Other issues to consider
Changes to the presentation of financial statements data will impact on bank covenants. Managing banking relationships will be important to come to a satisfactory agreement on covenant definitions. Banks may be less open to carve out accounting changes in the new banking environment as they once did when FRS17 was introduced.
"Explaining underlying performance to stakeholders – senior teams and Council – will be more challenging"
When FRS17 was introduced many HEIs discounted it from their narrative performance reports as if it wasn’t real accounting. We won’t be able to do that to FRS102 as the changes are all pervasive – but nor should we attempt to do that. Instead we may have to develop new KPIs that better reflect recurrent performance, such as cash generation.
Finally, the implementation of the changes will require resources – for planning, and training to equip finance staff in implementing the changes, in good time to construct prior year figures, propose accounting policy changes and change internal procedures were necessary. Falling short in this task is not an option if qualified audit reports or damaging external audit management letters are to be avoided.