Accounting changes just announced to benefit businesses

Technical accounting standard changes just announced should benefit businesses and provide cost savings (or assist to limit the fee increases that businesses will incur due to adoption of FRS 102 The Financial Reporting Standard applicable in the UK and Republic or Ireland ("FRS102")).

Due to the changes announced businesses will not now have to obtain valuations, will be able to apply simpler accounting with fewer calculations required, will have reduced disclosure requirements and the changes will hopefully reduce the time spent in determining an appropriate accounting policy for the business.

FRS 102 was introduced from 2015 and following a review by the Financial Reporting Council (FRC), the FRC have just announced a number of amendments to FRS102 which will benefit businesses that apply FRS102 as their accounting standard.

The FRC have advised that "The amendments to FRS 102 are intended to improve the cost-effectiveness of FRS 102 without impacting significantly on the usefulness of the resulting information for users of the financial statements. This has been achieved by simplifying some of the more challenging requirements (including requiring fewer fair value measurements in some areas), by introducing more accounting policy choices and by clarifying existing requirements meaning that less time is required to determine an appropriate accounting policy in those cases"

These changes include the following :

• removing the requirement for small entities to measure directors’ loans at present value
• permitting investment property let to another group entity to be measured based on cost, rather than fair value;
• requiring fewer intangible assets to be separated from goodwill when acquired as part of a business combination
• making it easier to determine whether a financial instrument is ‘basic’ or ‘other'
• amending the definition of a financial institution to focus more clearly on certain types of entity that shall provide enhanced disclosures about financial instruments; and
• clarifying requirements in certain areas, for example by addressing issues on which FRS 102 was previously silent
• Amendments are also made to incorporate the new small entities and micro-entities regimes in the Republic of Ireland (the latter by amendments to FRS 105 The Financial Reporting Standard applicable to the micro-entities Regime ).

In general these amendments are effective for accounting periods beginning on or after 1 January 2019, with early application available. 

The amendments to incorporate the small entities and micro-entities regimes in the Republic of Ireland are effective for accounting periods beginning on or after 1 January 2017.

About Rory Williams

Rory Williams is a Fellow of Chartered Accountant Ireland (FCA), Chartered Tax Advisor and Qualified Financial Advisor (QFA). A founding partner of Williams Merrigan, a firm of Chartered Accountants located in Dublin, he has many years experience advising indigenous Irish family owned businesses, self employed professionals and individuals in all aspects of their accounting, auditing, company secretarial, taxation compliance and tax planning requirements.

Interested in working with Rory Williams and Williams Merrigan ?

Rory can be contacted on (01) 676 5800 or by email on rory.williams@williamsmerrigan.ie

Disclaimer :

Whilst every effort has been made to ensure the accuracy of matters covered by this article, no responsibility for loss or damage occasioned by any person acting, or refraining from acting, as a result of matters above. Professional advice should always be sought before acting on any interpretation of matters covered by this article.