The Consultative Committee of Accountancy Bodies (CCAB) is consulting on an updated draft of the statement of recommended practice – accounting by limited liability partnerships (LLPs SORP), which is designed to ensure LLPs continue to present financial statements that are comparable with those of other entities
The move follows the Financial Reporting Council’s (FRC) publication in December 2017 of amendments to Financial Reporting Standard (FRS) 102, applicable in the UK and Republic of Ireland as a result of the 2017 triennial review.
CCAB has considered whether these amendments create any issues specific to LLPs and has concluded that only limited although important changes to the LLPs SORP are required.
These include updates to the guidance on cash flow statement presentation to reflect the new requirement to disclose the changes in net debt between the beginning and end of the financial period, as well as changes to the guidance on accounting by small LLPs to reflect the simpler recognition and measurement requirements available to small entities when accounting for certain loans.
The revisions also provide additional guidance on the revised recognition rules for intangibles assets acquired in a business combination, as well as changes to the guidance on merger accounting to reflect the extended definition of a group reconstruction. Other minor clarifications have also been proposed to the LLP SORP where required to maintain consistency with the revised FRS 102.
The updated SORP will be effective for periods commencing on or after 1 January 2019. Early adoption is permitted, provided all amendments are adopted from the same date, with some limited exceptions to this rule.
Peter Saunders, chairman of the CCAB SORP LLPs steering group, said: ‘The SORP has long established accounting practices for LLPs and ensures accountability and comparability.
‘It needs updating to reflect several important changes to FRS 102 arising from the 2017 triennial review which have specific relevance to LLPs.
‘We encourage constituents to consider the exposure draft carefully and we look forward to hearing their views on it.’
CCAB is an umbrella group of chartered professional bodies of British qualified chartered accountants with five members: ICAEW, ACCA, CIPFA, ICAS and Chartered Accountants Ireland.
The draft SORP is open for comment until 17 October.
Draft Statement of Recommended Practice Accounting by Limited Liability Partnerships is here
Report by Pat Sweet
