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Have you got all of the processes and controls in place to ensure a smooth transition from UK GAAP to FRS 102?


This is the year when all companies that currently prepare their financial statements in accordance with UK GAAP will need to understand fully everything that needs to be done to convert not just their financial statements to FRS 102 but also their nominal ledger (or general ledger as some may prefer to call it). These companies will have to close down their UK GAAP nominal ledger for the financial year that ends on or after 31st December 2014 and, following this, bring all of the asset, liability and equity account balances in their nominal ledger in line with the restated FRS 102 values in the preceding year’s balance sheet.FRS 102 financial statement

There are many considerations that bring about changes to the UK GAAP balance sheet to convert it to an FRS 102 balance sheet. These are mainly to do with the concept of fair value being extended to cover more assets and liabilities and, also to do with timing differences between what is the UK GAAP treatment of some income and expenses and the FRS 102 treatment of the same. After due consideration most companies should be in a position to clearly understand the impact that FRS 102 will have on the preparation of their FRS 102 financial statements for the year ending on or after 31st December 2015.

Since July 2013 UK Training have helped more than a thousand organisations prepare for this momentous year by explaining the differences between UK GAAP and FRS 102 and we are now shifting the emphasis within our training to explain the processes that need to be performed to:

  1. Convert the UK GAAP balance sheet at the date of transition to an FRS 102 balance sheet - the date of transition for companies with a financial year end of 31st December  is 1st January 2014;
  2. Convert the UK GAAP profit and loss statement up to the end of the year preceding the year of implementation - this will be the year ending 31st December 2014 for companies with a financial year end of 31st December; and
  3. Convert the UK GAAP balance sheet at the end of the year preceding the year of implementation.

These processes have to be well controlled and it is vital that the people performing these processes understand the critical points at which these controls must be performed. In the absence of such controls there is the risk that the first set of published FRS 102 financial statements will not be complete and accurate. There is also the risk that the effects of the transition will not be adequately explained in the additional disclosure notes that you are required to produce with the first set of FRS 102 financial statements.

Implementing FRS 102 - How To Convert Your Financial Statements is a one-day training course that incorporates a practical case study which explains in detail the processes and controls that need to be applied to ensure that your company prepares its first set of FRS 102 financial statements that are fully compliant with the requirements of the standard.

Stephen Smith
Managing Director
UK Training (Worldwide) Limited

 

 
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