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FRS105 – The new Financial Reporting Standard for Small Entities (in draft) – (aka – FRED58 at present)

The Financial Reporting Council (FRC) has recently published FRED 58, being the Exposure Draft for FRS105, which in turn will become the new FRSSE (or replace the existing FRSSE, we believe).

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Comments on the Exposure Draft was due by 30 April 2015, so if you missed it, we are afraid the the train has already left the station.

In a nutshell, we have some serious conceptual and philosophical concerns the FRED 58 does not address (and staff at the FRC at a recent event in London, prior to the General Election, could not provide assurances on).

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Effectively FRS 105 (as it will be know), once it is ratified and adopted in parliament, will not be IFRS ‘Lite-lite‘, although it will have some of the overall principles of Fair Value Accounting contained within it.

At a fundamental level micro-entities (* as defined below) can choose to adopt either FRS 105 or FRS 102. However, be very careful in which one you choose, as the two standards have some fundamental differences contained within them, which, later down the line (as the proverbial can is kicked up the road), might cost you additional compliance fees and time and effort, if you need to convert from FRS 105 reporting to FRS 102 (New UK GAAP).

Our concern is this:

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“The overall objective of all the initiatives (driven from Brussels) is HARMONISATION. The differences in approach between FRS 105 and FRS 102 do not underscore this fundamental principle!”

Hence, our health warning:

Think and consult carefully, before adopting either standard (FRS 102 or FRS 105) if you are a micro-entity caught in the compliance reporting net.

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If you have any questions or concerns, please contact any Business Accountant in our network for more details.

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*Definition of a micro-entity:

Micro-entities – HMRC guidance – May 2015 (as per the HMRC web site at the post’s publishing date)

Micro-entities are very small companies. Your company will be a micro-entity if it has any 2 of the following:

a turnover of £632,000 or less
£316,000 or less on its balance sheet
10 employees or less
If your company is a micro-entity, you can:

prepare simpler accounts that meet statutory minimum requirements
send only your balance sheet with less information to Companies House
benefit from the same exemptions available to small companies

3 ways to comply with Employer Auto Enrolment Obligations

This is exactly how I pictured the partners lounge

Auto Enrolment has arrived and there is a lot to do……

The Pension Regulator website will help you create a stage by stage plan working back from the date when you need to start (staging date), it is a useful planning tool http://www.thepensionsregulator.gov.uk/employers/planning-for-automatic-enrolment.aspx

Most schemes will be set up with one of the following providers:

NEST – National Employment Savings Trust – NEST was originally created by the government – limited help for employers

The Peoples Pension – B&CE – B&CE is well known in the Construction world, they have online tools to help you

Now: Pensions – ATP (Denmark) – 45 year experience in pensions and many awards

You could use another provider and you should take independent expert advise, never give pension or investment advice unless you are qualified to do so.

If you are asked for advice remember to say ‘I know nothing’

But as an employer you do need to select a pension scheme for Auto Enrolment.

Then you need to consider how you will comply with your responsibilities and keep records for:

  • Contributions
  • Opting Out
  • Opting In
  • Earnings
  • Employee Records
  • Communication with Employees

Take a look at this video for middleware to get an understanding of how you could manage your compliance requirements

So here are your 3 basic ways to comply:

  1. Small Employers – you may decide to do it yourself using information on the Pension Regulators website and provider of your choice
  2. Pension Provider Portals – schemes like the Peoples Pension will have portals and tools to help you manage your auto enrolment pensions but it won’t cater for other benefits and other schemes
  3. Middleware – like the video above, this gives lots of functionality and will allow you incorporate other schemes and benefits but its not free

You might also find this blog worth reading ‘10 things you need to know about Pension Auto Enrolment’

steve@bicknells.net

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