Are you ready for FRS102?

Small and medium-sized enterprises (SMEs) are reminded that a new accounting standard could affect their financial affairs. 

The proposed changes of the new UK GAAP [Generally Accepted Accounting Principles], known as FRS102, will align the requirements of FRS102, which is generally used by smaller firms, with those of the relevant International Financial Reporting Standard; as used by larger organisations.

The Financial Reporting Council (FRC) said the changes were needed as the complexity of the existing rules had led to ‘potential unintended consequences’ which meant that they were not only more arduous to apply, but they could also result in ‘inappropriate accounting outcomes’.

The FRC has launched a consultation on amendments to accounting standard FRS102 in a bid to simplify rules surrounding share and share option awards for smaller firms.  In its draft, called FRED61, the FRC has set out amendments to the standard, which deals with share-based payment transactions with cash alternatives.  The FRC is looking to make the changes for accounting periods beginning on or after 1 January 2015.  When a business adopts FRS 102, comparative accounts for the year prior to conversion will also be needed. The comment period on this proposal closes on 1 June 2015.

For more information please Tim Preece at the office.