Are you ready for FRS 102?
FRS 102 is one of three new accounting standards which will replace the existing UK accounting requirements affecting reports for accounting periods beginning on or after 1 January 2015. It applies to Companies, LLPs and Not-For-Profit organisations preparing true and fair accounts, but who choose not to adopt International Accounting Standards and do not qualify as ‘small’ under the current Companies Act.
The new standards aim to improve reporting for modern transactions, improve consistency with international accounting standards, and amend some areas of conflict with existing UK Company Law. This is likely to change how you classify and value various items and when you recognise them in your accounts. The extent and magnitude of the changes will depend on the size and nature of your organisation. While the impact may be largely presentational for some organisations, for others there could be significant differences to report results and/or balance sheet.
While there are some exemptions and exceptions; all organisations are likely to have to restate prior year information to some extent. For a December 2015 year-end, the date of transition will be 1 January 2014, so there will be a need to obtain certain information as at this date; some of which may not be available retrospectively. This will likely result in audit work over and above usual requirements and this should be an important factor to bring into the timetable.
It is the responsibility of Directors to ensure the conversion process is undertaken without a material impact on the organisation. Auditors can advise on the conversion process, and encourage starting preparing for the transition as early as possible. This is because some organisations will be more affected than others by this conversion resulting in varying degrees of work performed by auditors.