SMEs no longer immune from UK GAAP reporting

From the beginning of this year, small companies in the UK are no longer immune from generally accepted accounting principles (GAAP) reporting.

Larger private companies already experienced the changes last year, and now SMEs face major changes to their financial reporting as new and revised standards for accounting periods come into effect.

FRS 102

The FRSSE has been withdrawn, and small business entities now fall within the scope of FRS 102 The Financial Reporting Standard, which is applicable both in the UK and Republic of Ireland.

Both small and micro entities will have to apply the new standards retrospectively, although there are some exemptions and exceptions.

Directors and their advisers will be faced with some new decisions, and existing accounting policies will have to be reviewed and changes made where necessary.

FRS 105

FRS 105 is the new standard applicable to the micro-entities regime, which is available to companies that are eligible for and which apply for the option.

Based on FRS 102, FRS 105 has been simplified so that it takes account of the legal requirements of the micro-entities regime, including simplified account formats and reduced disclosure requirements.

Accountancy professionals in the UK should have already prepared for the transition to the new standards and be familiar with what will be required.

Other recent changes to UK company law include the option to prepare and file so-called abridged accounts and reduced disclosures required for small company accounts.