants Differences from current - examples • Investment properties – fair value via P&L • If reliable fair value cannot be obtained without undue cost or effort, use depreciated cost • Property, plant & equipment - Uplift of residual values; Less detail on capitalisation of subsequent expenditure. • Deferred tax provided on revaluations
- 11. The global body for professional accountants Other differences from current practice - examples • Different wording and less – revenue recognition • Holiday pay accrual • Total lease commitments • Related party transactions - names • Cash flow statements - headings
- 12. The global body for professional accountants Application of new GAAP • Must apply from 2015 • Comparatives for 2014 needed • Reconciliation from old to new
- 13. The global body for professional accountants FRSSE – road ahead for small companies
- 14. The global body for professional accountants Small companies • Thresholds increased – small would be at £10m of turnover, £5m assets • Maximum harmonisation for small companies - FRSSE cannot add disclosure requirements • Likely to replace FRSSE with ‘FRS102 lite’ • Accounting treatments would be as for FRS102? • Disclosures will be reduced • Effective from Jan 2016
- 15. The global body for professional accountants For small companies • Formats for P&L and balance sheet • Accounting policies • Effects of revaluation and fair values • Prior year adjustments • Commitments and contingencies • Security given over assets • Liabilities due in more than 5 years • Loans to directors • Exceptional items in P&L • Employee numbers
- 16. The global body for professional accountants Small companies – extra disclosures? • Movements on fixed assets • Immediate parent – consolidating • Off balance sheet arrangements • Post balance sheet events • Related party transactions
- 17. The global body for professional accountants Micro company accounting
- 18. The global body for professional accountants Simplification for micros • Micro definition – £632k of income and £316k of assets and 10 employees • Highly simplified balance sheet and P&L • Very few notes to the accounts • Only disclosure of directors’ loans, commitments and contingencies required • No revaluation or fair values
- 19. The global body for professional accountants Micro company balance sheets • Called up share capital unpaid • Fixed assets • Current assets • Prepayments and accrued income • Creditors • Accruals and deferred income • Provisions • Capital and reserves
- 20. The global body for professional accountants Micro company P&L • Turnover • Other income • Raw materials • Staff costs • Depreciation and other amounts written off assets (‘Value adjustments’) • Other charges • Tax • Profit or loss
- 21. The global body for professional accountants UK adoption of micro-rules • Years ending on/after 30 Sept 2013 • Now incorporated into FRSSE • Accounting treatments as per FRSSE • True and fair view is presumed
- 22. The global body for professional accountants Concluding thoughts
- 23. The global body for professional accountants Changes ahead Medium and large – FRS102 in 2015, but also comparatives Some may become small Small companies FRS102 or FRSSE? Reduced disclosures coming from 2016 Much simpler regime for micros already available
- 24. The global body for professional accountants Questions or comments?
- 25. The global body for professional accountants Thanks!
- 26. The global body for professional accountants Help with application of new GAAP Technical factsheet 181: FRS 102 – making the transition to new UK GAAP http://www2.accaglobal.com/pubs/members/publications/tech nical_factsheets/downloads/181.pdf Web-page with link to request model accounts: http://www2.accaglobal.com/uk/members/technical/advice_su pport/financial_reporting/guidance_disclosure/fin_rep_guid ance_2013/new_ukgaap_model_accounts Vodcast : http://uk.accaglobal.com/uk/members/publications/podcasts/c hanges_gaap