So I've been doing some reading on FRS 102 / 105.....
I've not really seen this subject covered much on here so...;)
The transition malarkey -
Can I assume that the previous TB is adjusted to read as if the comparative year was written up with FRS 102 / 105 in mind?
If so is it fair to assume that a previous years accounts can be re-submitted via taxfiler / taxcalc etc etc?
Now I also figure that going back to edit the comparative year to reflect FRS 102 /105 could turn profit negative. BUT assuming whilst using FRSSE profit was not negative there will be no penalties?
One that I've definitely not found the answer to is - can you switch from 105 to 102, and vice versa? If so, is this permitted only at the start of a new accounting year? Reason for this question is, if a business starts small lets say, then decides to buy property - as we know, if that is the case, one FRS is better than the other.
As a side, :) Isn't FRS 102 better to use looking at in from an investors / Bank point of view? More disclosures etc?
Thank you
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
Can't answer your questions Johnny but it's a timely reminder to get my head down and start looking at this, although my first one won't need to be done until about May next year.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
FRS105 seriously worries me. Its the result of an EU directive that just doesn't fit properly with UK reporting and you would think that the FRC could now squish it as the information that can be gleaned from financial statements under it make Abreviated accounts look like the encyclopedia Brittanica by comparrison.
As for having to depreciate investment properties don't even get me onto that!
Considering that FRS105 seems to be geared towards micro businesses wanting to do it themselves, and requiring HMRC to visit to go through the bookkeeping to understand what the hell is behind the figures I'm sticking with FRS102 with limited disclosures (and fair value reporting) for my clients.
This is a change of accounting policy, not an error in a prior period so there will be no penalties for restating opening balances and comparatives. Note that there are also several important exemptions on first adoption of the new standard which may eradicate the issue over changed profit or loss.
Mandatory exemptions are :
Derecognition of financial assets and liabilities
Accounting estimates.
Optional exemptions are :
Business combinations / goodwill
Share based payments
Investment property
Compound financial instruments
Lease Arrangements
Decommissioning liabilities
Dormant companies
Lease incentives
The exemptions continue to be applied until the elements that are in breach of the requirements of FRS105 cease to exist in the business.
You can look any of the above exemptions up in a quick search and going into detail here would make the thread somewhat too detailed.
You can only change accounting policy where such is required by regulatory change or where such results in the financial statements providing more reliable
and / or more relevant information about the effects of transactions, other events or conditions on the entitys financial position or financial performance.
Considering that, following the demise of FRSSE then the business owner would adopt either FRS102 or FRS105. If they adopt FRS105 then a move to FRS102 would be permissible but a move from FRS102 to FRS105 which provides much less information would never be permitted.
That probably doesn't aswer all of your questions but hope that it starts other people talking about the changes.
I'll dip back into the conversation when I can,
all the best,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
No you have answered a fair few questions in your post.
It is fair to agree then, that if all was legal under FRSSE, then should be not retrospective tax charge when implementing FRS 105 / 2?
I do see many businesses deciding to use FRS 105 (Those who draw up their own) due to the lack of disclosures / deferred tax calculations.
To use FRS 102, unless asked to use FRS 105 does seem the sensible option for sure.
It is nice to read the FRS in all its glory, yet it is nicer to come here for the common sense approach, and to see how others are interpreting what I'm reading!
In parts, some of the FRS is like trying to understand the ITTOIA!
:)
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
Sorry, in a real rush this morning so no time for a long answer.
Anything on FRS102 or FRS105 by Steve Collings. He's done a load of articles for the transition both on his own firms website and on Aweb (be warned there are A LOT of articles on this subject!).
He's also written a book for small company accounts for Bloomsbury :
although much of what he writes on FRS102/105 in there is also available freee from Aweb
Also have a look through the ACCA's articles which have some excellent material especially around change of accounting policy (see ACCA technical fact sheets 162 and 188).
Sorry, got to go,
hope that helps,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Good call on the Steve Collings - I have watched a few of his records over on the AAT CPD section. I have also seen a few of his posts over on AW.
I shall start on the ACCA technical articles - thanks.
The book you linked to is in line with, price wise, the couple I have in mind.
I was hoping that one of the main bodies may have had a text out on the subject, yet most seem to be aimed more towards listed, or / and audit threshold companies.
Thanks
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
