Accounting Standards Board

ASB Publishes 'One-Stop Shop' Standard for Smaller Entities

ASB PN 269

22 April 2005

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	FRSSE effective 1 January 2005


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The Accounting Standards Board (ASB) today published an update of its Financial Reporting Standard for Smaller Entities (FRSSE). It is effective for accounting periods beginning on or after 1 January 2005.

The FRSSE is based on the proposals set out in the November 2004 exposure draft and builds on the concept developed in the March 2004 discussion paper A ‘One-stop Shop’ FRSSE. It brings together in a single document the accounting standards and the accounting requirements of company law applicable to smaller companies.

This update also reflects the basic principles of FRS 5 Application Note G ‘Revenue recognition’; FRS 21 ‘Events after the balance sheet date’ (which supersedes the UK standard SSAP 17) and UITF Abstract 34 ‘Pre-contract costs’.

Announcing the publication, Ian Mackintosh, Chairman of the ASB, said:

“This latest version of the FRSSE reflects the strong demand from constituents for a ‘one-stop shop’ incorporating the accounting requirements of company law in addition to those derived from UK accounting standards. The overwhelming view was that this would make the FRSSE even more useful to those preparing financial statements for smaller entities. I am grateful for the assistance provided by the ASB’s specialist Committee on Accounting for Smaller Entities (CASE) in developing the revised standard.”

Notes to Editors

The ASB is an operating board of the Financial Reporting Council (FRC). The FRC is a unified, independent regulator. Its mission is to promote confidence in corporate reporting and governance. The FRC incorporates five operating boards: the ASB, the Auditing Practices Board, the Financial Reporting Review Panel, the Accountancy Discipline and Investigation Board and the Professional Oversight Board for Accountancy.
The role of the ASB is to issue accounting standards. The ASB collaborates with accounting standard-setters from other countries and the International Accounting Standards Board (IASB) both in order to influence the development of international standards and in order to ensure that its standards are developed with due regard to international developments.
The ASB has up to ten Board members, of whom two (the Chairman and the Technical Director) are full-time, and the remainder, who represent a variety of interests, are part-time.
The ASB’s Committee on Accounting for Smaller Entities (CASE) was established in 1997. Its members have an interest in financial reporting in the smaller entity sector and include a cross-section of the financial community, including small practitioners (auditors), directors of small companies, investment bankers and lenders.
The FRSSE is an accounting standard that was developed specifically for smaller entities, by collecting together in one document and in simplified form the requirements from other accounting standards and UITF Abstracts that are applicable to smaller entities. It may be adopted by companies qualifying as small under companies legislation and by analogous bodies (at present, generally those entities with an annual turnover of less than £5.6 million). Smaller entities that elect to comply with the FRSSE are exempt from applying all other accounting standards and UITF Abstracts. Smaller entities that do not adopt the FRSSE remain subject to the full range of accounting standards and UITF Abstracts.
The FRSSE incorporates the accounting requirements of British company law with corresponding references to the legal requirements in Northern Ireland and the Republic of Ireland. References are also provided to legal requirements in the Republic of Ireland that are different or additional to those reflected in the FRSSE. The recent changes to the 1985 Companies Act affecting small companies’ accounts that come into force from 1 January 2005 have been reflected in the FRSSE and this has been a driver for the effective date of accounting periods beginning 1 January 2005.

In developing the FRSSE, the Board and CASE considered all the accounting standards and UITF Abstracts issued, or amended, between the last update and October 2004. These are as follows:

		Issue date
Amendment to FRS 17	Retirement Benefits and FRSSE (effective June 2002)	November 2002
Amendment to FRS 5	Reporting the Substance of Transactions Application Note G: Revenue Recognition	November 2003
FRS 20*	Share-based Payment	April 2004
FRS 21	Events After the Balance Sheet Date	May 2004
UITF Abstract 31	Exchanges of business or other non-monetary assets for an interest in a subsidiary, joint venture or associate	October 2001
UITF Abstract 32	Employee benefit trusts and other intermediate payment arrangements	December 2001
UITF Abstract 33	Obligations in capital instruments	February 2002
UITF Abstract 34	Pre-contract costs	May 2002
UITF Abstract 35	Death-in-service and incapacity benefits	May 2002
UITF Abstract 36	Contracts for sales of capacity	March 2003
UITF Abstract 37	Purchases and sales of own shares	October 2003
UITF Abstract 38	Accounting for ESOP trusts	December 2003

* The requirements of FRS 20 are not reflected in this version of the FRSSE, consistent with the delayed implementation date in FRS 20 for unlisted entities. Taking account of respondents’ comments, the Board intends to consult on introducing specific requirements from FRS 20 in a future update.

The Financial Reporting Standard for Smaller Entities (effective January 2005) is available free of charge from the ASB’s website at: www.frc.org.uk/asb/technical/frsse.cfm. Hard copies are available, price £10.00 (post-free) from ASB Publications, 145 London Road, Kingston Upon Thames, Surrey, KT2 6SR (020 8247 1264). Web: www.asbpublications.com.
Press enquiries should be directed to: Andrew Lennard (Technical Director) 020 7492 2430 or Duncan Russell (Project Director) 020 7492 2421.