REPORTING WATCHDOG the FRC has issued a series of amendments to new UK GAAP to improve the accounting for certain financial transactions to make the standards easier to use and reduce the cost of compliance.
The FRC is making changes to FRS 101, which allows entities to apply IFRS with exemptions from some disclosures, and FRS 102, a simplified version of old UK GAAP derived from IFRS for SMEs.
The amendments to FRS 101 are being made in light of changes to IFRS and centre on updates to IFRS 10, Consolidated Financial Statements, and IAS 27 Separate Financial Statements as a result of the IASB’s project Investment Entities); and IAS 36, Impairment of Assets, as a result of the IASB’s project Recoverable Amount disclosures for Non-Financial Assets.
Alongside these changes, the FRC is updating specific elements of FRS 102 that relate to financial instruments, including updating requirements on hedge accounting. The changes will make hedge accounting more readily available to entities where it is consistent with their risk management processes, the FRC said.
It will also relax 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 and make transition to FRS 102 less costly. The changes 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 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.”