In response to today’s statement from the Financial Reporting Council (FRC) regarding Financial Reporting Exposure Draft (FRED) 67 following the triennial review of FRS 102, Danielle Stewart OBE, Head of Financial Reporting at RSM, said:
‘The early release of FRED 67 is welcome news, as there is something within the proposals for everyone. Small companies will be delighted by the proposed relaxation of the need to adjust directors’ loans to take account of the notional interest cost; all businesses will benefit from a more relaxed approach to the financial instruments rules; and larger groups will be pleased to see that they don’t need to revalue properties rented to other group companies any more.
‘There are a number of very useful ideas within the proposals, but as ever, the devil is in the detail. For example, whilst removing the specific ‘undue cost or effort’ exemptions which are currently standard is fine, because they have been replaced with simplified accounting policy choices. There is also a statement that the exemption will not be used in the future, which might be seen to be giving UK companies an unfair disadvantage compared to users of the IFRS for SMEs, who continue to be able to use the exemption.
‘Nonetheless, taken over all, this first cut of the triennial review to New UK GAAP is a great improvement, which should help UK businesses to present their financial results more efficiently and more appropriately.’