Proposed amendments to UK and Ireland Accounting Standards
By Anne Adrain, Head of Sustainability and Reporting
7 August 2020
The FRC is consulting on amendments to UK and Ireland accounting standards to reflect current topical issues
The Financial Reporting Council (FRC) has issued two Exposure Drafts proposing amendments to UK and Ireland accounting standards.
The first of these Exposure Drafts, FRED 75 Draft amendments to FRS 104, Interim Financial Reporting, Going Concern, proposes to:
- clarify the requirement to assess the going concern basis of accounting; and
- require the disclosure of any related material uncertainties, when preparing interim financial statements in accordance with FRS 104.
As FRS 104 already requires an assessment of the going concern basis of accounting, in order to include a statement that the same accounting policies are applied as compared to the most recent annual financial statements, this element of the proposals will not be a change for companies and should be applied prior to these proposals being finalised.
The disclosure of any related material uncertainties will enhance the information available to users of the interim financial statements.
The second document, FRED 76 Draft amendments to FRS 102 and FRS 105 – COVID-19-related rent concessions, proposes explicit requirements for accounting for temporary rent concessions for operating leases occurring as a direct consequence of the COVID-19 pandemic, and within a limited timeframe.
They shall be recognised over the period the concession is intended to compensate, reflecting the economic substance of the concessions and their temporary nature.
The comment period for both Exposure Drafts closes on 1 September 2020.
The proposals in FRED 75 are expected to apply to interim periods beginning on or after 1 January 2021, and the proposals in FRED 76 are expected to apply to accounting periods beginning on or after 1 January 2020. In both cases, early application will be permitted.