To mark this momentous year for UK GAAP, I'm embarking on a mission to work my way through FRS 102, reading a portion on each working day of 2015 and writing a short blog entry on my thoughts and musings (be they few or many). It's Friday and time for my fifth post - into section 4...
DAY FIVE (9 Jan)
Section 4 is one of the shorter sections within FRS 102 and deals with the Statement of Financial Position (that's the balance sheet to you and me. Remember that you can continue to call it the latter if you'd prefer - as I'm about to for the rest of this post).
Where does the balance sheet format come from? For companies, we look to company law - specifically, the 2008 Regulations for either medium and large or small companies respectively. The regs set out the format and key elements of disclosure. For non-corporates, there's no set format (but we broadly follow a similar though usually simplified format as for companies).
This changes under FRS 102. The standard requires the use of company law formats for the presentation of the balance sheet (see 4.2). While companies will do this anyway, the effect of 4.2 is to require non-corporates to use the same formats. This will help make accounts more consistent for corporates and non-corporates.
What if this conflicts with other formatting requirements? This is where Appendix 4 steps in. It's the most important Appendix (don't tell the other appendices I said so) and outlines how FRS 102 dovetails with company law. Paragraphs A4.41-A4.42 list some issues for specific sectors - building societies, charities, friendly and industrial and provident societies and pension schemes.
Section 4 also deals with the issue of long-term debtors - where these are so material that mentioning them in a note is just too discreet, they should be disclosed on the face of the balance sheet but within current assets. This reflects the current approach as set out in UITF 4 (which no doubt you remember to read monthly).
Section 4 also requires some disclosure of capital and reserves, and of binding commitments to dispose of assets or a 'disposal group'.
That's it for this week. My weekends are packed with windsurfing and chess (usually at separate times), so I won't return to Route 102 until Monday. Time to grab a Crunchie Bar and prepare for the weekend...
P.S. If you missed yesterday's instalment click here