Ernst & Young: Comments on new UK and Ireland Financial Reporting Standards

By Rob Starr, Content Manager, Big4.com

The Financial Reporting Council (“FRC”) issued two of the three new Financial Reporting Standards (“FRSs”) recently  which will replace the current accounting framework in the UK and Ireland. The issued standards are FRS 100 ‘Application of Financial Reporting requirements’ (“FRS 100”) and FRS 101 ‘Reduced Disclosure Framework’ (“FRS 101”).

Companies currently applying IFRS in their subsidiary accounts can now, thanks to a recent change in the law, convert them to FRS101. As a change from IFRS to FRS 101 will not, for most companies, cause any material measurement differences we believe that early-adoption would be especially advantageous for such groups, significantly reducing the volume and cost of disclosures currently being prepared.
Other companies will have to make a choice when replacing UK GAAP, between using internationally recognised IFRS or a new, untested, globally unique, simpler accounting regime; New UK GAAP.

Andrew Davies, Ernst & Young partner and leader of Financial Accounting Advisory Services in the UK and Ireland, said:

“We welcome the earlier release of FRS100 and 101, divorcing them from the release of FRS 102, the third standard of the new financial reporting regime.  The issue of FRS 102, now commonly referred to as ‘New UK GAAP’, has been deferred until Spring 2013, while further changes are debated. The earlier release of FRS 100 and FRS 101 provides qualifying companies the opportunity to apply IFRS with reduced disclosures in their 31 December 2012 accounts. This will be a significant benefit for many.”