GAAP will be Replaced by FRS 102 by 2015

The Accounting Council of the Financial Reporting Council (FRC), now responsible for former Accounting Standards Board activities, has issued an update on the technical issues under review in relation to FRED 48.

FRC, which is now looking after the former Accounting Standards Board activities has recently released updates on technical matters being reviewed with respect to Financial Reporting Exposure Draft 48.

By the month of January in 2015, FRS 102 will be introduced and it is going to replace United Kingdom’s Generally Accepted Accounting Principles.

The FRC update states how the project is progressing and will also be laying down the main principles as well as guidelines. However, any decision related to the guidelines will be finalized only after the Accounting Council makes recommendations before the FRC board and acquires approval for the same.

As far as agricultural reporting is concerned, the Accounting Council is trying hard to acquire an accounting policy based on a class for biological assets such as crops and livestock. This will help organizations make a selection between the cost and fair priced model.

On the other hand, when it comes to accounting for ESOPs as well as EBTs, the accounting council recommended that they should not be given the treatment of subsidiaries and should be taken into account on a consistent basis as well as in tune with the existing requirements of United Kingdom. It is because of this reason that the liabilities and assets of EBT or ESOP will be treated as liabilities and assets of the company that will be sponsoring them.

The council has also agreed to the definitions of conditions related to performance as well as restrictions with regard to liability and income recognition tentatively. The requirements pertaining to insurance related accounting is also being discussed at present.

The Accounting council has also given its nod to suggest guidelines pertaining to amendment of IFRS for small and medium enterprises. The council has given a confirmation regarding the changes that will be made in order to give permission to accounting related treatments, which exist in Financial Reporting Standards on the same date when European Union will be adopting IFRS.