United Kingdom Releases New Differential Reporting Rules
The UK FRC has released 2 new accounting standards that basically implement a differential reporting rule, which has been revised, for the companies of United Kingdom. The revised rule launches a ‘reduced disclosure regime’ for the individual finance related statements of the parent company and its subsidiaries and replaces several existing accounting based requirements that make up most of the United Kingdom’s Generally Accepted Accounting Principle.
The decision to adopt a completely new reporting rule has been taken after a much long as well as controversial procedure in the UK. The consultation procedure with regard to the future of finance related reporting in the United Kingdom as well Republic of Ireland took place for a long time (i.e. between 2002 and 2012).
With the introduction of the new rule more and more finance related reporting will now be done on the basis of International Financial Reporting Standards. While introducing the new accounting standards UK’s Financial Reporting Council stated that by utilizing a framework that is based on international standards, all the organizations as well as users will be utilizing the similar accounting practices and languages, irrespective of the size. The council also mentioned that an approach that is proportionate is required for disclosures as it aims at meeting the information requirements of users without enforcing unnecessary reporting related burdens.
The 2 accounting standards that have been introduced are:
Financial Reporting Standard 100 of Financial Reporting Requirements, which lays down the overall finance related reporting needs, providing several organizations with an option of detailed financial accounting needs based on factors like size irrespective of the fact whether they are or are not a part of any group that is listed.
Financial Reporting Standard 101Reduced Disclosure Framework, which is applicable to the individual statements of parent companies and its subsidiaries and allows them to further apply similar accounting practices as is applicable in their group related accounts that is listed, but with limited number of disclosures.
These accounting standards will now be followed by a 3rd accounting standard Financial Reporting Standard 102 The Financial Reporting Standard, which would be applied in the Republic of Ireland and the United Kingdom and is likely to be announced in the year 2013.