CFM22020 - Accounting for corporate finance: UK GAAP before 1 January 2005: lenders: accounting standards

Overview of accounting guidance

There is no single accounting standard that lenders will follow when accounting for loans and other debt instruments.

For all accounting periods beginning before 1 January 2005, the principal Accounting Standards which were likely to be relevant to determining the accounting for loan relationships were:

• FRS 4 ‘Capital Instruments’
• FRS 5 ‘Reporting the substance of transactions’
• FRS 18 ‘Accounting policies’

With effect for accounting periods beginning on or after 1 January 2005, a number (but not all) of the requirements set out in FRS 4 were replaced by FRS 25 ‘Financial Instruments: Presentation’ (see CFM22030).

Members of the British Bankers' Association should also apply the Statements of Recommended Practice (SORPs) on Advances and Securities issued by that Association and dealing with loan transactions in the specific case of banking institutions.

Members of the Association of British Insurers should also apply the SORP 'Accounting for insurance business' issued by that organisation.