Monday, 6 March 2017

FY2016 Accounts of "Small" Companies–Which GAAP can be Applied?

GAAPs That Are Available to “Small” Companies for FY2016 Accounts

The 2013 EU accounting directive (Directive) contains accounting provisions to make financial reporting more accessible for small-sized companies in the EU.

UK Companies

UK has implemented legislation to transpose the Directive which led to the publication of FRS 105 for micro-entities and FRS 102 for smaller entities i.e. Section 1A by the Financial Reporting Council. Consequently, UK companies who meet certain requirements can apply FRS 105 or FRS 102 for smaller entities for their accounts for annual periods beginning on or after 1 January 2016. Early adoption is possible.

 

Irish Companies

Ireland has presented the Companies (Accounting) Bill 2016 (Bill) to transpose the Directive into Irish legislation. At the time of this article is written i.e. 6 March 2017, the Bill is still going through the process of being transposed into legislation. Refer to the website for the status of the Bill. The enactment of the Bill is unlikely to have a significant impact on Irish companies that have transitioned to FRS 102 for FY2015 since they can continue to adopt FRS 102 for their FY2016 accounts.

However, for those companies who applied FRSSE for their FY2015 accounts, FRSSE is no longer available for the FY2016 accounts. Until the Bill has been enacted before the filing date of the annual returns, “small” Irish companies will not be able to apply FRS 105 or FRS 102 for their FY2016 accounts. This means that such Irish companies are required to apply FRS 102 (unless they choose to apply IFRS or FRS 101!) for FY2016. It is safe to say that FRS 102 is more onerous than FRSSE and a GAAP conversion from FRSSE to FRS 102 is also required. It is hoped that the Bill will be enacted by 30 September 2017 so that qualifying Irish companies that previously applied FRSSE previously can adopt either FRS 105 or Section 1A of FRS 102 for their FY2016 accounts.

 

Summary

The table summaries the accounting frameworks that are available to UK and Irish companies for the accounts for the year ended 31 December 2016 at the time this article is published (6 March 2017):

 

UK Companies

Irish Companies

FRS 102, FRS 101, EU-IFRS, FRS 103

Yes

Yes

FRS 105, Section 1A of FRS 102

Yes

No – tentatively

FRSSE

No

No

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