Accounting standards are used to prepare financial statements of all companies. These allow the companies, their investors and other regulators a standardised way of measuring financial performance. 

Generally Accepted Accounting Practice in the UK (UK GAAP) is the body of accounting standards and this issues financial reporting frameworks that need to be used.

This year we have the introduction of (Financial Reporting Standards) FRS 102, which has changed some of the standards previously used in UK GAAP.  This will have impact on some companies and it’s important to understand how this could affect you.

Some of the changes that will impact companies are:

• Changes in reported profit and the way in which they communicate with stakeholders.
• The balance sheet position could change as FRS 102 has different definitions for measuring certain assets and liabilities.
• Effect on banking covenants and the credit rating of a company, so all calculations need to be re-considered.

In addition to these, there will be some key accounting changes for companies that hold investment properties.  FRS 102 states that investment properties need to be re-valued at each reporting date. Some points to note regarding investment properties are:

• Surpluses or deficits will be presented as part of the profit and loss for the period; therefore they will not be available for payment of dividends.

• Fewer properties may qualify as investment properties based on the new accounting framework.

• If a property is sold a provision for tax payable needs to be made, this will reduce the net assets on a balance sheet.

The impact of FRS 102 will differ from one company to the next; some companies will not experience many changes whereas others will need a more detailed review in line with these accounting standards.

We will be working with all our clients to ensure they comply with the new standards, if you are unsure of the impact of FRS 102 on your company please do get in touch by email at This email address is being protected from spambots. You need JavaScript enabled to view it.  or call 01623 490 120.