FRS 102: it changes everything

Author: James Keeton

Categories: Financial Reporting, Getting advice, Governance, Tax Planning
Tags: FRS 102

James Keeton, Partner - Assurance & Business Services, Smith & Williamson on how FRS 102 changes everything

The implementation of FRS 102 is probably the largest single change to an accounting framework for the majority of companies in a generation.  Not only that, it will also impact on profitability of businesses, the way their accounts looks and because of the impacts on tax, it means that there will be proper real money effects as well.

The way that tax is accounted for in the UK, is that the tax payments often, under many situations follow the accounting rules.  When the accounting rules change, therefore the amount of tax you have to pay also changes.  This means that when you dot the new FRS 102, you will be paying more or possibly less tax, depending on the effect that it has on your profit and loss.

I think people have heard about it.  They heard it’s coming, lots of people haven’t really understood the impact it’s going to have on their accounts.  And lots of people don’t realise that it’s going to have that real money effect that we were talking about.  It is a huge change and the devil is in the detail.

When you throw out all the current accounting standards and replace them with one, that is going to have a huge effect.

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