The new Financial Reporting Standard FRS102 is applicable in the UK and Republic of Ireland and replaces all the UK Financial Reporting Standards and UITF Abstracts in issue prior to the new UK financial reporting regime.
It sets the standard for financial reporting and applies primarily to corporate entities whose financial statements are intended to give a true and fair view of their financial position and profit or loss for a period. It has no relevance to the accounts that practitioners prepare for private family trusts and estates.
In the event that a trust owned a trading business then separate accounts would be prepared for that, conforming as necessary to FRS102, but the trust accounts themselves would merely reflect the trustees’ share of any trading profit derived from the business.
The accounts for any private company whose shares are owned by the trustees would similarly be dealt with as a separate matter.
So it is business as usual for trust and estate practitioners who can continue to be guided by the standards set out in the STEP Accounting Guidelines (Guidelines for the Preparation of Trust & Estate Accounts in England & Wales), particularly as far as English and Welsh trusts and estates are concerned.
The STEP Accounting Guidelines are subject to periodic review. In particular, the examples of how tax returns can be prepared from the information contained in the specimen accounts will be reviewed in due course, once the form of the 2016/17 trust tax return is known following the 2016 Budget changes to income tax and dividend tax rates.
Jonathan Cooke TEP is the author of the STEP Accounting Guidelines. He was one of the founding members of STEP and is a consultant in the Trusts & Estates Support Services department of Humphrey & Co, Chartered Accountants, Sussex, UK