*Practical, concise reference
*Chapter "what-if" scenarios
*Fully updated to cover convergence of GAAP/IAS/IFRS
UK companies other than those listed on the full market or AIM will be permitted to continue using UK GAAP for several years to come. The Accounting Standards Board recently announced that it was re-considering its strategy for converging UK GAAP with IFRS. The UK Government has also brought in many company law changes in the past two years. Never in the history of financial reporting has the pace of change been so rapid.
This book provides you with a concise and easily accessible guide to all the recent changes, and their likely practical impact. This new edition has been extensively updated and revised and includes:
• An Executive summary of recent developments;
• UITF Abstract 40 on Revenue recognition;
• Financial Reporting Standard for Smaller Entities (effective January 2005);
• The latest convergence developments, including summaries of comparison of UK GAAP with IFRS;
• Financial instruments (FRS 25 and 26);
• Events after the balance sheet date (FRS 21);
• A new chapter on the UK regulatory framework, including statutory Instruments issued during 2005;
• Overview of reporting requirements for listed companies.
New features within the book include:
• Frequently Asked Questions at the end of most chapters.
• Each chapter concludes with a concise summary of relevant IFRS requirements.
• References to relevant websites.
The book also includes summaries of current standards and key implementation dates.
[This book was previously known as: Spicer and Pegler: Financial Reporting for Business and Practice]
Accountants in small accounting firms (LLPs), and small groups of accountants in SMEs.
UK GAAP for Business and Practice, 1st Edition
1 Executive summary 2005; 1.1 UK GAAP or IFRS?; 1.2 Recent developments; 1.3 Recent Financial Reporting Standards; 1.4 Recent Financial Reporting Exposure Drafts; 1.5 Earlier Financial Reporting Standards; 1.6 The Financial Reporting Standard for Smaller Entities (FRSSE); 1.7 Urgent Issues Task Force developments; 1.8 Company law changes; 1.9 Listed company reporting; 1.10 Financial Reporting Review Panel; 1.11 Statements of Recommended Practice (SORPs); 1.12 International Financial Reporting Standards; 2 The UK Regulatory Framework; 2.1 Companies Act 1985 requirements; 2.2 Financial Reporting Council (FRC); 2.3 Accounting Standards Board (ASB); 2.4 Urgent Issues Task Force (UITF); 2.5 Statements of Recommended Practice (SORPs); 2.6 Statement of Principles; 2.7 Companies (Audit, Investigations and Community Enterprise) Act 2004; 2.8 The Companies Act 1985 (Operating and Financial Review and Directors’ Report etc) Regulations 2005; 2.9 Companies Act 1985 (Investment Companies and Accounting and Audit Amendments) Regulations 2005; 2.10 Legal Opinion on Role of Accounting Standards and True and Fair; 2.11 Directors’ report; 2.12 Revision of defective accounts; 2.13 Financial Reporting Review Panel; 2.14 International Financial Reporting Standards; 3 Accounting policies and estimation techniques; 3.1 Objectives of FRS 18; 3.2 Concepts; 3.3 Definitions; 3.4 Examples; 3.5 Concepts and objectives - further comments; 3.6 Changes in accounting policies; 3.7 Estimation techniques; 3.8 Disclosures; 3.9 Illustration; 3.10 International Financial Reporting Standards; 4 Profit and loss account, Statement of total recognised gains and losses and balance sheet; 4.1 Introduction; 4.2 FRS 3 - The Profit and Loss Account; 4.3 Exceptional Items; 4.4 Extraordinary Items; 4.5 Discontinued Operations and Provisions; 4.6 Operations in the process of being discontinued; 4.7 Profit or loss on disposal of fixed assets; 4.8 FRS 3 - The Statement of total recognised gains and losses (STRGL); 4.9 FRS 3 - Other Statements; 4.10 Prior period adjustments; 4.11 Comparative figures; 4.12 International Financial Reporting Standards; 5 Cash Flow statements; 5.1 Background and scope; 5.2 Format and content - single companies; 5.3 Worked example - a single company using the indirect method; 5.4 Problem areas - single companies; 5.5 Group accounts considerations; 5.6 Worked example - a group; 5.7 Illustrations from published accounts; 5.8 Using cash flow statements; 5.9 International Financial Reporting Standards; 6 Reporting the substance of transactions; 6.1 Background; 6.2 The Substance of transactions; 6.3 Features of more complex transactions; 6.4 Applying the principles of FRS 5; 6.5 Recognition of assets and liabilities; 6.6 De-Recognition
6.7 Relationship with other standards; 6.8 Disclosure Requirements; 6.9 Linked presentation for certain non-recourse finance arrangements; 6.10 Offset; 6.11 Consignment stocks; 6.12 Debt factoring and invoice discounting; 6.13 Sale and repurchase agreements; 6.14 Further complications; 6.15 International Financial Reporting Standards; 7 Converging UK GAAP with IFRS; 7.1 Terminology; 7.2 Recap; 7.3 Options for members of a group; 7.4 Application to different categories of companies; 7.5 Comparison of UK GAAP with IFRS; 7.6 True and fair requirement; 7.7 Converging UK GAAP with IFRS; 7.8 Urgent Issues Task Force Abstracts; 7.9 Extant standards; 8 Revenue recognition; 8.1 Introduction; 8.2 The Statement of Principles; 8.3 FRS 5, Application Note G; 8.4 Contracts for services and UITF Abstract 40; 8.5 Other aspects of UK GAAP; 8.6 Review Panel Press Notices; 8.7 Illustrations from published accounts; 8.8 International Financial Reporting Standards; 9 Employee benefits; 9.1 Directors’ remuneration - unlisted companies (other than small); 9.2 Directors’ remuneration - other disclosures; 9.3 Directors’ remuneration - small companies; 9.4 Retirement benefits - introduction; 9.5 Retirement benefits - Companies Act 1985 requirements; 9.6 Funding of pension arrangements; 9.7 Accounting for retirement benefits - FRS 17: Introduction; 9.8 FRS 17 - Transitional provisions; 9.9 FRS 17 - Full implementation; 9.10 International Financial Reporting Standards; 10 Share-based Payment; 10.1 Overview; 10.2 Employess share schemes- UITF abstract 17; 10.3 National Insurance Contributions on share option gains- UITF abstract 25; 10.4 Accounting for ESOP Trusts- UITF abstract 38; 10.5 Share-based payment; 10.6 International Financial Reporting Standards; 11 Taxation, including deferred tax; 11.1 Accounting for current tax; 11.2 Deferred tax - Introduction; 11.3 Accounting for Deferred Tax - FRS 19; 11.4 Accounting for Deferred Tax - FRS 19: Deferred Tax Assets; 11.5 Accounting for Deferred Tax - FRS 19: Disclosure requirements; 11.6 Accounting for Government grants; 11.7 SSAP 5 (Accounting for value added tax); 11.8 International Financial Reporting Standards; 12 Tangible Fixed Assets; 12.1 Introduction; 12.2 Tangible Fixed Assets - Overview of FRS 15; 12.3 Determining cost; 12.4 Capitalisation of Interest; 12.5 Revaluation; 12.6 Depreciation; 12.7 Website Development Costs; 12.8 Impairment; 12.9 Disposal of fixed assets; 12.10 UITF 5 - Transfers from current assets to fixed assets; 12.11 Investments properties (SSAP 19); 12.12 Government grants for capital expenditure; 12.13 International Financial Reporting Standards; 13 Intangible fixed assets, including goodwill; 13.1 Introduction; 13.2 Accounting for goodwill - FRS 10; 13.3 Intangible assets (other than goodwill); 13.4 UITF 27 - Revision to estimates of the useful economic life of goodwill and intangible assets; 13.5 FRS 10 Disclosure requirements - overview; 13.6 Accounting for research and Development expenditure; 13.7 International Financial Reporting Standards; 14 Hire purchase and leasing; 14.1 Introduction - Financing of fixed assets; 14.2 Hire purchase - Accounting for the hirer; 14.3 Lessee Accounting - Background; 14.4 Lessee Accounting - Classification; 14.5 Lessee Accounting - Finance Leases and hire purchase contracts; 14.6 Lessee Accounting - Operating Leases; 14.7 Lessee Accounting Disclosures - Finance Leases; 14.8 Lessee Accounting Disclosures - Operating Leases; 14.9 Lease Classification and FRS 5; 14.10Lessor Accounting _ Background; 14.11 Lessor Accounting - Operating Leases; 14.12 Lessor Accounting - Finance Leases; 14.13 Manufacturer/Dealer Lessor; 14.14 Lessor Accounting - Disclosure Requirements; 14.15 Sale and Leaseback; 14.16 UITF 28 - Operating Lease Incentives; 14.17 International Financial Reporting Standards; 15 Current assets; 15.1 Stocks and Long-term contracts - overview; 15.2 Short-term stocks and work-in-progress; 15.3 Long-term contracts; 15.4 Debtors; 15.5 Current asset investments; 15.6 Cash; 15.7 International Financial Reporting Standards; 16 Loans, Provisions, contingencies and commitments; 16.1 Introduction; 16.2 Creditors and loans; 16.3 Provisions; 16.4 Contingencies; 16.5 Commitments; 16.6 International Financial Reporting Standards; 17 Financial instruments including creditors and loans; 17.1 Overview; 17.2 FRS 4, Capital instruments - shareholders’ funds; 17.3 FRS 4 , Capital instruments - debt; 17.4 FRS 25, Financial instruments: disclosure and presentation; 17.5 International Financial Reporting Standards; 18 Shareholders’ funds and dividends; 18.1 Introduction; 18.2 Share capital disclosures - Companies Act 1985; 18.3 Reserves - categories; 18.4 Permitted reserves movements; 18.5 FRS 25 Financial instruments: disclosure and presentation; 18.6 Purchase and redemption of shares - CA 85 rules; 18.7 Distributable profits; 18.8 International Financial Reporting Standards; 19 Related Party Transactions, contingencies, commitments and post balance sheet events; 19.1 Introduction to FRS 8; 19.2 Identifying related parties; 19.3 Related Party Transactions - Definitions and examples; 19.4 Disclosure requirements; 19.5 Companies Act 1985 - Directors’ interests in contracts; 19.6 International Financial Reporting Standards; 20 Events after the balance sheet date; 20.1 SSAP 17 - Post balance sheet events; 20.2 FRS 21 - Events after the balance sheet date; 21 Analysis of Accounts - 4: Segmental Reporting; 21.1 The need for segmental analysis; 21.2 Companies act 1985 requirements; 21.3 UK listing authority requirements; 21.4 SSAP 25 - Segmental reporting; 21.5 Terminology; 21.6 Disclosure requirements; 21.7 Relaxations for smaller entities; 21.8 International Financial Reporting Standards; 22 Accounting for SMEs and using the FRSSE; 22.1 Reporting Requirements - An overview; 22.2 Statutory Definitions; 22.3 Shorter form of Accounts for shareholders; 22.4 The financial reporting standard for smaller entities (FRSSE) - overview; 22.5 Using the FRSSE - Accounting and disclosure issues; 22.6 Using the FRSSE (effective January 2005) - Accounting And Disclosure Issues; 23 Listed company reporting; 23.1 Introduction; 23.2 Fully listed or AIM - who makes the rules?; 23.3 Members of a listed group - UK GAAP or IFRS?; 23.4 Directors’ remuneration - additional considerations; 23.5 Operating and Financial Review (OFR); 23.6 Financial Reporting Review Panel (FRRP); 23.7 International Financial Reporting Standards specific to listed companies; 24 Limited liability partnerships; 24.1 Introduction; 24.2 Legal and administrative matters; 24.3 Accounting and audit; 24.4 Statement of recommended practice (SORP); 24.5 Summary - comparisons with unlimited partnerships and limited companies; 24.6 International Financial Reporting Standards; 25 FRS 2 - Accounting for subsidiary undertakings; 25.1 Requirement to prepare consolidated accounts; 25.2 Definitions - parent undertaking and subsidiary undertaking; 25.3 Dominant influence and managed on a unified basis; 25.3 a) Dominant influences; 25.3 b) Managed on a unified basis; 25.3c) Amendment to FRS 2; 26 Acquisition accounting, fair values and business disposals; 26.1 Accounting for business combinations; 26.2 Features of acquisition accounting; 26.3 Fair values and acquisition accounting; 26.4 The merger reserve (CA 1985, s 131); 26.5 Acquisition accounting illustration; 26.6 Acquisition accounting disclosures; 26.7Changes in stake
26.8 Accounting for disposals of shares in subsidiary undertakings; 26.9 Realisation of the merger reserve; 26.10 International Financial Reporting Standards; 27 Associates and joint ventures; 27.1 Introduction; 27.2 Regulatory environment - overview; 27.3 Classification of fixed asset investments; 27.4 Cost method and equity method compared - an introduction; 27.5 Investments in subsidiaries; 27.6 Associates; 27.7 Joint ventures; 27.8 Acquisitions and disposals; 27.9 Commencement or cessation of an associate or joint venture relationship; 27.10 Loss-making associates and joint ventures; 27.11 Joint arrangements not entities (JANEs); 27.12 Investment funds; 27.13 Investor not preparing consolidated accounts; 27.14 International Financial Reporting Standards; 28 Accounting for overseas operations; 28.1 Introduction; 28.2 Accounts of individual companies; 28.3 Consolidation of foreign subsidiaries - an introduction; 28.4 Closing rate/net investment method; 28.5 Temporal method; 28.6 Equity investments financed by foreign borrowings; 28.7 Foreign braches; 28.9 Disclosures in financial statements; 28.10 International Financial Reporting Standards / FRS 23; 29 Converging UK GAAP with IFRS - the road ahead; 29.1Convergence experience to date; 29.2 Progress during 2005; 29.3 2006 and beyond; Appendices; 1 Implementation dates for unlisted companies; 2 UK GAAP status report; Extant IASs and IFRSs; Useful website addresses