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FRC - New accounting standards offer simplification for micro-entities and small entities

The Financial Reporting Council (FRC) yesterday issued a suite of changes that update and, in many cases simplify, UK and Ireland accounting standards. 

Key amongst the changes are new requirements for micro-entities and small entities, and the withdrawal of the Financial Reporting Standard for Smaller Entities (FRSSE).

The changes are largely in response to the implementation of the new EU Accounting Directive, and include: 

  • a new standard, FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime;
  • new Section 1A Small Entities of FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland; and
  • other changes necessary for continued compliance with company law.​

Melanie McLaren, Executive Director of Codes and Standards said:

“These new accounting standards support the implementation of the micro-entities regime, further simplifying accounting requirements for up to 1.5 million of the UK’s smallest entities. They also respond to the new legal framework for disclosure in small company reporting, providing guidance for applying it and improving transparency relating to financial instruments, and they further improve the cost-effective reduced disclosure framework for listed groups by permitting IFRS-based presentation requirements in subsidiaries’ financial statements.”

Changes made also relate to the annual review of FRS 101 Reduced Disclosure Framework and address an implementation issue in relation to FRS 102.

The main changes are effective for accounting periods beginning on or after 1 January 2016, with early application permitted for accounting periods beginning on or after 1 January 2015.

Notes to editors:

1.   The FRC is responsible for promoting high quality corporate governance and reporting to foster investment.  We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work.  We represent UK interests in international standard-setting.  We also monitor and take action to promote the quality of corporate reporting and auditing.  We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.

2.   The changes to accounting standards issued are:

a)   Amendments to FRS 100 Application of Financial Reporting Requirements;
b)   Amendments to FRS 101 Reduced Disclosure Framework – 2014/15 cycle and other minor amendments;
c)   Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland – Small entities and other minor amendments; and
d)   FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime.

3.   Also issued is an Overview of the financial reporting framework which describes the financial reporting framework applicable for accounting periods beginning on or after 1 January 2016.  It includes key differences between the FRSSE and the new requirements set out in FRS 105 and Section 1A of FRS 102.

4.   In September 2015 the FRC is expected to issue revised editions of FRS 100 Application of Financial Reporting Requirements, FRS 101 Reduced Disclosure Framework and FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.  These will reflect the changes issued today and any other changes made since the current editions were published.

5.   These proposals were consulted on in a series of FREDs and a Consultation Document.   Most of which were issued during the last year.  An accompanying Impact Assessment and Feedback Statement, covering all the changes and all the consultations are also issued.

6.   In the UK the new EU Accounting Directive was implemented in The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 (SI 2015/980).  In the Republic of Ireland, the Department of Jobs, Enterprise and Innovation has consulted on the implementation of the new EU Accounting Directive, but final legislation is pending.

7.   All Press enquiries should be directed to:

  • Peter Timberlake, Head of Communications on telephone: 020 7492 2397/07768 502332, or email p.timberlake@frc.org.uk
  • Sophie Broom, Communications Manager, on telephone: 020 7492 2395/07845 947902 or email: s.broom@frc.org.uk
  • Rita Carolan, Communications Officer on telephone: 020 7492 2307/07428 149096 or email: r.carolan@frc.org.uk  

Attachments:

https://www.frc.org.uk/Our-Work/Publications/Accounting-and-Reporting-Policy/Amendments-to-FRS-100-Application-of-Financial-Re.pdf

https://www.frc.org.uk/Our-Work/Publications/Accounting-and-Reporting-Policy/Amendments-to-FRS-101-Reduced-Disclosure-Framewor.pdf

https://www.frc.org.uk/Our-Work/Publications/Accounting-and-Reporting-Policy/Amendments-to-FRS-102-The-Financial-Reporting-Sta.pdf

https://www.frc.org.uk/Our-Work/Publications/Accounting-and-Reporting-Policy/FRS-105-The-Financial-Reporting-Standard-applicab.pdf

https://www.frc.org.uk/Our-Work/Publications/Accounting-and-Reporting-Policy/Impact-Assessment-and-Feedback-Statement-Amendmen.pdf

https://www.frc.org.uk/Our-Work/Publications/Accounting-and-Reporting-Policy/Overview-of-the-financial-reporting-framework.pdf

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