The majority of accountancy firms are not prepared for the upcoming transition from UK GAAP to FRS 102 with only one in ten having considered the cost implications of the changes to the accounting framework, while four in ten business FDs and finance professionals have started planning for the changes according to a survey by CCH say Harris & Co accountants Northampton
There is less than six months until the effective implementation date for the new FRS 102, the Financial Reporting Standard for UK and Ireland, which will replace existing UK GAAP from 1 January 2015.
In a survey of accountancy practices across the UK, only 22% said they had communicated the basic choice of new accounting regimes to their clients, and only one in 10 were aware of the impact on bank covenants, derivative and fair value issues, all of which will change substantially under the new accounting framework.
Despite the requirement to produce comparable accounts by year end 2015, less than 5% of practices have considered the likely cost of transition while only a third of companies are planning specialist training for staff.
By contrast, businesses are better prepared for the transition with nearly 40% having considered the most appropriate accounting framework to use and 20% stating that they have an understanding of the new rules.
Almost two thirds of business respondents (60%) have planned extra time to deal with the transition, or are moving towards this goal, while 30% have set up or have a plan to create new accounting formats.
Some of the main changes in FRS 102 relate to financial instruments, including loans, hedging and derivatives, so this will require a rethink in terms of accounting treatment.