Ring out the old, ring in the new…
Paul Creasey –9th December 2015
To quote Alfred, Lord Tennyson in his 1850 poem “Ring Out, Wild Bells”: “Ring out the old, ring
in the new”. Traditionally, the closing of a year is a good chance to draw a line under what’s
been before, take stock of what you have and start afresh with a clean slate.
And so it is with financial accounts. For all but small companies, entities in the UK will be
adopting the new accounting framework in the form of FRS 102 “The Financial Reporting
Standard applicable in the UK and Republic of Ireland” for accounting periods commencing on
or after 1 January 2015 (small companies get an extra year to adopt which allows for a bit
more time to plan).
So we ring out the old and wave goodbye to a set of rules that largely pre-date Slade’s “Merry
Xmas Everybody” in 1973 and frankly haven’t changed a great deal for most private companies
since Simon Cowell introduced us to the X Factor.
And we ring in the new – a new set of bells with tones and timbres we may not have come
across before, like intangibles, financial instruments and fair value. Some things might have
the same names, but get accounted for differently – like acquisitions, foreign currency,
investment properties, investments and deferred tax.
All of these things have the potential to change your profit for the current year compared to the
old rules and re-stating the comparatives could actually reduce your distributable profits
(worth bearing in mind if you were planning on paying a dividend before 5 April 2016 – but
you can read all about this in another of our advent blogs: “Pay the Elves their dividends before
the end of the tax year”.) Or change the numbers you use to work out your bank covenants,
staff bonuses, or earn out payments.
If you’re preparing accounts under FRS 102 in the New Year, do allow a bit longer for the
process as there will be new things to think about, new accounting policies to draft, new notes
to create and quite possibly comparatives to re-state. If you’ve got another year before it’s your
turn, use the time to talk to your advisors to find out what decisions and actions you could be
taking now to make things easier in a year’s time.
PS. If you need some holiday reading to get ahead of the game or top up your CPD records, take
a look at our factsheets on this subject at http://www.wilkinskennedy.com/services/auditassurance/the-new-financial-reporting-landscape