Five practical issues on first-time adoption of new UK GAAP

financial accounting
By Amy Hutchinson and Anne Adrain, ICAS

11 October 2016

The ICAS Technical team recently hosted an innovative and informative session with more than 20 CA firms to consider some of the practical issues emerging on the implementation of new UK GAAP.

Amy Hutchinson, Assistant Director, Technical Policy, and Anne Adrain, Assistant Director, Sustainability and Assurance, lead the interactive discussion which looked at the following five key areas:

1. Accounting treatment of investment properties

The differences in the accounting treatment of investment properties under existing UK GAAP and FRS 102 were highlighted – with the key change being that revaluation changes are now recognised in the profit and loss account.

Particular focus was given to the different treatment under new UK GAAP when properties are leased to other group companies: the prohibition on such properties being treated as investment properties under old GAAP has not been carried forward into FRS 102.

2. Disclosures under FRS 102

The FRC’s mandatory and encouraged disclosures under FRS 102 Section 1A: Small entities were discussed. There is a need for greater judgement as to the nature and extent of information that should be disclosed as there are now fewer mandatory disclosures than under the FRSSE, but the accounts must still provide a true and fair view.

3. New filing options

The filing requirements for small companies, including the withdrawal of abbreviated accounts, effective for accounting periods commencing on or after 1 January 2016, were highlighted. Entities now have the following three filing options:

  • Full accounts; or
  • Abridged accounts; or
  • The balance sheet plus related notes.

4. The transition to FRS 102

The need for the disclosure of reconciliations between the previous reporting framework and FRS 102 was emphasised. It was also stressed that an entity was required to include an explanation of how the transition to FRS 102 had impacted upon its financial performance.

5. Audit considerations

Some of the audit considerations on first-time adoption were also discussed where the need for the auditor to document the rationale behind all his/her judgements and conclusions was stressed.

The FRSSE is withdrawn for accounting periods beginning on or after 1 January 2016, meaning that small entities will be required to adopt FRS 102 including section 1A, or full FRS 102 from that date.

Next steps

Members should ensure they are up-to-date with the practical implementation issues in order to assist clients with a smooth transition to the new standards.

ICAS hopes to run similar sessions in the future and would welcome suggestions for future topics. If you would be interested in attending any of these future sessions, please email us.


  • Corporate and financial reporting

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