From 2015 a complete overhaul of UK accounting standards will change how and when companies account for certain assets and liabilities with potential implications on profitability and net assets.
This is the first major change in UK GAAP for many years and will involve both cost and short-term challenges. The extent of the impact will depend on a company’s activities, assets and liabilities but while some may find it fairly painless, others will need to make significant changes to how they report their financial performance and position. The changes may also impact on commercial arrangements such as bank covenants, earn-out agreements and remuneration schemes. Companies should have started planning for the change by now.