What are the standards and what do they mean?
FRS 100 Application of Financial Reporting Requirements sets out the overall framework, which has been illustrated below.
UK and Ireland GAAP
The UK and Ireland GAAP reporting framework is made up of five regimes, three of which are available within FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. The other two are FRS 101 Reduced Disclosure Framework and FRS 105 The Financial Reporting Standard applicable to the micro-entities regime.
FRS 101 Reduced Disclosure Framework sets out a reduced disclosure framework which addresses the financial reporting requirements and disclosure exemptions for ‘qualifying entities’ within a group that otherwise apply the recognition, measurement and disclosure requirements of EU-adopted IFRS.
FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland will apply to all other entities not required to prepare IFRS Accounts or eligible for FRS105 (which will capture most organisations).
This reporting standard is based on the International Financial Reporting Standard for Small and Medium Entities (IFRS for SMEs) but adapted for the UK and replaces almost all the current UK GAAP standards (the Financial Reporting Standards and Statements of Standard Accounting Practice). It is a simplified reporting regime for entities that will fall under its scope while retaining Companies Act 2006 requirements.
FRS105; the Financial Reporting Standard applicable to the micro-entities regime will apply to all entities which are eligible under the micro-entities regime.
When is it applicable and what is the date of transition?
The effective date for implementation of the new UK GAAP is for accounting periods beginning on or after 1 January 2015. Earlier adoption is permitted subject to certain conditions. The comparative period will also be affected and so consideration of these new standards needs to be given to periods beginning on or after 1 January 2014; i.e. the year ended 31 December 2015 will be the first year of adoption for most organisations. Transition requirements are included in FRS 102.
Note that for entities with a period beginning on 1 January 2014, the transition date has passed, which emphasises the need for organisations to consider the impact of FRS 102 sooner rather than later.
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