The new UK accounting rules, which represent the most significant change in reporting standards for 30 years, could have a major impact on how the motor retail sector presents its financial results, according to accounts and business advisers BDO LLP.
The new FRS102 accounting rules will replace the existing UK GAAP framework in January 2015.
Comparative results for the 2014 financial year will have to be restated using the new standards and, as a result, certain additional information will need to be obtained as at December 31, 2013 to ensure the comparative results can be correctly converted.
Steve Le Bas, a motor retail specialist and director at BDO, said: “The move to FRS102 is the most fundamental change to accounting regulations in a generation, so motor retailers need to be prepared.
“The changes are more than just cosmetic - we expect that reporting under FRS 102 will not only change reported profits and net assets but could also result in increased volatility in reported earnings.
“Looking behind the headline numbers, companies could also find that the new rules affect tax payments, compliance with banking covenants, director and staff bonus schemes, and ability to pay dividends.
“This starts to give you an idea of how much work needs to be done to implement FRS102.
"It’s not just about getting the reporting mechanisms in place; a significant part of the project will involve managing the changes with all of the affected stakeholders, including banks, manufacturers, shareholders and employees.
“Although the new regulations don’t come into force until January 1, 2015, companies need to start getting ready now to ensure that all of the relevant information is collected and the impact has been communicated with affected parties.”
> Background material on FRS102.