From 1 January 2015, the biggest change in accounting rules in a generation will come into effect. Companies may need to begin preparing from the change from January 2014, warns ICAEW.
The new UK Generally Accepted Accounting Principles (GAAP) are based on international standards and will change the look and feel of company reports. They will apply to most medium and large private companies in the UK, and companies will have to provide comparative information in their first statement under the new rules.
Dr Nigel Sleigh-Johnson, Head of ICAEW’s Financial Reporting Faculty, cautioned that the move will require time and resources on behalf of companies and that failing to prepare could result in ‘more pain and less gain’ after the change-over.
He said: ‘The biggest change some companies will face is to how they account for financial instruments. For the first time, certain investments and derivative contracts will have to be reported at fair value. While it is usually possible to obtain the fair values at a later date, it will require more effort and research than capturing the valuation when the transactions happen.’
Read the full article on the ICAEW website.