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It is now possible to produce financial statements following IFRS’s
/ IAS’s for Limited Companies and Groups. This is only possible
when using an Enhanced Limited Company chart (for example, ELTD).
To use the International Accounting Standards (examples based on an IAS current year end 31/12/05)
After entering this date any posting entries created will default to Accounting Standard IAS, this can be changed if required.
Create a comparative International Accounting Standard posting entry in Posting | New (for example, 31/12/04) by confirming the Accounting Standard as IAS.
A warning displays stating that the start date of the posting entry is before IAS applies.
Click Yes to continue.
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.
Import Postings from the comparative UK GAAP entry (for example, 31/12/04) into the corresponding comparative IAS entry by selecting Advanced | Generate IAS postings from UK GAAP Trial Balance/Working Papers from within the posting screen.
Amendments resulting from First Year Adoption can then be made to this entry.
Create a current International Accounting Standard posting entry in Posting | New (for example, 31/12/05) and confirm the Accounting Standard as IAS.
For any posting entry set to Accounting Standard IAS a different chart group structure will be used for posting.
Accounts are run in the normal way by selecting Reports | Annual (for a Full Set of IAS Financial Statements LTD is still selected).
The Annual Report Output screen will alter when running reports for First Year Adoption for International (that is, first year end found after ‘date IAS apply’) to show:
Current – IAS (First posting entry found following IAS apply date entered)
Last – IAS (If no IAS comparative entry this and following fields will be left blank)
Last – UK (Must select a UK GAAP entry and Period End should match Last - IAS)
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.
The content of the report will be similar
to that of a UK Limited Company with a Directors Report, Primary Statements
and Notes and so on but the layouts will vary slightly.
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.
Two sets of Data Screens will now be shown for ALL Limited Companies using the Enhanced chart, one for UK and one for International.
The standard set on a posting entry can be amended at any time by selecting Posting | Post File Maintenance | Entries | Change.
Client Specific Account Descriptions may need to be changed to ensure they reflect the International Accounting Standards being produced.
When changing Group Descriptions a choice of Group Structure is given so amendments can be made on either standard.
UK GAAP Account Codes that are NOT available when using International Accounting Standards are as follows:
- Amounts written off investments (Accounts 406-407)
- Extraordinary items (Accounts 460-463)
- Linked Presentation (Accounts 655-656)
If postings have been previously made to these accounts they will need to be deleted and re- entered into alternative accounts.
Reconciliation of Equity - Produces a comparison at the start and end of the comparative UK and IAS years. The ‘Year End’ comparison is generated automatically from posting entries however the Reconciliation of Equity (Date of Transition) e.g. Start of IAS comparative is manual and the figures must be entered in the First Year Adoption | Reconciliation of Equity data screen (YBL – UK figures could be used as a guide).
Reconciliation of Profit – A ‘Year End’ comparison of UK and IAS 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 IAS comparative is likely NOT to balance (unless incorporation occurred at the start of the comparative year) due to there being no IAS 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 data screen for the current IAS 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 IAS’. For example, Inventories, Receivables and Payables, Share Capital, Tax and so on.
Movement in Shareholders Funds – Similarly the ‘Opening Position’ for the IAS comparative will pick up from the Total Equity entered in the data screen First Year Adoption | Reconciliation of Equity for the current IAS year.
If producing group accounts, the information explained above should still be applied. The Group and all Undertakings should be set up appropriately to follow International Accounting Standards with the correct posting entries and the date international applies. i.e. If following First Year Adoption for a long standing client each would have a; Current IAS, Last IAS and Last UK posting entry. The accounting standard and year end of each undertakings posting entry must match that of the group.
When running Annual Reports
if any of the undertakings do not have an appropriate posting entry
set up for the relevant accounting standard of the groups then a message
will appear stating ‘No suitable posting entries exist’ and no posting
entry for that undertaking will be consolidated.
For annual periods beginning on or after the 1 January 2009, a revised IAS 1 Presentation of Financial Statements will be produced.
Users can also submit accounts starting prior to the 1 January 2009 with the revised IAS 1 Presentation of Financial Statements.
This can be selected via Edit | Data Screens | International | IAS1 (Revised September 2007) and select the tick box to adopt for an accounting period starting prior to 1 January 2009.
This is aimed at improving users’ ability to analyse and compare the information given in the financial statements.
Key changes include:
The requirement to aggregate information in the financial statements on the basis of shared characteristics
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’
‘Income statement’ will become ’statement of comprehensive income’
‘Cash flow statement’
will become ‘statement of cash flows’
Users are required to present a classified statement of financial position, separating current and noncurrent assets and liabilities.
Current assets are cash, cash equivalent, assets held for collection, sale, or consumption within the enterprise’s normal operating cycle, or assets held for trading within the next 12 months. All other assets are noncurrent.
Current liabilities are those to be settled within the enterprise’s normal operating cycle or due within 12 months, or those held for trading, or those which the entity does not have an unconditional right to defer payment beyond 12 months. Other liabilities are noncurrent.
Long-term debt expected to be refinanced under an existing loan facility is noncurrent, even if due within 12 months.
This statement presents all items of income and expense recognised in
profit or loss together with all other items of recognised income and
expense.
Other comprehensive income include:
Exchange differences on translating foreign operatives
Gains and losses on available-for-sale securities
Effective portions of gains and losses on cash flow hedging instruments
Actuarial gains and losses on defined benefit pension plans
Changes in revaluation surplus relating to property, plant and equipment and intangible assets
Income tax relating to components of other comprehensive income
Share of other
comprehensive income (after tax) of associates and equity accounted
joint ventures
The statement of cash flows analyses changes in cash and cash equivalents during a period.
Cash and cash equivalents comprise of cash on hand and demand deposits, together with short-term, liquid investments that are readily convertible to a known amount of cash and that are subject to an insignificant risk of changes in value.
Bank overdrafts which are repayable on demand and which form an integral part of an enterprise’s cash management are also included as a component of cash and cash equivalents.