Companies in the North West that have not started preparing for what has been described by the Institute of Chartered Accountants (ICAEW) as ‘the biggest change in UK financial reporting in a generation’ should do so now to avoid administrative headaches when they compile their annual accounts in 2016, according to Suzanne Robinson, EY’s Financial Accounting Advisory Services Leader in the North of England.

There are a number of different frameworks available under the new UK Generally Accepted Accounting Principles (GAAP) regime, and companies need to invest time and effort to ensure they transition to the right one for them.

The rules, which apply to statutory accounts for company reporting periods beginning on or after 1 January 2015 and are designed to move UK company accounting to be more in line with international accounting principles, will first affect most private businesses when firms produce their next accounts in 2016.

For the first companies to be affected – whose year ends fall in December – there are only four months left to prepare. EY Partner Suzanne Robinson has urged North West businesses that have not started planning for the new UK GAAP regime to do so now.

Suzanne said: “While many of the companies we’ve met in the North West are ready or almost ready, others still haven’t started planning for the new rules. Moving to the new regime could mean investment in time and resources.

“There is a real possibility of changes to the amount of tax a company pays or indeed their ability to pay dividends, and time is running out for businesses to plan properly.

“The first step for companies should be working out how the changes will impact them by identifying the differences between the way they currently report and the way they will need to report under the new rules.”

20% of companies that took part in a recent EY webcast poll were yet to decide which framework they will adopt, while two thirds of respondents had not started identifying the differences between their current reporting and how they will need to report under a new framework.

Suzanne commented: “Once they’ve chosen the framework they plan to use, businesses will need to think about how they collect and analyse data, and present that information in their financial statements.

“Alongside differences in how North West companies report their financial results, the new rules could also mean changes to software and processes, require staff training and impact the way regional businesses share financial information with their fellow group companies.”

Suzanne concluded: “Firms in the North West that haven’t already addressed their new UK GAAP requirements should act fast. Even in the simplest companies there are likely to be implications, so failing to make the necessary preparations now could give finance departments a real headache next year.”