UK Accounting Standards
<ul><li>The Future of Financial Reporting in the UK </li></ul><ul><li>The FRSME’s </li></ul><ul><li>A comparison of UK GAA...
and a simplified UK standard based on the IFRS for SME’s
<ul><li>TIER 1   </li></ul><ul><li>FULL IFRS AS ADOPTED BY THE EU </li></ul><ul><li>TIER 2   </li></ul><ul><li>UK GAAP </l...
<ul><li>TIER 1   </li></ul><ul><li>FULL IFRS AS ADOPTED BY THE EU </li></ul><ul><li>TIER 2   </li></ul><ul><li>FRSME  (com...
<ul><li>FULL IFRS as adopted by the EU </li></ul><ul><li>Quoted groups are already   reporting their group accounts under ...
<ul><li>UK GAAP </li></ul><ul><li>A new financial reporting standard based on the IFRS for SMEs has been produced in expos...
<ul><li>The smallest companies will continue to use the simplified version of UK GAAP known as the FRSSE. </li></ul>
<ul><li>The current 2000-page book, built up over decades is considered unwieldy and incoherent </li></ul><ul><li>Current ...
<ul><li>Reduces training costs </li></ul><ul><li>Reduces risk of auditor error </li></ul><ul><li>Improves consistency </li...
First FRSME a/cs 31 Dec 2014  1 Jan 2014 31 Dec 2012  Comparatives Reconcile equity  Reconcile equity  Reconcile profit UK...
<ul><li>Property, Plant and Equipment </li></ul><ul><li>Borrowing costs </li></ul><ul><li>Investment Properties </li></ul>...
FRSME Section 17 IFRS IAS 16
<ul><li>UK GAAP </li></ul><ul><li>Terminology- fixed assets </li></ul><ul><li>Allows certain classes of fixed asset to be ...
FRSME Section 25 IFRS IAS 23
<ul><li>UK GAAP </li></ul><ul><li>If an entity constructs its own asset such as a warehouse or building the borrowing cost...
FRSME Section 16 IFRS IAS 40
<ul><li>UK GAAP </li></ul><ul><li>Investment property is carried in the balance sheet at fair (market) value </li></ul><ul...
FRSME Section 18 IFRS IAS 38
<ul><li>UK GAAP </li></ul><ul><li>Allows development costs to be capitalised if, and only if,certain criteria are met. </l...
FRSME Section 18 IFRS IAS 38
<ul><li>UK GAAP </li></ul><ul><li>Only permits the revaluation of intangible assets in circumstances where readily ascerta...
FRSME Section 20 IFRS IAS 17
<ul><li>UK GAAP </li></ul><ul><li>Two types of lease </li></ul><ul><ul><li>Finance </li></ul></ul><ul><ul><li>Operating </...
FRSME Sections 11 and 12 IFRS IAS 32/IAS 39
<ul><li>UK GAAP </li></ul><ul><li>Some UK entities report under IAS 26 (new model) </li></ul><ul><li>This is the same as I...
<ul><li>UK GAAP </li></ul><ul><li>Timing difference approach based on periods in which gains/losses recognise vs periods i...
 
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Aat Frsme (Delegate Pack)

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AAT Oxford Branch - Accounting Standards Presentation slides from 15th September 2011

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  • Some very small financial institutions would be exempt.
  • FRSME RUNS TO ABOUT 400 PAGES
  • AT LEAST FOR THE MOMENT&gt;&gt;&gt;WELL A Lengthy moment..but still its only a matter of time..
  • ASB is planning to develop a standard specific to the needs of public benefit entities such as charities. It will also retain the sector specific SORPs where there is a clear need.
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  • Aat Frsme (Delegate Pack)

    1. 1. UK Accounting Standards
    2. 2. <ul><li>The Future of Financial Reporting in the UK </li></ul><ul><li>The FRSME’s </li></ul><ul><li>A comparison of UK GAAP and the FRSME </li></ul>
    3. 3. and a simplified UK standard based on the IFRS for SME’s
    4. 4. <ul><li>TIER 1 </li></ul><ul><li>FULL IFRS AS ADOPTED BY THE EU </li></ul><ul><li>TIER 2 </li></ul><ul><li>UK GAAP </li></ul><ul><li>TIER 3 </li></ul><ul><li>FRSSE </li></ul>
    5. 5. <ul><li>TIER 1 </li></ul><ul><li>FULL IFRS AS ADOPTED BY THE EU </li></ul><ul><li>TIER 2 </li></ul><ul><li>FRSME (comments on FRED currently under consideration) </li></ul><ul><li>TIER 3 </li></ul><ul><li>FRSSE </li></ul>
    6. 6. <ul><li>FULL IFRS as adopted by the EU </li></ul><ul><li>Quoted groups are already reporting their group accounts under IFRS </li></ul><ul><li>This would apply if their equity/debt is traded on a regulated securities exchange </li></ul>
    7. 7. <ul><li>UK GAAP </li></ul><ul><li>A new financial reporting standard based on the IFRS for SMEs has been produced in exposure draft form. It will be called the FRSME. </li></ul><ul><li>This new standard FINANCIAL REPORTING STANDARD FOR MEDIUM-SIZED ENTITIES will replace the current 2000 page book that is UK GAAP. </li></ul>
    8. 8. <ul><li>The smallest companies will continue to use the simplified version of UK GAAP known as the FRSSE. </li></ul>
    9. 9. <ul><li>The current 2000-page book, built up over decades is considered unwieldy and incoherent </li></ul><ul><li>Current UK GAAP is a mix of old UK standards and ones that have been partially converged with IFRS. </li></ul><ul><li>Commitment to harmonisation with IFRS </li></ul><ul><li>Without these changes UK GAAP will need ongoing modifications </li></ul>
    10. 10. <ul><li>Reduces training costs </li></ul><ul><li>Reduces risk of auditor error </li></ul><ul><li>Improves consistency </li></ul><ul><li>Makes interpretation simpler for users of accounts, </li></ul><ul><li>Companies will find it easier to move between tiers. </li></ul>
    11. 11. First FRSME a/cs 31 Dec 2014 1 Jan 2014 31 Dec 2012 Comparatives Reconcile equity Reconcile equity Reconcile profit UK GAAP v FRSME
    12. 12. <ul><li>Property, Plant and Equipment </li></ul><ul><li>Borrowing costs </li></ul><ul><li>Investment Properties </li></ul><ul><li>Development costs </li></ul><ul><li>Intangibles </li></ul><ul><li>Leased assets </li></ul><ul><li>Financial assets and liabilities </li></ul><ul><li>Deferred Tax </li></ul>
    13. 13. FRSME Section 17 IFRS IAS 16
    14. 14. <ul><li>UK GAAP </li></ul><ul><li>Terminology- fixed assets </li></ul><ul><li>Allows certain classes of fixed asset to be revalued to market value. </li></ul><ul><li>Depreciation of buildings is not specific re components </li></ul><ul><li>FRSME </li></ul><ul><li>Terminology- non-current assets </li></ul><ul><li>FRSME does not allow revaluation of property, plant and equipment. </li></ul><ul><li>FRSME requires component depreciation. </li></ul>
    15. 15. FRSME Section 25 IFRS IAS 23
    16. 16. <ul><li>UK GAAP </li></ul><ul><li>If an entity constructs its own asset such as a warehouse or building the borrowing costs may be capitalised as part of the cost of the asset </li></ul><ul><li>FRSME </li></ul><ul><li>FRSME does not allow capitalisation of borrowing costs </li></ul><ul><li>FRSME requires borrowing costs be expensed through profit </li></ul>
    17. 17. FRSME Section 16 IFRS IAS 40
    18. 18. <ul><li>UK GAAP </li></ul><ul><li>Investment property is carried in the balance sheet at fair (market) value </li></ul><ul><li>Gains and losses are reported in the statement of total recognised gains and losses (STRGL) </li></ul><ul><li>FRSME </li></ul><ul><li>Investment property is also carried in balance sheet (statement of financial position) at fair (market) value (if fair value can be obtained without due cost or effort) </li></ul><ul><li>Gains and losses are recognised directly in profit. </li></ul>
    19. 19. FRSME Section 18 IFRS IAS 38
    20. 20. <ul><li>UK GAAP </li></ul><ul><li>Allows development costs to be capitalised if, and only if,certain criteria are met. </li></ul><ul><li>-Separate project </li></ul><ul><li>-Expenditure clearly identifiable </li></ul><ul><li>-Commercially viable </li></ul><ul><li>-Technically Feasible </li></ul><ul><li>-Overall profitable </li></ul><ul><li>-Resources exist to complete the project </li></ul><ul><li>FRSME </li></ul><ul><li>FRSME requires internal development costs to be written off as they are incurred, unless they meet the recognition criteria which say an intangible can be recognised if, and only if: </li></ul><ul><li>-It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity </li></ul><ul><li>-The cost or value of the asset can be reliably measured </li></ul><ul><li>-The asset does not result from expenditure incurred internally on an intangible item . </li></ul>
    21. 21. FRSME Section 18 IFRS IAS 38
    22. 22. <ul><li>UK GAAP </li></ul><ul><li>Only permits the revaluation of intangible assets in circumstances where readily ascertainable market values can be obtained. </li></ul><ul><li>FRSME </li></ul><ul><li>Does not allow intangible assets to be revalued. The entity will continue to measure intangible assets at cost less accumulated amortisation and any accumulated impairment losses. </li></ul>
    23. 23. FRSME Section 20 IFRS IAS 17
    24. 24. <ul><li>UK GAAP </li></ul><ul><li>Two types of lease </li></ul><ul><ul><li>Finance </li></ul></ul><ul><ul><li>Operating </li></ul></ul><ul><li>Contains a 90% ‘ rule of thumb ’ test to help determine if risks and rewards are transferred. </li></ul><ul><li>FRSME </li></ul><ul><li>Similar in principle but does not contain the 90% rule of thumb </li></ul>
    25. 25. FRSME Sections 11 and 12 IFRS IAS 32/IAS 39
    26. 26. <ul><li>UK GAAP </li></ul><ul><li>Some UK entities report under IAS 26 (new model) </li></ul><ul><li>This is the same as IAS 39 </li></ul><ul><li>Some UK entities report under FRS 4/FRS 5 (Derivatives left off balance sheet). </li></ul><ul><li>FRSME </li></ul><ul><li>Contains two sections </li></ul><ul><ul><li>Simple instruments (section 11) </li></ul></ul><ul><ul><li>Complex instruments (section 12) </li></ul></ul><ul><ul><li>Unusual feature allows a mix of IAS 39 in full for measurement and adoption of FRSME for disclosure. </li></ul></ul><ul><ul><li>Derivatives come on to the statement of financial position </li></ul></ul>
    27. 27. <ul><li>UK GAAP </li></ul><ul><li>Timing difference approach based on periods in which gains/losses recognise vs periods in which tax effect arises. </li></ul><ul><li>FRSME </li></ul><ul><li>Temporary difference (balance sheet approach) based on difference between carrying amounts and tax bases. </li></ul><ul><li>Generally more complex. </li></ul>DEFERRED TAX

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