MichaelFarrellOnline.Wrdpress.Cm NEW IRISH GAAP BACKGROUND Under the Cmpanies Acts, cmpany directrs must prepare accunts fr the cmpany fr each financial year using either: Cmpanies Act individual accunts ( Irish/UK GAAP ) IFRS individual accunts ( Internatinal GAAP )* * Under EU regulatins, all cmpanies that have equity r debt listed n a EU stck exchange must use IFRS. Irish GAAP (fr perids beginning n/after 1 January 2015) cmprises f 5 standards: FRS 100: Applicatin f Financial Reprting Requirements FRS 101: The Reduced Disclsure Framewrk FRS 102: The Financial Reprting Standard Applicable in the UK and Republic f Ireland FRS 103: Insurance Cntracts FRS 104: Interim Financial Reprting FRS 105: The Financial Reprting Standard applicable t the Micr-entities Regime Bth Irish GAAP and IFRS accunts must include sme additinal disclsures as required by cmpany law. RECENT UPDATES TO IRISH GAAP FRED Review f FRS 102 When FRS 102 was issued in March 2013 (applicable fr perids beginning n/after 1 January 2015) it was indicated that it wuld be reviewed every three years. The first triennial review is nw in prgress and Financial Reprting Expsure Draft 67 (FRED 67) prpses incremental imprvements and clarificatins t FRS 102. In additin, this FRED includes cnsequential amendments t the ther UK and Ireland accunting standards. Cmpanies (Accunting) Act 2017 The Cmpanies (Accunting) Act 2017 was enacted n 17 May 2017 with mst changes taking effect frm 9 June 2017. The main purpse f the Act was t transpse the EU Accunting Directive 2013/34/EU int Irish law, amending the Cmpanies Act 2014 t give effect t the prvisins in the Accunting Directive relating t the statutry financial statements and related reprts f cmpanies. The tw biggest changes are that cmpanies can nw avail f the small cmpany and micr cmpany prvisins under Irish GAAP: - Small cmpany prvisins are mstly cntained in Sectin 1A f FRS 102 - Micr cmpany prvisins are cntained within FRS 105 Further infrmatin is available belw n bth f these.
MichaelFarrellOnline.Wrdpress.Cm FRS 100: APPLICATION OF FINANCIAL REPORTING REQUIREMENTS This is a shrt 13 page standard that sets ut what accunting framewrk (IFRS/FRS 101/FRS 102/FRS 103/FRS 105) shuld be used. FRS 101: THE REDUCED DISCLOSURE FRAMEWORK FRS 101 enables qualifying entities t apply the recgnitin and measurement rules f IFRS, but with reduced disclsures (ptentially up t 50% reductin). Under FRS 100, a qualifying entity is a member f a grup, where the parent prepares cnslidated financial statements that are publicly available, and which include that member. Nte that there are als a number f measurement adjustments that need t be made t the IFRS accunts t bring them in line with FRS 101 e.g. negative gdwill must be capitalised and amrtised t prfit r lss (amrtised in line with acquired nn-mnetary assets). FRS 102: THE FINANCIAL REPORTING STANDARD APPLICABLE IN THE UK AND THE REPUBLIC OF IRELAND Overview f FRS 102 FRS 102 is the main standard and is applied by almst 95% f cmpanies in Ireland. The dcument, cvering apprx. 300 pages, is brken int 35 sectins and deals with each individual area f the accunts. While it is ne standard it culd be cnsidered 35 mini-standards. The standard is expected t be revised every 3 years with the first triennial review nw in prgress (see earlier n FRED 67). An interpretatins cmmittee will als prvide nging guidance n the applicatin f the standard. FRS 102 requirements are similar in many respects t thse f IFRS. Hwever, there are a number f imprtant differences. As peple may knw already, I m a big fan f BDO s financial reprting material and I have upladed their key IFRS/FRS 102 differences dcument alngside this dcument fr thse wishing fr mre detailed infrmatin (but still in summarised frm!). Finally, it shuld be nted that The Cmpanies (Accunting) Act 2017 (see earlier discussin) distinguishes between micr, small, medium, and large cmpanies/grups. There are nly slight differences between the accunting fr a medium/large grup s they are nt discussed here. Hwever, there is a much simplified regime fr cmpanies that meet the definitin f small and this will be discussed in mre detail belw. A discussin f Micr-entities is als included further belw in a separate sectin.
MichaelFarrellOnline.Wrdpress.Cm Simplified regime fr Small cmpanies FRS 102 has specific prvisins fr small cmpanies that can nw be availed f by Irish entities after the enactment f The Cmpanies (Accunting) Act 2017. These prvisins are mstly lcated in Sectin 1A f FRS 102. These prvisins can be retrspectively adpted by preparers f 2016 financial statements if thse financial statements have yet t be apprved. The small cmpanies regime is available t a private cmpany (r hlding cmpany f a private grup) in relatin t a financial year in which it fulfils tw r mre f the qualifying cnditins set ut in the table belw, generally fr at least tw cnsecutive financial years: Qualifying cnditin fr an individual cmpany Qualifying cnditin fr a grup Turnver </= 12m </= 12m net ( 14.4m grss) Balance Sheet Ttal </= 6m </= 6m ( 7.2m grss) Average number f emplyees </= 50 </= 50 Ntes t the abve table: i. A hlding cmpany is small nly if the grup it heads up is a small grup. ii. Turnver, balance sheet ttal and the average number f emplyees are determined by aggregating the equivalent figures fr each member f the grup. iii. Net means after set ffs and ther adjustments made t eliminate grup transactins. Grss means withut thse set-ffs and ther adjustments. The qualifying cnditins must be met n either a net r a grss basis. Certain ineligible entities cannt be small cmpanies. Ineligible entities include, fr example, public interest entities (PIEs), credit institutins. Als, a hlding cmpany f a grup cannt qualify as small if any member f the grup is an ineligible entity. The main features f the small cmpanies regime are: Subject t the true and fair view, a limited number f ntes t the financial statements are mandated in cmpany law under the small cmpanies regime. A hlding cmpany that qualifies fr the small cmpanies regime is exempt frm the requirement t prepare grup financial statements. While a cmpany that qualifies fr the small cmpanies regime is required t prepare a directrs reprt, it is exempt frm the requirement t give a business review and t describe its use f financial instruments. The frmats f the financial statements are the same as thse required fr larger cmpanies. The frmats may als be adapted in the same manner as fr larger cmpanies (fr example, the balance sheet can be adapted t distinguish between current / nncurrent items as is currently required under IFRS).
MichaelFarrellOnline.Wrdpress.Cm Small cmpanies may still file abridged financial statements. Hwever, the nte disclsure requirements in respect f abridged financial statements have increased. FRS 103: INSURANCE CONTRACTS An insurance cntract is defined in FRS 102 as a cntract under which ne party (the insurer) accepts significant insurance risk frm anther party (the plicyhlder) by agreeing t cmpensate the plicyhlder if a specified uncertain future event (the insured event) adversely affects the plicyhlder. Althugh FRS 102 includes a definitin f an 'insurance cntract' it des nt set ut the accunting required fr such a cntract. Instead, a separate standard FRS 103 "Insurance Cntracts" cntains specific accunting requirements fr entities that have insurance cntracts (including reinsurance cntracts) and are applying FRS 102 The Financial Reprting Standard applicable in the UK and Republic f Ireland. FRS 104: INTERIM FINANCIAL REPORTING FRS 104 Interim Financial Reprting is intended fr use in the preparatin f interim financial reprts fr thse entities that apply FRS 102 but may als be used as a basis fr preparing interim reprts by thse entities applying FRS 101 Reduced Disclsure Framewrk. The Standard is based n IAS 34 Interim Financial Reprting. FRS 105: MICRO-ENTITIES FRS 105 The Financial Reprting Standard applicable t the Micr-entities Regime is nw available fr use after the enactment f The Cmpanies (Accunting) Act 2017. FRS 105 can be retrspectively adpted by preparers f 2016 financial statements if thse financial statements have yet t be apprved. FRS 105 may be applied by cmpanies that satisfy at least tw f the fllwing three requirements in relatin t a financial year: Turnver: Nt mre than 700,000(pr-rated apprpriately where a cmpany s year is shrter r lnger than a calendar year); Balance sheet ttal (i.e. grss assets): Nt mre than 350,000; and Average number f emplyees: Nt mre than 10. A cmpany must meet at least tw f these limits in tw cnsecutive years t qualify as a micr-entity and, nce qualified, must exceed at least tw f these limits fr tw cnsecutive years t cease t qualify. Key differences between FRS 105 and FRS 102 are as fllws: Micr-entities are nly required t prepare a balance sheet and prfit and lss accunt and nt any f the ther primary statements required fr larger cmpanies.
MichaelFarrellOnline.Wrdpress.Cm A Directrs reprt is nt required. N assets can be measured at fair value r a revalued amunt. N deferred tax r equity-settled share-based payments are recgnised. All f the accunting plicy chices set ut in FRS 102 are remved. Micr-entities' accunts are nly required t prvide very limited disclsures and are presumed t give a true and fair view by ding s. Certain types f cmpany, such as charitable cmpanies and parent cmpanies that are required r chse t prepare cnslidated financial statements, are excluded frm the micr-entity regime and therefre cannt apply FRS 105. Als, a private hlding cmpany is a micr cmpany nly if it meets the size criteria itself n an individual basis, if the grup it heads up is a small grup and it des nt prepare grup financial statements.