The Financial Reporting Council (FRC) published Financial Reporting Standard (FRS) 100 'Application of Financial Reporting Requirements' in November 2012. This outlines the standards that make up the new financial reporting framework applicable on a mandatory basis for the majority of UK entities for reporting periods starting on or after 1 January 2015. Housing Associations will be required to apply FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' which was issued in March 2013.
FRS 102 addresses some of the specific reporting issues faced by housing associations and other public benefit entities, including the basis for recognising government grants, business combinations and the recognition of income from various sources. The housing SORP has been updated to reflect the new framework. The final SORP has now been published.
Housing associations will be required to adopt the new financial reporting regime for accounting periods starting on or after 1 January 2015, with the comparative balance sheet and opening comparatives requiring restatement. For many associations this will mean a 1 April 2014 transition date, a 31 March 2015 comparative balance sheet and the first FRS 102 compliant accounts being prepared for 31 March 2016.
However, it is not too soon to start considering how you will address the transition process. From our extensive experience in assisting clients with transition to EU-adopted IFRS, good planning is key to success. Timely actions and the right support will ensure that the process goes as smoothly as possible.
There are also operational matters which may need to be addressed in preparing for transition, such as training requirements for your finance and operational teams, systems changes to ensure relevant information is captured, education of your stakeholders, and the potential need for additional resources.
This factsheet provides a summary of the key changes brought about by the proposed FRS 102 compliant SORP (SORP 2014) , our interpretation of the practical effects of implementation, together with suggested actions. Most actions involve conducting a review of accounting policies.