As the new UK GAAP comes into force, Andrew Davies, partner and UK&I leader, Financial Accounting Advisory Services at EY runs through the essentials to make sure you’re ready for the changes
1 Determine the implications on the accounting policies (ie, measurement differences), normally through the use of an impact assessment
How do we make the decision about which framework to choose and which accounting policies to apply within that?
Making the overarching decision of which framework to apply is not a linear process. It may well be influenced by a high level objective such as alignment with International Financial Reporting Standards’ (IFRS) group policies, but issues that arise as you work through the detail will inevitably prompt you to circle back and re-examine that objective; for example, because of an unexpected tax or distributable reserves consequence.
The new UK financial reporting regime contains multiple areas of flexibility, so you can investigate combinations of accounting policies that give you a better answer for a particular issue. Do you want to apply new, more user friendly, hedging rules? FRS 102 allows you to access IFRS 9, Financial Instruments [replacement of IAS 39], earlier than those entities applying IFRS, so you could do that.
