This edition first published 2016
© 2016 Steven Collings
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Library of Congress Cataloging-in-Publication Data
Names: Collings, Steve, author.
Title: UK GAAP financial statement disclosures manual / Steven Collings.
Description: Hoboken : Wiley, 2016. | Series: Wiley regulatory reporting | Includes index.
Identifiers: LCCN 2016022153| ISBN 9781119132752 (paperback) | ISBN 9781119132776 (epub) | ISBN 9781119132769 (ebk) | ISBN 9781119283393 (ebk)
Subjects: LCSH: Accounting–Standards–Great Britain. | Financial statements–Great Britain.
Classification: LCC HF5616.G7 C63 2016 | DDC 657.0941–dc23
LC record available at https://lccn.loc.gov/2016022153
A catalogue record for this book is available from the British Library.
ISBN 978-1-119-13275-2 (paperback) ISBN 978-1-119-13276-9 (ebk)
ISBN 978-1-119-13277-6 (ebk) ISBN 978-1-119-28339-3 (obk)
Since the demise of old UK GAAP, companies and their advisers now face a diverse range of potential financial reporting requirements, and the need to get accustomed to the alphabet soup of the different reporting requirements of full IFRS, the variations of FRS 102, FRS 101 and FRS 105. Determining which requirements, options and exemptions might be appropriate to a particular company or group is likely to present a real challenge. This book will help navigate the reader, topic by topic, through the complex maze of UK financial reporting in 2016 and beyond.
The book starts off with a comprehensive review of the UK financial reporting regulatory framework, explaining clearly the implications for each category of entity – whether groups, subsidiaries or small and micro-entities – and then deals with each major topic in turn.
The chapters are well-structured with clear signposting, and each contains a summary of key points and an excellent selection of practical examples and illustrations. The book never loses focus – it contains a wealth of good practical, down-to earth stuff relevant to the day-to-day work that passes over the desks of most accountants.
Steve Collings has extensive experience as an accounting practitioner, lecturer and author, and he writes in a highly practical and user-friendly way. The book should provide an excellent and constant source of reference.
Paul Gee, BA(Econ) FCA
July 2016
This is the first edition of UK GAAP Financial Statement Disclosures Manual aimed at practising accountants, accountants in industry and commerce, student accountants and boards of directors. This publication is a companion guide to Interpretation and Application of UK GAAP: For Accounting Periods Commencing On or After 1 January 2015 (Wiley, March 2015). Target audiences include micro-entities, small companies and companies which are reporting under EU-adopted International Financial Reporting Standards (IFRS). This is in recognition of the fact that UK GAAP is comprised of an IFRS-based regime (for micro-entities, small companies and unlisted companies which are not small) and EU-endorsed IFRS.
Financial reporting in the UK and Republic of Ireland has seen considerable changes over the last couple of years with the introduction of FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. Many companies had to mandatorily adopt FRS 102 for accounting periods commencing on or after 1 January 2015 and this meant restating prior year financial statements so that they were FRS 102 compliant and making the additional disclosures required by the new regime.
Shortly afterwards the small companies' regime experienced a significant overhaul. This was due to the issuance of the EU Accounting Directive (the Directive) in June 2013. The UK's Department for Business, Innovation and Skills was given until July 2015 in which to transpose the Directive into legislation and this completed in January 2015; the revised Companies Act 2006 became effective from 6 April 2015 for accounting periods commencing on or after 1 January 2016, or for accounting periods commencing on or after 1 January 2015, but before 1 January 2016, if the directors so wished.
One of the most notable changes which the EU Accounting Directive brought about was a reduction in small and micro-entities' disclosure requirements in an attempt to reduce the burdens placed on smaller companies.
As a direct result of the Directive, the Financial Reporting Council (FRC) had to revise UK GAAP for small and micro-entities. The FRC had previously incorporated the micro-entities' legislation in the (now defunct) Financial Reporting Standard for Smaller Entities (the FRSSE) in order that qualifying entities could use the regime; but this was never intended to be a long-term solution. It had already become clear that the FRSSE could not be sustained and the FRC then made the decision to withdraw the FRSSE, move small companies within the scope of FRS 102 and have micro-entities reporting under a standalone standard (that of FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime).
The new regime in the UK and Republic of Ireland has brought about significant change where disclosures are concerned in small and micro-entities' financial statements and this publication examines those disclosure issues in detail. This book also caters for those companies which report under EU-adopted International Financial Reporting Standards (IFRS) because EU-adopted IFRS forms part of UK GAAP.
The book goes through the technical theory within UK GAAP and brings this theory to life through the use of worked examples (where considered applicable) and also by illustrating how certain financial statement disclosures might look. Where examples and illustrations are concerned, it is to be emphasised that these are not prescriptive and it should be borne in mind that every company/entity is different and will require differing levels of disclosure requirements depending on specific facts and circumstances.
It is also particularly important to emphasise that where small companies' are concerned, directors still have a legal responsibility to ensure that the entity's financial statements give a true and fair view and whilst the Directive (and the revised Companies Act 2006) limit the amount of disclosures that are required to be made in the small company's financial statements, additional disclosures, over and above those required by law, should be made where making such disclosures enables the financial statements to give a true and fair view. Wherever appropriate, professional advice should be sought to ensure disclosures are made which are appropriate to the company's specific circumstances.
I hope you find this book helpful in your role as a financial statement preparer and comments are always welcome, via the publisher, for future editions.
Steve Collings, FMAAT FCCA
April 2016
The production of a book involves many stages and a variety of individuals who help the author, not only in terms of grammar and technical content, but also with the structure, content and flow of the book. Without these individuals the books I write would not see the light of day.
I would like to offer my sincere thanks to Gemma Valler, who is the commissioning editor for this title. Gemma has been closely involved from the start and agreed to deadline extensions so I could incorporate the changes that have recently taken place in the small companies' regime following the Financial Reporting Council's decision to withdraw the Financial Reporting Standard for Smaller Entities and introduce a new reporting regime for micro-entities.
Thank you to my copy-editor Caroline Quinnell who has done a wonderful job on the manuscript and also to all the staff at Wiley who have been involved in the printing, production and marketing of this book.
I would also like to express my sincere thanks to my technical editor, Caroline Fox, BA FCA, who always does a remarkable job in reviewing the draft chapters for technical accuracy and provides me with advice throughout the production of the title as to how to make each chapter even better!
My grateful thanks go to Paul Gee who has written the Foreword to this book.
I would also like to thank all my friends and family who are supportive of my authoring commitments, particularly Les Leavitt who is my co-director at Leavitt Walmsley Associates Ltd. Without this support, it would not be possible to commit to the huge task which is authoring books.
Finally, I would like to thank you, the reader, who has picked up this book. I hope that it helps you, not only with the disclosure issues you may be facing, but also the additional points incorporated in the chapters giving an overview of the various changes in accounting treatment brought about by the new UK Generally Accepted Practice and Companies Act 2006. Comments and suggestions for future editions are always welcome via the publisher.
Steve Collings, FMAAT FCCA, is the audit and technical director at Leavitt Walmsley Associates Ltd, a firm of Chartered Certified Accountants based in Sale, Cheshire, in the United Kingdom, where Steve trained and qualified. Steve was admitted as a member of the Association of Accounting Technicians (AAT) in 2001 and went on to qualify as a Chartered Certified Accountant (ACCA) in 2005. He was admitted as a Fellow Member of the AAT in 2006 and became a Fellow Member of ACCA in 2010. Steve also holds ACCA's Diploma in International Financial Reporting Standards, Diploma in International Financial Reporting Standards for Small-Medium Entities as well as ACCA's Certificates in IFRS and International Auditing Standards and holds Senior Statutory Auditor status in the UK.
Steve is a member of the Financial Reporting Council's UK GAAP Technical Advisory Group that advises the Corporate Reporting Council on all issues relating to UK accounting standards.
Steve is the author of several books on the subjects of accounting and auditing, including Interpretation and Application of International Standards on Auditing (Wiley, March 2011), IFRS for Dummies (Wiley, March 2012), Frequently Asked Questions in IFRS (Wiley, April 2013) and Interpretation and Application of UK GAAP for Accounting Periods Commencing on or after 1 January 2015 (Wiley, March 2015). He is the author of several articles published in the accounting media and much of Steve's work can be seen on his website at www.stevecollings.co.uk.
Steve lectures to professionally qualified accountants on the areas of accounting, audit and Solicitors Accounts Rules and was named Accounting Technician of the Year at the 2011 British Accountancy Awards. He was also awarded Outstanding Contribution to the Accountancy Profession in 2013 by the Association of International Accountants and was shortlisted for Practitioner of the Year at the 2014 British Accountancy Awards.