Financial Reporting Standards 102

Introduction

It is now possible to produce financial statements following UK GAAP - FRS 102 for Limited companies, LLPs and Charities/Academies. This is only possible when using an Enhanced chart.

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Additional FRS 102 information

FRS 102 First Year Adoption Only

FRS 102 Presentation of Financial Statements

Income Statement

Statement of Cash Flows

To use the Financial Reporting Standard 102 (examples based on an UK GAAP - FRS 102 current year end 31/03/16):

1. Enter a Date Accounting Standards apply within the Client | View | A/P Dates (for example, 01/04/15).

2. After entering this date any posting entries created will default to Accounting Standard UK GAAP - FRS 102, this can be changed if required.

3. Create a comparative Financial Reporting Standard UK GAAP - FRS 102 posting entry in Posting | New (for example, 31/03/15) by confirming the Accounting Standard as UK GAAP - FRS 102.

4. A warning displays stating that the start date of the posting entry is before UK GAAP - FRS 102 applies; click Yes to continue.   

5. This is required in order to re-state the UK GAAP comparative year, so only follow this and the next step if there is also a comparative UK GAAP posting entry.

5. Import Postings from the comparative UK GAAP entry into the corresponding comparative UK GAAP - FRS 102 entry by selecting Advanced | Import from posting entry from the posting screen.
    

6. Amendments resulting from First Year Adoption can then be made to this entry.

6. Create a current UK GAAP - FRS 102 posting entry in Posting | New (for example, 31/03/16) and confirm the Accounting Standard as UK GAAP - FRS 102.   

7. Accounts are run in the normal way by selecting Reports | Annual (for a Full Set of UK GAAP - FRS 102 Financial Statements LTD/LLP/CHA is still selected).   

The Annual Report Output screen will alter when running reports for First Year Adoption for UK GAAP - FRS 102 (that is, first year end found after ‘date FRS 102 apply’) to show:

• Current – UK GAAP - FRS 102 (First posting entry found following UK GAAP - FRS 102apply date entered)

• Last (Transition)– UK GAAP - FRS 102 (If no UK GAAP - FRS 102comparative entry this and following fields will be left blank)

• Last – UK  (must select a UK GAAP entry and Period End should match Last – UK GAAP - FRS 102

• YBL – UK (must select a UK GAAP entry)

For all other years the screen will appear as before and will display only posting entries that correspond to the Accounting Standard set on the entry chosen as Current Year.

Additionally for First Year Adoption, extra reports/notes are produced (Reconciliation of Equity/Profit, Impairment of Assets and so on) which will only appear for this one year and can be generated/adjusted via a separate First Year Adoption folder within the data screens.

Additional FRS 102 information

General:

• The standard set on a posting entry can be amended at any time by selecting Posting | Post File Maintenance | Entries | Change

• When changing Group Descriptions a choice of Group Structure is given so amendments can be made on either standard.

FRS 102 First Year Adoption ONLY

• Reconciliation of Profit or Loss - produces a comparison at the start and end of the comparative UK and UK GAAP -FRS 102 years. The Year End comparison is generated automatically from posting entries however the Reconciliation of Profit or Loss (Date of Transition) for example, Start of UK GAAP- FRS 102 comparative is manual and the figures must be entered in the First Year Adoption | Reconciliation of Profit or Loss data screen (YBL – UK figures could be used as a guide).
  
• Reconciliation of Equity – a Year End comparison of UK and UK GAAP -FRS 102 comparative entries is generated automatically from posting entries.  

Both of these reports may require corresponding notes which should be entered in the appropriate First Year Adoption data screen provided.

• Cash Flow Statement – initially the UK GAAP - FRS 102 comparative is likely NOT to balance (unless incorporation occurred at the start of the comparative year) due to there being no UK GAAP - FRS 102 pre-comparative and therefore no Opening Positions.
  
  To allow for this the Opening Position for Cash and Cash Equivalent (and/or Bank Overdrafts) picks up from the First Year Adoption | Reconciliation of Equity/Funds data screen for the current FRS 102 year (which must be completed as above). Additionally to achieve the correct movements all other Opening Positions should be entered in the Adjustment columns in the main Cash Flow Statement data screens for Last Year UK GAAP -FRS 102. For example, Inventories, Receivables and Payables, Share Capital, Tax and so on.
  
• Movement in Shareholders’ Funds – similarly the ‘Opening Position’ for the UK GAAP -FRS 102 comparative will pick up from the Total Equity entered in the data screen First Year Adoption | Reconciliation of Equity for the current UK GAAP -FRS 102 year.
  

• The note may be omitted from the financial statements by amending the data screen option.

FRS 102 Presentation of Financial Statements

Where the accounting standards is selected as UK GAAP – FRS 102, the Financial Reporting Standard 102 Presentation of Financial Statements will be produced.

Key changes include:

• The introduction of a Statements of Comprehensive Income

• Changes in titles of some of the financial statements

The changes in titles of financial statements are as follows:

• Balance sheet will become statement of financial position - (optional)

• Profit and Loss Account will become Income Statement

• Cash flow statement will become statement of cash flows – (optional)

Income Statement

This statement presents all items of income and expense recognised in profit or loss together with all other items of recognised income and expense.

Options within data screens allows the Income Statement to be presented either using a single or two statement approach.

Statement of Cash Flows (Cash Flow Statements)

UK GAAP -FRS 102 requires an entity to present a statement of cash flows providing information about the changes in cash and cash equivalents for a reporting period classified under three headings:

1. operating activities;

2. investing activities;

3. financing activities.

The cash flow statement now includes cash and ‘’cash equivalents’’.

Cash equivalents are defined as short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. An investment with a maturity of three months or less may qualify as a cash equivalent. Bank overdrafts repayable on demand and that are an integral part of cash management are a component of cash and cash equivalents.

UK GAAP -FRS 102 requires a reconciliation of the amounts of cash and cash equivalents presented in the statement of cash flows to the equivalent items in the statement of financial position.