Micro entity reporting options have thrown a spanner into long term plans for the one-stop-shop UK accounting framework.
The FRC has recently published updates to the Financial Reporting Standard for Smaller Entities (the FRSSE) that accommodate the micro-entity regime which became effective for very small, small companies last year. These amendments, however, only work as a short-term sticking plaster in the context of the overall future financial reporting framework. Let's look at why.
In the not too dim and distant past, our expectations of what a new UK GAAP would look like included the FRSSE; a proposal entitled the Financial Reporting Standard for Medium Sized Entities (a FRSME); and a half-baked, half-cash, half accruals proposal for micro entities (many came up with their own acronyms for this one which were not generally fit for sharing).
For differing reasons, none of these expectations appear in the future UK reporting framework.
The proposed FRSME has been replaced with FRS 102, The Financial Reporting Standard applicable in the UK and ROI, which becomes mandatorily effective for non small entities that do not apply IFRS for periods commencing on or after 1 January 2015.
Small entities, subject to how changes to European Law are implemented in the UK, are also looking likely to be brought into the scope of FRS 102 to aid consistency between small and non-small accounting. This would remove the need for a FRSSE and create a one-stop-shop UK accounting standard.
However, the one-stop-shop FRS 102 doesn't seem to fit the new simplified reporting regime for micro entities. To provide a simple link between legislative disclosure and accounting requirements and underlying accounting principles, micro-entities now look like they'll get their own one-stop-shop; a Financial Reporting Standard for Micro-Entities based on, but separate from FRS 102. Seemingly short on ideas for new acronyms, the FRC now appear to be looking to the return of a FRSME.
So the future now looks like two one-stop-shops plus full IFRS for the big boys and a simplified IFRS disclosure regime also thrown in for good measure. The joys of simplification!