The financial Reporting Council, the independent body responsible for promoting high quality corporate governance, has introduced as series of changes that will impact on the way information in limited company accounts is disclosed, as well as their format.
Accounting periods commencing after 1st January 2015 (so for most, if the year-end is 1st January 2016 onwards) will be affected. The current UK GAAP has been replaced by adoption of FRS102 which is based on the International Financial Reporting Standards, ensuring UK accounts are more consistent with international accounting.
- The format of the financial statements will change as well as the disclosures themselves, which will now make reference to the new reporting standard.
- Profit and loss will now be called Income Statement and Balance Sheet will be called Statement of Financial Position, as well as other terminology changes.
- For many businesses the numbers will change, particularly if the company has leases, investments and financial instruments such as forward contracts and complex loans.
- Goodwill and intangible assets previously were allowed a maximum useful economic life of 20 years, however could be altered if there was suitable evidence to suggest this was longer. Under FRS102, assets must have a finite life. If it is unclear how long the assets useful life will be, the asset must be limited to a maximum of 5 years.
- There are also changes to pension valuation methods for defined benefit scheme.
There are a number of other changes and our clients will be made aware of these based on the items on their circumstances. For more details about the change visit HMRC’s website or click to view