FRS 102 vs. German Gaap

Attribute	FRS 102	German Gaap
Scope	Applies to UK entities	Applies to German entities
Financial Statements	Balance sheet, income statement, cash flow statement, statement of changes in equity	Balance sheet, income statement, cash flow statement, notes to the financial statements
Measurement	Historical cost, fair value	Historical cost, fair value
Consolidation	Consolidation required for group entities	Consolidation required for group entities
Disclosure	Extensive disclosure requirements	Extensive disclosure requirements

Introduction

Financial Reporting Standards (FRS) 102 and German Generally Accepted Accounting Principles (Gaap) are two sets of accounting standards used by companies to prepare their financial statements. While both aim to provide a framework for financial reporting, there are key differences in their attributes that companies need to consider when deciding which set of standards to follow.

Scope and Applicability

FRS 102 is a set of accounting standards used in the UK and Ireland, while German Gaap is used in Germany. FRS 102 is applicable to all entities, regardless of size or industry, while German Gaap is primarily used by medium to large-sized companies. FRS 102 also includes specific sections for different types of entities, such as small entities and micro-entities, to provide tailored guidance.

Measurement and Recognition

FRS 102 allows for more flexibility in measurement and recognition compared to German Gaap. FRS 102 allows companies to choose between historical cost and fair value measurement for certain assets and liabilities, while German Gaap generally requires the use of historical cost. Additionally, FRS 102 includes more guidance on the recognition of intangible assets and revenue recognition compared to German Gaap.

Consolidation and Group Accounting

Both FRS 102 and German Gaap provide guidance on consolidation and group accounting, but there are differences in the requirements. FRS 102 requires entities to prepare consolidated financial statements if they have subsidiaries, while German Gaap has stricter criteria for consolidation, including control over the subsidiary's financial and operating policies. German Gaap also has specific rules for the treatment of minority interests in consolidated financial statements.

Disclosure Requirements

FRS 102 and German Gaap have different disclosure requirements for financial statements. FRS 102 includes specific disclosure requirements for certain transactions, such as related party transactions and financial instruments, while German Gaap has more general disclosure requirements. German Gaap also requires additional disclosures for certain industries, such as banks and insurance companies.

Audit and Assurance

Both FRS 102 and German Gaap require companies to have their financial statements audited by an independent auditor. However, there are differences in the audit requirements between the two sets of standards. FRS 102 includes specific requirements for the auditor's report, such as the need to report on the consistency of the financial statements with the underlying records, while German Gaap has more general requirements for the auditor's report.

Conclusion

In conclusion, FRS 102 and German Gaap are two sets of accounting standards with their own unique attributes. Companies need to carefully consider the scope, measurement and recognition, consolidation and group accounting, disclosure requirements, and audit and assurance requirements of each set of standards when deciding which one to follow. Ultimately, the choice between FRS 102 and German Gaap will depend on the specific needs and circumstances of the company, as well as any regulatory requirements that may apply.