Aat Frsme (Delegate Pack)
description
Transcript of Aat Frsme (Delegate Pack)
![Page 1: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/1.jpg)
UK Accounting Standards
![Page 2: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/2.jpg)
The Future of Financial Reporting in the UK
The FRSME’s A comparison of UK GAAP and the
FRSME
2
![Page 3: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/3.jpg)
and a simplified UK standard based on the IFRS for SME’s
![Page 4: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/4.jpg)
TIER 1 FULL IFRS AS ADOPTED BY THE EU
TIER 2 UK GAAP
TIER 3 FRSSE
![Page 5: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/5.jpg)
TIER 1 FULL IFRS AS ADOPTED BY THE EU
TIER 2 FRSME (comments on FRED currently under
consideration)
TIER 3 FRSSE
![Page 6: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/6.jpg)
FULL IFRS as adopted by the EUQuoted groups are already reporting their group accounts under IFRS
This would apply if their equity/debt is traded on a regulated securities exchange
![Page 7: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/7.jpg)
UK GAAPA new financial reporting standard based on the IFRS for SMEs has been produced in exposure draft form. It will be called the FRSME.
This new standard FINANCIAL REPORTING STANDARD FOR MEDIUM-SIZED ENTITIES will replace the current 2000 page book that is UK GAAP.
![Page 8: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/8.jpg)
The smallest companies will continue to use the simplified version of UK GAAP known as the FRSSE.
![Page 9: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/9.jpg)
The current 2000-page book, built up over decades is considered unwieldy and incoherent
Current UK GAAP is a mix of old UK standards and ones that have been partially converged with IFRS.
Commitment to harmonisation with IFRS
Without these changes UK GAAP will need ongoing modifications
![Page 10: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/10.jpg)
Reduces training costs Reduces risk of auditor error Improves consistency Makes interpretation simpler for users of
accounts, Companies will find it easier to move between
tiers.
![Page 11: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/11.jpg)
First FRSME a/cs
31 Dec 2014
1 Jan 2014
31 Dec 2012
Comparatives
Reconcileequity
Reconcileequity
Reconcile
profit
UK GAAP v FRSME
![Page 12: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/12.jpg)
Property, Plant and Equipment Borrowing costs Investment Properties Development costs Intangibles Leased assets Financial assets and liabilities Deferred Tax
12
![Page 13: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/13.jpg)
FRSME Section 17IFRS IAS 16
![Page 14: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/14.jpg)
UK GAAP• Terminology- fixed
assets• Allows certain classes
of fixed asset to be revalued to market value.
• Depreciation of buildings is not specific re components
FRSME• Terminology- non-
current assets• FRSME does not allow
revaluation of property, plant and equipment.
• FRSME requires component depreciation.
![Page 15: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/15.jpg)
FRSME Section 25IFRS IAS 23
![Page 16: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/16.jpg)
UK GAAP• 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
FRSME• FRSME does not allow
capitalisation of borrowing costs
• FRSME requires borrowing costs be expensed through profit
![Page 17: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/17.jpg)
FRSME Section 16IFRS IAS 40
![Page 18: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/18.jpg)
UK GAAP• Investment property is carried
in the balance sheet at fair (market) value
• Gains and losses are reported in the statement of total recognised gains and losses (STRGL)
FRSME• 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)
• Gains and losses are recognised directly in profit.
![Page 19: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/19.jpg)
FRSME Section 18IFRS IAS 38
![Page 20: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/20.jpg)
UK GAAP• Allows development costs to be
capitalised if, and only if,certain criteria are met.-Separate project-Expenditure clearly identifiable-Commercially viable-Technically Feasible-Overall profitable-Resources exist to complete the project
FRSME• 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:-It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity-The cost or value of the asset can be reliably measured-The asset does not result from expenditure incurred internally on an intangible item.
![Page 21: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/21.jpg)
FRSME Section 18IFRS IAS 38
![Page 22: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/22.jpg)
UK GAAP• Only permits the
revaluation of intangible assets in circumstances where readily ascertainable market values can be obtained.
FRSME• 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.
![Page 23: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/23.jpg)
FRSME Section 20IFRS IAS 17
![Page 24: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/24.jpg)
UK GAAP
• Two types of lease• Finance• Operating
• Contains a 90% ‘rule of thumb’ test to help determine if risks and rewards are transferred.
FRSME• Similar in principle but
does not contain the 90% rule of thumb
![Page 25: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/25.jpg)
FRSME Sections 11 and 12IFRS IAS 32/IAS 39
![Page 26: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/26.jpg)
UK GAAP• Some UK entities report under
IAS 26 (new model)• This is the same as IAS 39• Some UK entities report under
FRS 4/FRS 5 (Derivatives left off balance sheet).
FRSME• Contains two sections
- Simple instruments (section 11)
- Complex instruments (section 12)
- Unusual feature allows a mix of IAS 39 in full for measurement and adoption of FRSME for disclosure.
- Derivatives come on to the statement of financial position
![Page 27: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/27.jpg)
UK GAAP Timing difference approach
based on periods in which gains/losses recognise vs periods in which tax effect arises.
FRSME Temporary difference
(balance sheet approach) based on difference between carrying amounts and tax bases.
Generally more complex.
DEFERRED TAX
![Page 28: Aat Frsme (Delegate Pack)](https://reader035.fdocuments.us/reader035/viewer/2022062419/558e3ec31a28ab8c068b466a/html5/thumbnails/28.jpg)