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UK Financial Statements: Presentation and Disclosure Requirements

Author: Steve Collings

Publisher: Bloomsbury Professional

Law As Stated At: 1 June 2023

UK Financial Statements: Presentation and Disclosure Requirements

UK Financial Statements: Presentation and Disclosure Requirements

This publication explains how the disclosure requirements under new UK GAAP (and EU-endorsed IFRS) should be prepared. This commentary offers preparers of financial statements detailed guidance on getting the accounts and associated disclosure requirements correct under the FRC's reporting framework following the triennial review amendments to UK GAAP. It also reflects Republic of Ireland company law amendments in respect of FRS 102, Section 1A and FRS 105.

Rather than focusing on disclosure requirements only, this commentary is a 'one-stop-shop' which focuses on the wider issues around financial statement preparation. Various areas of the Companies Act 2006 require differing levels of disclosure depending on whether the entity is a micro-entity, small company, medium-sized or large business; and this book is structured in such a way that each type of business is covered in its own chapter, hence making each chapter a standalone section depending on the size of the entity concerned.

Detailed explanations of why certain things are done and disclosed are incorporated within each chapter to enable preparers to understand why they are disclosing certain items. Bloomsbury Professionals Example Financial Statements should be referred to alongside this commentary.

Steve Collings FCCA

Steve Collings FCCA is a director at Leavitt Walmsley Associates, Chartered Certified Accountants based in Sale, Cheshire where he trained and qualified. Steve is the author of several titles for Bloomsbury Professional including Group Accounts under UK GAAP, Financial Reporting for Unlisted Companies in the UK and Republic of Ireland and Financial Statements: Presentation and Disclosure Requirements. Steve has close connections with various professional bodies producing authoritative material, articles and courses and represents the Association of Accounting Technicians on the CCAB and Technical Partners Committee at the Financial Reporting Council.

FRC issues update to the periodic review

On 29 September 2023, the Financial Reporting Council (FRC) issued a project update on its periodic review of UK and Ireland accounting standards.

FRED 82 Draft amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and other FRSs – Periodic Review was published on 15 December 2022 and comments on this Exposure Draft closed on 30 April 2023.

Among other amendments, FRED 82 proposes significant changes in the areas of lease accounting (but not for FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime) and revenue recognition (for both FRS 102 and FRS 105). It is doubtful that the FRC will abandon these significant proposals and have confirmed in their project update that they are continuing work in these areas. Notably, for on-balance sheet lease accounting, the FRC are reconsidering how the model is proportionate and understandable for preparers of financial statements under FRS 102. For example, by perhaps clarifying the scope of the recognition exemption for leases of low-value assets.

In respect of the changes to revenue recognition and the introduction of a five-step model approach similar to that in IFRS® 15 Revenue from Contracts with Customers, the FRC have received support for the proposals. However, there is some concern about the proportionality of the amendments in FRS 105. In this respect, the FRC are continuing to work on the five-step model approach to revenue recognition in light of the feedback they have received and are seeking further simplifications to ensure the revenue recognition principles in FRS 105 remain proportionate.

Effective date

The FRC originally planned to require the amendments arising from the periodic review to be effective for periods commencing on or after 1 January 2025. This date has now been delayed so the amendments arising from the periodic review will not have an effective date before 1 January 2026. The FRC expect to publish the final amendments to FRS 102 and other FRSs in the suite of UK and Ireland GAAP in the first half of 2024.