The FRC (Financial Reporting Council) promotes high-quality corporate governance and set the standards for accounting, auditing, and actuarial work in the UK. The quality of corporate reporting and auditing are regularly monitored by FRC. Recently, FRC published a number of changes to accounting standards for Small Entities in accordance with the recent changes to the Companies Act 2006.
One of the major changes to the UK legal requirements for accounts was small and micro companies can no longer follow the FRSSE (Financial Reporting Standard for Smaller Entities). New UK GAAP (FRS102) was implemented, and those entities who currently apply the FRSSE have to either follow the requirements of FRS102 or FRS102 Section 1A or FRS105. These Financial Reporting Standards were applicable for the accounting periods beginning on or after 1st January 2016. FRS 102 brings well-integrated reporting regime which is based on IFRS but with considerable changes to suit for companies of all sizes in the UK. FRS102 (new UK GAAP) or UK IFRS will soon replace all of the current accounting standards.
Impact on Small and Micro entities
FRS102 will differ from previous UK GAAP depending on the each company’s individual circumstances and on the adoption of accounting policies where there are options under the accounting standard. Major differences in accounting which impacted are:
Overall the key changes have impacted the income statement, balance sheet, banking disclosures, profit sharing agreements, etc., in the filing. However, once it comes to iXBRL tagging requirement, HMRC has not released any specific taxonomy for FRS102 Section 1A and FRS105. Eventually, all accounting standards fall under the category of full list tagging as against the minimum list tagging approach used by HMRC during initial days of iXBRL mandate.
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