View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Technology
December 15, 1997updated 03 Sep 2016 4:45pm


By CBR Staff Writer

Two new pronouncements from the UK’s Accounting Standards Board (ASB) due out next year will force companies to account properly for the cost of year 2000 compliance and many listed companies will be forced to restate their results. Due out in January 1998 is a new rule from the ASB’s Urgent Issues Task Force which will prevent companies from erroneously capitalizing the costs of year 2000 work, and thus boosting short term earnings. And by the Summer of next year, FRS 14 Provisions and Contingencies, will put a stop to the so called big bath provisions where companies make inflated, one-off charges for future costs in the hope of shielding long term earnings figures. The ASB has been aggressively targeting the more dubious accounting practices in the UK for some time, with its chairman Sir David Tweedie masterminding a flurry of detailed accounting standards over the last few years. But FRS 14, currently in draft format, is likely to be the standard with the furthest reaching consequences for companies with large year 2000 compliance problems. In essence, FRS 14 will force companies to charge the costs of compliance work to the profit and loss account in each and every period in which the work is performed, thus disallowing attempts to write off the whole expense in one isolated charge. Companies generally prefer the latter approach because the costs can be flagged as exceptional and earnings figures can be quoted before one off year 2000 costs; the company takes a so called big bath. Although the new standard will not be mandatory for companies reporting before next summer, the standard will apply retrospectively to all prior accounting periods. Companies which have already taken their bath will have to get wet all over again as they restate their results.

Content from our partners
Green for go: Transforming trade in the UK
Manufacturers are switching to personalised customer experience amid fierce competition
How many ends in end-to-end service orchestration?

Websites in our network
Select and enter your corporate email address Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
  • CIO
  • CTO
  • CISO
  • CSO
  • CFO
  • CDO
  • CEO
  • Architect Founder
  • MD
  • Director
  • Manager
  • Other
Visit our privacy policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.