A Practitioners Perspective.

GAAP are the more generic accounting rules

that every country holds, and are directly
influenced by the different accounting boards
of each jurisdiction, whereas, IAS were the
specific set of internationally recognised
accounting standards, set by the IAS Committee
(IASC).

GAAP, is locally based, (i.e. UK GAAP,

US GAAP) while the IAS is globally
recognised, and some of its rules or
standards are incorporated in the
GAAPs of many countries.
The series of accounting standards, known as the International
Accounting Standards (IAS), were released by the IASC between
1973 and 2000, and were ordered numerically. The series started
with IAS 1, and concluded with the IAS 41, in December 2000.
At the time when the IASB was
established, they agreed to adopt
the set of standards that were
issued by the IASC, i.e. IAS 1 to
41, but that any standards to be
published after that would follow
a series known as the
International Financial Reporting
Standards (IFRSs).
The Difference
The question of the differences between the IAS and IFRS arises on a
number of occasions in accounting circles, and in fact, some would
question if there is any/much difference at all.
One of the major differences is that the IAS
series of standards were published by the
International Accounting Standards
Committee (IASC) between 1973 and 2001,
whereas, the standards for the IFRS were
published by the International Accounting
Standards Board (IASB), starting from 2001.
When the IASB was established in 2001, it
was agreed to adopt all IAS standards, and
name future standards as IFRS.
 Summary.. So far..!!
IAS stands for International Accounting Standards,
while IFRS refers to International Financial Reporting
Standards.
IAS standards were published between 1973
and 2001, while IFRS standards were published
from 2001 onwards.

IAS standards were issued by the IASC, while the IFRSs

are issued by the IASB, which succeeded the IASC.

Principles of the IFRS take precedence if there is any

contradiction with those of the IAS, and this results in the
IAS principles being dropped. Basically, when contradictory
standards are issued, older ones are usually disregarded.
Since 2005 listed groups in the UK have been required
to prepare their consolidated financial statements in
accordance with International Financial Reporting
Standards (IFRSs).

Almost all other groups and companies have

a choice. They can choose to follow IFRSs or
UK GAAP.

Note: Small companies (as defined by the Companies Act

2006) have an additional option of following the Financial
Reporting Standard for Smaller Entities (FRSSE).
But!!!!
New UK GAAP
..for periods beginning on or after
.1 January 2015

three new Financial Reporting

Standards FRS 100, 101 and 102

..will be in force, bringing with them a

number of new options for all UK entities
and groups.
Developing a replacement to existing UK GAAP
has long been an objective of the UKs Financial
Reporting Council.
Three new FRSs have been
developed by the Accounting
Standards Board to replace
current UK GAAP

(ASB - the predecessor of what is now the

Accounting Council of the FRC)
.(other than the FRSSE, which will be
retained) and introduce an IFRS-based reduced
disclosure framework for certain entities.
The Financial Reporting Council assumed responsibility
for accounting standards on 2 July 2012.

Accounting standards were formerly developed by the

Accounting Standards Board are contained in 'Financial
Reporting Standards' (FRSs).
Soon after it started its activities, the ASB adopted the
standards issued by the ASC, so that they also fall
within the legal definition of accounting standards.

The FRC collaborates with accounting standard-setters

from other countries and the International Accounting
Standards Board (IASB) in order to influence the
development of international standards and to ensure
that its standards are developed with due regard to
international developments.

One role of the FRC is to issue accounting

standards. It is recognised for that purpose
under the Companies Act 1985.
Current status..
FRS 100, FRS 101 and FRS 102 have been issued by the
FRC and are applicable for accounting periods beginning
on or after 1 January 2015 (with earlier application
permitted).
For periods beginning on or after 1 January
2015, three new Financial Reporting
Standards (FRS 100, 101 and 102) come into
force, bringing with them a number of new
options for all UK entities and groups.

With all of these new standards now published,

companies should now be thinking carefully about
the impact that these will have on their financial
reporting.
The new financial reporting framework in the UK will be effective on
1 January 2015. The UK's Financial Reporting Council (FRC) has
published three standards which together form the basis of the new
UK regime. The three new standards will replace all current UK
accounting standards. The purpose of each is as follows:
FRS 100 Application of Financial Reporting
Requirements which sets out the overall
reporting framework;
FRS 101 Reduced Disclosure Framework which permits
disclosure exemptions from the requirements of EU-
adopted IFRSs for certain qualifying entities; and
FRS 102 The Financial Reporting Standard applicable in the
UK and ROI which will ultimately replace all existing FRSs,
SSAPs and UITF Abstracts.
FRS 100 sets out the financial reporting framework and
outlines which standards to apply. It also outlines the
application of Statements of Recommended Practice
(SORPS) and transitional arrangements from the current
standards.

It sets out a proposed framework that would

apply to all UK entities preparing financial
statements that are intended to give a true and
fair view other than where an entity is required
or chooses to prepare its financial statements in
accordance with IFRSs or the FRSSE.
FRS 101 is a proposed reduced disclosure framework
for qualifying entities preparing their financial
statements in accordance with IFRSs.

This sets out a reduced disclosure framework which

addresses reporting requirements and disclosure
exemptions for subsidiaries and ultimate parents
that would normally apply EU-adopted IFRSs.
FRS 102 contains the text of a comprehensive proposed accounting
standard based upon the International Financial Reporting Standard
for Small and Medium-sized Entities, this would replace current UK
GAAP.
The new standards will effectively allow for three
different tiers of reporting in the UK.

Under IFRS and FRS 102 there is also the option of

reduced disclosures for qualifying entities

Optional for small entities i.e. large and medium private

companies.

Small private companies will use FRSSE (Small entities)

FRS 102
This is likely to be the standard applied by the majority of large
and medium sized UK entities.

It is a single standard that applies to entities not applying IFRS,

FRS 101 or FRSSE.

It is based on IFRS for SMEs but with amendments to incorporate

UK company law and some additional accounting policy choices.
Overall this means that companies currently using SSAPs and FRSs are
most likely to end up using FRS 102.
Although they may choose to move to FRS 101
if they are part of a listed group.

Companies currently using IFRS voluntarily will

be able to use either FRS 102 or FRS 101.

Previously a move "back" to UK GAAP from IFRS was

only permitted if there was a "good reason", such as a
group delisting or a subsidiary leaving a listed group.
Impact?

Negligible!!!
Presentation of Financial Statements
New titles for the financial statements

The titles of some of the financial statements have been changed:

A Balance Sheet is now referred to as a Statement of Financial

Position,

A Cash Flow Statement is referred to as a Statement of Cash Flows.

A Profit and Loss Account is referred to as a Statement of

Comprehensive Income.
Where an entity elects to present income and expenses using a single statement
(see later).
A complete set of financial statements includes:

A statement of financial position (balance sheet) at the end of

the period;

A statement of profit or loss and other comprehensive income

(income statement) for the period;

A statement of changes in equity for the period;

A statement of cash flows (cash flow statement) for the period;

Notes to the accounts

Note: The names of the main statements are not mandatory.

 Although these new titles will be used in all accounting standards
from now on:

they are not mandatory for use in financial statements.

Entities can choose whether to use the new titles.

--------------
Generally, the recommendation would be to change
(in the interests of simplicity and comparability, etc.)

..For exam purposes, the followingapplies to all companies,

partnerships, and sole traders ACCA
Traditional terminology (Companies Act) FRS 102

Balance sheet Statement of financial position

Income statement (under the two-statement approach) or statement of
comprehensive income (under the single-statement approach) which
Profit and loss account
would include the income statement and statement of changes in equity
being presented as one statement
Statement of total recognised gains and
Statement of changes in equity
losses
Cash flow statement Statement of cash flows
Tangible assets Property, plant and equipment (as well as investment property).
Debtors Trade receivables
Creditors Trade payables
Minority interests Non-controlling interests
Capital and reserves Equity
Net realisable value Estimated selling price less costs to complete and sell
Stock Inventories
Interest payable and similar charges Finance costs
Interest receivable and similar income Finance income/investment income
These are the most notable differences in the terminology and
a full and comprehensive list of the terminology equivalences
can be found in FRS 102 (at Appendix III on page 299).

Paragraph 3.22 allows an entity to use alternative titles other

than those used in FRS 102 provided they are not
misleading.

.so the chances are that practitioners will still refer to the
balance sheet as the balance sheet etc.

.. see Sainsbury..!!!
Some worked examples..!!!