New Irish GAAP
Preparing for change
Developing a replacement for existing Irish GAAP has long been an objective of the Financial Reporting Council. For periods beginning on or after 1 January 2015, three new Financial Reporting Standards (FRS 100, 101 and 102) have come into force, bringing with them a number of new options for all Irish entities and groups. A new standard, FRS 103, has also been published for Insurance Contracts. This new regime is here now and companies have to deal with the challenge it presents.
New reporting standards
Irish companies have in the past generally prepared their financial statements on one of two bases: full IFRSs or the previous Irish standards. This is now changed, with the introduction of FRS 102. a new, much shorter standard, based on the IFRS for SMEs. In addition, a new option for some companies to follow the recognition and measurement bases of IFRSs, but with reduced disclosures, has been introduced by FRS 101.
- FRS 100 “Application of Financial Reporting Requirements” sets out rules and guidance on how to select the appropriate accounting framework for a particular entity or group.
- FRS 101 “Reduced Disclosure Framework” introduces a new reduced disclosure framework enabling most subsidiaries and parents to use the recognition and measurement bases of IFRSs in their individual entity financial statements, while being exempt from a number of disclosures required by full IFRSs.
- FRS 102 “The Financial Reporting Standard Applicable in the UK and Republic of Ireland” is the ‘main’ standard which replaces current Irish GAAP. It also includes disclosure exemptions for certain qualifying entities.
- FRS 103 “Insurance Contracts” FRS 103 is the standard issued by Financial Reporting Council (FRC) aimed at the accounting treatment and disclosure requirements of Insurance Contracts including financial guarantees in limited circumstances and financial instruments with discretionary participation features. It is aimed at Life and Non-life Irish Insurance and Reinsurance entities, including captives and insurance special purpose vehicles which have decided to apply FRS 102. There is no significant change in accounting treatment of insurance contracts introduced by FRS 103. Rather, FRS 103 aims at consolidation of the accounting requirements for insurance companies in Ireland which were previously contained separately in FRS 27 (for life insurance companies), various statutory instruments containing requirements for life and non-life companies and Statements of Recommended Practices (SORP) issued by the Association of British Insurers (ABI).
How we can help
The challenges will vary from business to business depending on industry, structure and size. Listed companies will want to take the opportunity to re-evaluate the choice of accounting framework used to prepare their individual parent and subsidiary financial statements. Unlisted groups and entities will need to decide whether to move to full IFRSs or transition to the replacement for the previous Irish GAAP, FRS 102, taking into account the wider implications of the options on offer. Deloitte has produced further publications including ‘Changing your GAAP’, which looks at the broader implications of changing accounting frameworks, and pro-forma financial statements prepared under both FRS 101 and FRS 102.
Our integrated team of accounting and taxation specialists can assist you in assessing and understanding the various impacts of these new standards. If you would like further, more detailed information or advice, or to discuss how these changes could affect your business, please contact your usual Deloitte partner or one of the contacts listed below or to the right on next steps.