The future of UK GAAP

The UK Accounting Standards Board (ASB) has proposed to replace current UK GAAP with a 3 tier approach to financial reporting in the UK.

Tier	Nature of entity	Accounting regime
1	Listed and publicly accountable	Full EU endorsed IFRS
2	Non-publicly accountable entities	FRSME
3	Small (as at present)	FRSSE

If introduced, the new regime will apply for accounting periods commencing after 30 June 2013. Whilst 2013 may seem a long way away, assuming a 31 December 2014 year end, a comparative income statement and balance sheet would be required for the year end 31 December 2013. This would require financial information for the new standards to be available from 1 January 2013.

The changes will not only impact upon the financial statements but on number of topics which rely to one degree or another on the numbers in the financial statements such as:

• Corporate tax charge and cash taxes
• Tax strategies
• Distributable reserves
• Share and bonus schemes
• Management and shareholder agreements
• Debt covenants
• IT and reporting systems
• Operational and financial KPIs
• Training of accounting staff
• Non financial management (including the Board) need re-educating
• Communication with stakeholders requiring sensitive management.

Paul Eagland, Head of Audit and Tax at BDO comments: "The scale of the transition task should not be underestimated. Invariably significant issues emerge: accounting policies, tax accounting, fair values, disclosures – all of which require the exercise of judgement. They can have a material effect on the presentation of the results and this may need to be communicated early to stakeholders. Companies need to plan their transition now, and make sure they engage with their advisors throughout the process."

How BDO can help you?

At BDO we have a unique team incorporating specialists in financial reporting and tax to help guide companies through the changes.

We can help you:

• Assess the impact on your financial statements
• Review the effects of changes on the taxation charges
• Give advice on tax planning schemes
• Provide a detailed review of accounting changes in your accounts
• Convert the comparative current information to relevant set of standards
• Manage the whole transition process.

We are more than happy to discuss with you how the changes may impact upon your business.

National Contacts

Paul Merris - Director of Financial Reporting Advisory - 0121 352 6323
Neil Brackstone - Senior Tax Manager – 0118 925 4442