Final stage interview - need help on UK accounting standards!

I have a final stage interview for a role in industry coming up - in the first interview they asked me about accounting standards - i cannot really get my head around the different standards and just had to waffle about how different organisations have different standards.

As i now understand it the UK has GAAP and FRS (of which there are a load of standards based upon what you are accounting for). These different FRSs each outline, for instance, when you recognise revenue and how to recognise fixed assets, contingent liabilities / assets and so on? Is this correct?

Finally, does anyone know how GAAP and FRS fit together? are they standards which must both be followed?

many thanks for any help

Right so in the UK the financial reporting frameworks are as follows:

FRS101
FRS102
IFRS

All entities have to prepare their statutory reports by these. FRS101 is a reduced disclosure version of IFRS and only some companies are eligible to use it (and that's only if their parent is reporting in full IFRS!). FRS102 is the new version of UK GAAP and is very closely aligned with IFRS as part of global convergence in accounting standards. IFRS is the international financial reporting standards and is generally considered best practice as it is used in other countries too (all listed entities must report in IFRS). There are no rules for internal management accounts. Each set of standards will have its guidance for applying a similar set of principles and some may point to others (i.e. section 11 of FRS102 says to use IFRS9 for certain financial instruments). IFRS actually consists of two parts - the IFRSs and IASs both of which must be applied. The individual standards making up each framework specify things like recognition criteria, intial and subsequent measurement, application guidance for edge cases etc. Once you choose a framework you need to use all the standards making up that framework.

thanks for that, much appreciated.

the firm i'm interviewing at is a subsidiary (ltd i think) of a large privately held german AG. so this probably means a set of accounts would need to be done for statutory purposes for the UK authorities, and one for the parent company for their own use.

the accounts for the UK authorities would have to comply with FRS102 (which is the new version of GAAP), which is similar to IFRS. IFRS is made up of both reporting standards (IFRS) and accounting standards (IAS). each of the standards making up the framework will have a set of guiding principles depending on the thing you account on and others like recognition of revenue etc. you cannot pick and choose standard you use - once you've picked one you have to follow all the guidance in the framework.

on the other hand, the reports and accounts to the parent in Germany are not governed by any standards and can be in any form you like.

does that sound right?

thanks again!

thanks for that, much appreciated.

the firm i'm interviewing at is a subsidiary (ltd i think) of a large privately held german AG. so this probably means a set of accounts would need to be done for statutory purposes for the UK authorities, and one for the parent company for their own use.


thanks again!