The Financial Reporting Council (FRC) has issued amendments to new UK GAAP to improve the accounting for certain financial transactions, which will also improve ease of use of the standards and reduce the cost of compliance.
- Amendments to FRS 101: Reduced Disclosure Framework (2013/14 Cycle)
- Impact Assessment and Feedback Statement - Amendments to FRS 101: Reduced Disclosure Framework
- Amendments to FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland
- Impact Assessment and Feedback Statement - Amendments to FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland
The amendments to FRS 102:
relate to financial instruments:
- updating the requirements on hedge accounting, making hedge accounting more readily available to entities where it is consistent with their risk management processes;
- relaxing the conditions for regarding financial instruments as ‘basic’, with the effect that more financial instruments will be measured by reference to cost rather than fair value;
make transition to FRS 102 less costly; and
are effective from the same date as FRS 102, 1 January 2015.
Roger Marshall, FRC Board Member and Chairman of the Accounting Council, said: “The FRC has amended FRS 102 prior to its effective date to improve its hedge accounting requirements, in line with international developments. The changes will better reflect entities’ risk management strategies, and respond to entities’ concerns that FRS 102 required too many financial instruments to be measured at fair value where a cost-based measurement would be appropriate. We have listened carefully to concerns about making changes close to the effective date of FRS 102, but we believe overall these amendments will both improve financial reporting by UK and Irish entities and reduce the costs of compliance. We have in particular provided flexible transitional arrangements, as requested by respondents."
FRS 101 allows entities to apply IFRS with exemptions from some disclosures. The amendments to FRS 101 are the result of its first annual review to ensure those disclosure exemptions are updated on a timely basis as IFRS develops.