Management: Setting the standard
While the Accounting Standards Board's application note G has the potential to have a massive impact on the way law firm accounts are managed, its full implications are as yet unclear. George Bull reports
On 13 November, 2003, the Accounting Standards Board (ASB) issued application note G (ANG 5) to Financial Reporting Standard 5 (FRS5). While application note G was ostensibly intended to decelerate revenue recognition in certain business sectors, some interpreted ANG 5 as having the potential effect of advancing the recognition of taxable income for professional services, sometimes materially. ANG 5 affects accounting periods ending after 22 December, 2003, including many accounts ending up to 5 April, 2004, which will form the basis of tax returns to be filed no later than 31 January, 2005. With that deadline now looming, there is a pressing need for a clear interpretation of ANG 5.
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