The new accounting framework for small companies will become mandatory for accounting periods starting on and after 1 January 2016, and is known as FRS 102. This new framework was introduced to provide one single set of accounting policies for businesses to follow and policies which are more in-line with international standards.
Companies do have the option to early adopt the new framework, but this depends on individual circumstances.
Once FRS 102 applies to your business, it is not just the current year that is affected. The previous comparative figures also need to be adjusted for any change in accounting policies.
Some examples of the changes to the accounting framework include the valuation of investment properties, dealing with short-term employment benefits (accrued staff holidays not taken at the year end), shortened the useful life of goodwill, dealing with lease incentives and further rules regarding the calculation of deferred tax.
It is vital that these changes be properly thought through as they could have a significant impact on the results of the business, which will be filed on the public record and used to determine credit scores.
Should you require any help and assistance with regards to the transition to FRS 102, and indeed ways to improve your credit score, please call Cheadles accountants in Stafford on 01785 254550.