Proposed amendments to new UK GAAP unveiled
THE UK Financial Reporting Council (FRC) has issued proposals to amend UK and Irish accounting standards, in line with the European Union Accounting Directive.
The FRC says the proposals will benefit 1.5m of the smallest companies ("micro-entities") in the UK by simplifying their reporting requirements. There will also be changes for the 1.5m other companies that fall within the "small" company size threshold, including improving accounting for financial instruments and supporting the implementation of legislative changes. The proposals are also intended to benefit listed groups by providing greater flexibility and greater efficiency in reporting formats.
Key aspects of the proposals include:
- The withdrawal of the FRSSE (Financial Reporting Standard for Smaller Entities) for accounting periods beginning on or after 1 January 2016.
- A new accounting standard for micro-entities offering some simplifications in accounting.
- New recognition and measurement requirements for other small companies aligned with new UK GAAP, and disclosure requirements based on the new legal framework.
- Greater flexibility in relation to the format of the profit and loss account and balance sheet in FRS 101, allowing the use of IFRS-based presentation requirements similar to those used for group accounts.
The proposals are intended to be effective for accounting periods beginning on or after 1 January 2016, with early application permitted for accounting periods beginning on or after 1 January 2015. The proposals are open for comment until 30 April 2015 and the final standards and amendments are expected to be issued in July 2015.
The consultation documents are available on the FRC website.