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).
We're in section 10 and gazing mistily into the future...
DAY 17 (27 Jan)
Here's a question. When you go on a Mercia course and hear that a particular accounting standard has changed, do you ever think to yourself, 'I wonder if at some point in the future, that will impact any of my clients, and if so should we probably make pre-emptive disclosures in each of those companies' accounts?'
Of course you don't. You think instead, 'How long until the coffee break and will there be any chocolate biscuits?'
But here's an interesting prospect - para 10.13 says the following:
When an amendment to an FRS or FRC Abstract has an effect on the current period or any prior period, or might have an effect on future periods, an entity shall disclose the following:
(a) the nature of the change in accounting policy;
(b) for the current period and each prior period presented, to the extent practicable, the amount of the adjustment for each financial statement line item affected;
(c) the amount of the adjustment relating to periods before those presented, to the extent practicable; and
(d) an explanation if it is impracticable to determine the amounts to be disclosed in (b) or (c) above.
Now, it'd be easy to panic on reading this paragraph that (as can be the case under IFRS), FRS 102 requires disclosure of the effects of a standard that hasn't even been finalised yet. But that's not what it says - it refers to an amended standard (rather than an exposure draft).
But the point still stands that 10.13 requires us to describe the nature of policy changes even before they've actually resulted in changes to balances or transactions. It doesn't mean that we should include every conceivable accounting policy on the grounds that there's a tiny chance it might have a material impact in later years - that would be daft. But certainly, the rather dusty and hitherto untouched accounting policy note should be regularly reviewed and kept in step with the standards (which means we need to keep up with the changes).
Now that's an even better reason to go on Mercia courses than chocolate biscuits.
P.S. If you missed yesterday's instalment click here