Impact of FRS102 and SORP on scheme accounts
In March 2013 the Financial Reporting Council (FRC) published a new financial reporting standard (FRS 102) to replace all existing UK accounting standards (‘old UK GAAP’ comprising FRSs, SSAPs and UITF abstracts) with a system based on international standards (‘new UK GAAP’) for accounting periods beginning on or after 1 January 2015.
The new regime represents the biggest change to accounting regulations in many years.
Helen Scothern, senior audit manager at PKF Cooper Parry, explains the changes and gives an insight into how they will affect pension scheme accounts:
“The transition to FRS 102 is set to change not only the format of financial statements and the disclosures they contain, but also the criteria for recognition of some assets.
“The key changes arise from the need to account for annuities and the introduction of some significant new disclosures, including investment fair value tables and details of investment risks.
“FRS 102 defines an annuity as an insurance policy that matches the amount and timing of some or all of the benefits that are payable under the new plan. It requires annuities to be recognised if they are held in the name of the scheme or in the name of the trustee.
“Previously, they were not included in the net assets of the scheme. The Statement of Recommended Practice (SORP) has been revised to reflect this as well as the other changes arising from FRS 102.
“Trustees must work to co-ordinate information from investment managers and ensure that everything is presented in a consistent format. Accountants will need time to prepare financial statements and auditors will also have to consider the changes during the course of their work.
“We are currently working with Trustees to help prepare them for these changes and ensure that their transition to the new requirements runs smoothly.
“Organisation is the key for getting used to the new regime and all affected entities need to be assessing and implementing the changes now,” added Helen.
The pensions team at PKF Cooper Parry act for over 200 pension schemes across the UK, and are one of only six firms in the UK and the only firm in the Midlands) to be members of the Pension Protection Fund’s (PPF) Audit Services Panel.
The recent merger with Clement Keys has created a £30m turnover group with a 350 strong workforce spanning the East and West Midlands.
It is the fastest growing top 100 accountancy and business advisory firm in the UK. Its aim is to double turnover in the next two years, with the creation of up to 100 new jobs.
This was posted in Bdaily's Members' News section by Donna Hill .
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