'What you learn on… The ‘FRS 102 and the future of UK financial reporting’ Mastercourse'

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Kerry Jones is the programme manager for financial reporting professional development programmes and a presenter at BPP.

She has also lectured for Kaplan, Fitch Learning and the London School of Business and Finance, having started out as a financial accountant in industry.

This one-day course is designed to advise qualified accountants in the UK on how the transition from UK Gaap to FRS 102 will affect their work. The forthcoming reporting standard is the adaptation by the UK and Republic of Ireland of the International Accounting Standards Board’s IFRS for SMEs.

We start the day by establishing what the attendees understand about the changes that will come when FRS 102 supersedes all of the financial reporting standards and statements of standard accounting practice that currently apply when it takes effect on 1 January 2015.

Comprising 35 sections and 342 pages, it’s still a compact document when compared with the myriad standards and abstracts from the Financial Reporting Council that it replaces.

We will then discuss a number of the most significant changes, such as those concerning the treatment of financial instruments. Most financial instruments are dealt with under UK Gaap on the cost basis.

Under FRS 102 different measurement bases will have to be considered. It requires derivatives and certain equity interests to be accounted for at fair value through profit and loss, which could give a significantly different look to the accounts compared with how they would appear under UK Gaap.

Another change will affect the amortisation of intangibles such as brands, customer lists and goodwill. These are currently amortised over their useful lives – up to a maximum of 20 years – before annual impairment reviews have to be conducted.

Under FRS 102 intangible assets will still be amortised over their useful lives, but the maximum is assumed to be five years if an alternative useful life cannot be determined.

With regard to investment property, FRS 102 requires that revaluation gains and losses are recognised directly in the P&L account.

This contrasts with the current procedure under UK Gaap, whereby gains and losses are held in the statement of total recognised gains and losses until they are realised.

Profit and loss in translation
Another significant difference from UK Gaap lies in the terminology.

FRS 102 is written in IFRS style, so in place of the balance sheet there is the statement of financial position.

You will also see references to property, plant and equipment rather than fixed assets, for instance, and to receivables and payables rather than debtors and creditors.

The course provides practical examples and illustrations throughout to demonstrate the key accounting treatments under FRS 102.

We also have quite a few exercises to work through and, once we have finished covering each topic, I will set three or four multiple-choice questions on it for people to work through in groups.

Attendees are encouraged to ask questions throughout the day and time is built in at the end of the course to address any outstanding queries.

Delegates should leave the course with an improved understanding of:

  • Which entities can use FRS 102.
  • Where the significant differences between UK Gaap and FRS 102 lie.
  • The procedures for adopting FRS 102 for the first time.
  • Which disclosures it will require.

The course will also explain why it is important to complete the transition within two years. We will consider how the implementation process can be conducted successfully – and how time-consuming this can be.

Germane lessons
I run two other related courses that may also be of interest:

  • “First-time adoption workshop – IFRS and FRS 102”. This case-study-based course assumes some knowledge of IFRS and/or FRS 102 and is suitable for those who have worked with IFRS in practice, studied IFRS for their exams or attended “IFRS – introduction” or “FRS 102 and the future of UK financial reporting”. The one-day workshop examines the requirements of this standard and provides practical guidance on producing your opening IFRS/FRS 102 statement of financial position and restating your prior-year financial statements to comply with IFRS/FRS 102.
  • “IFRS – introduction”. This one-day course will focus on the basic differences between IFRS and UK Gaap. (No knowledge of IFRS is assumed on the part of delegates.) This may be useful for larger entities that are considering whether they should adopt FRS 102 or make the transition to IFRS.

For further details about “FRS 102 and the future of UK financial reporting”, visit www.cimamastercourses.com

Photo: Shutterstock

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