New legislation simplifies accounting for SMEs » SMEInsider

New legislation simplifies accounting for SMEs

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The Financial Reporting Council (FRC) has released a new set of accountancy changes for financial workers in the UK and Ireland, including legislation changes for microbusinesses and the withdrawal of the Financial Reporting Standard for Smaller Entities (FRSSE).

The FRC has implemented the changes largely in response to the European Union’s accounting directive that was established by the Department for Business Innovation and Skills (BIS) in 2014.

Major FRC legislation changes include:

  • A new accountancy standard,  entitled FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime;
  • Creating a new Section 1A entitled Small Entities of FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland;

Small business accountants will welcome the FRC changes. Watch our interview with Raj Shah, owner of Litchfield accountancy firm who explains why the EU accountancy directive could be disastrous for small businesses.

All changes will come into effect on January 1st 2016, with early application permitted for accounting periods beginning on or after 1 January 2015.

Melanie McLaren, executive director of codes and standards for FRC welcomed the legislation changes:

‘‘These new accounting standards support the implementation of the micro-entities regime, further simplifying accounting requirements for up to 1.5 million of the UK’s smallest entities.’’

‘‘They also respond to the new legal framework for disclosure in small company reporting, providing guidance for applying it and improving transparency relating to financial instruments.’’