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Business owners are being urged to act over new regulations which are regarded as the most significant change to UK financial reporting rules for many years.
Accountancy and business advisory firm HURST is warning that thousands of companies are affected by the new FRS 102 accounting standard, but says most have underestimated the amount of time required to meet its demands.
FRS 102 is now the main standard for accounting periods beginning on or after January 1 this year, replacing all existing UK GAAP (Generally Accepted Accounting Practice) rules.
For example, if a company’s year-end was March 31 this year, FRS 102 must be adopted for the period from April 1.
It affects all large and medium-sized companies initially. Smaller businesses will be exempt until January 1 2016. After that, only ‘micro-entities’ will be exempt.
HURST has published a free guide to FRS 102 for business owners, and has set up an impact assessment tool on its website.
The firm has also acquired the internet domain name www.frs102.guru and is posting regular updates on the new website.
FRS 102 requires major changes to the form and content of company accounts, which will impact on the balance sheet and, potentially, reported results.
The amount of tax payable on profits will be affected, because earnings could go up or down. The exact impact depends on the nature of a company’s activities and the type of assets it owns.
John Glover, pictured, a business services manager at HURST, who is leading the firm’s FRS 102 initiatives, said: “It’s the most significant change to UK financial reporting for many years, yet most companies are only just starting to think about the potential impact and appear to have underestimated the amount of time involved. They need to act promptly.
“There could be an impact on aspects such as budgets, forecasts and bonus agreements. There is no such thing as one answer for all. Every business is different and has its own circumstances.
“We are already working with clients to ensure that the transition to, and adoption of, the new rules is done in an efficient and seamless way. It’s best to prepare early as it gives the most time possible to identify issues and consider the available options.”
