Amendments to the FRSSE (effective April 2008) and the FRSSE (effective January 2015) - Micro-entities
On 29 April 2014 the FRC issued amendments to the FRSSE for use by micro-entities that want to take advantage of new regulations allowing them to prepare simplified financial statements.
Amendments to the FRSSE - Micro-entities
Editorial correction – November 2014
FRSSE (effective April 2008) and the FRSSE (effective January 2015)
The April 2014 amendments to the FRSSE (effective April 2008) and the FRSSE (effective January 2015) to incorporate the micro-entities regime included the requirement for micro-entities to account for investment properties using historical cost, in accordance with the legal framework for micro-entities. However, paragraph 1.2 of the FRSSE (effective April 2008) and the FRSSE (effective January 2015) may appear unclear in relation to the application of depreciation and impairment as part of the cost method.
Paragraph 1.2 of the FRSSE (effective April 2008) and of the FRSSE (effective January 2015) is amended as follows (deleted text is struck through, inserted text is underlined):
1.2 A micro-entity preparing its financial statements in accordance with section 393(1A) of the Act:
(d) shall account for any investment properties at cost less depreciation and impairment in accordance with paragraphs 6.19 to 6.22, paragraphs 6.38 to 6.42 and paragraphs 6.45 to 6.46 and 6.48 rather than paragraphs 6.18, 6.37, 6.44 and 6.50 to 6.53;
FRSSE (effective January 2015)
On 31 July 2013 the FRC issued an updated version of the Financial Reporting Standard for Smaller Entities.
FRSSE (effective January 2015
FRS 100 Application of Financial Reporting Requirements
, issued in November 2012, contained a small number of amendments to the FRSSE. As a convenience to those preparing small company accounts, the FRC has issued an updated version of the FRSSE containing those amendments, to maintain it as a one-stop-shop. The updated FRSSE contains no new amendments to those previously issued.
The amendments to the FRSSE are as a consequence of the revised reporting framework introduced into the UK and Republic of Ireland, with the issue of FRS 100 and FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland
. As part of the revised reporting framework, the FRC has withdrawn extant financial reporting standards and Urgent Issues Task Force (UITF) abstracts and has made amendments to the FRSSE where it previously referred to standards or abstracts that are now withdrawn.
The FRSSE (effective January 2015) will supersede the FRSSE (effective April 2008) and will be effective for reporting periods beginning on or after 1 January 2015, although early adoption is permitted.
FRSSE (effective April 2008)
The ASB published in June 2008 an updated version of the Financial Reporting Standard for Smaller Entities. (FRSSE) to reflect changes in company law arising from the Companies Act 2006. No changes were made to the requirements that are based upon Generally Accepted Accounting Practice.
The updated FRSSE (effective April 2008) applies to accounting periods beginning on or after 6 April 2008; the date from which the accounting and reporting regime for smaller companies in the Companies Act 2006 becomes effective. Early adoption is not permitted; hence smaller companies should continue to use the FRSSE (effective January 2007) for earlier accounting periods.
The FRSSE (effective April 2008) is available for download below.
FRSSE (effective April 2008)
To find out how to obtain a hard copy of the FRSSE go to www.frcpublications.com
Editorial correction – March 2013
It has been brought to our attention that, in referring to the small companies regime, the footnote to paragraph 2.6 and paragraph 2.30 of the FRSSE (effective April 2008) are not consistent with the wording of the Companies Act 2006 (the Act). The footnote to paragraph 2.6 has been amended as part of the FRSSE (effective January 2015), as set out in FRS 100 Application of Financial Reporting Requirements
. For consistency with the Act paragraph 2.30 should be read as follows (deleted text is struck through, inserted text is underlined):
2.30 A COMPANY’S ANNUAL ACCOUNTS MUST BE APPROVED BY THE BOARD OF DIRECTORS AND SIGNED ON BEHALF OF THE BOARD BY A DIRECTOR OF THE COMPANY. THE SIGNATURE MUST BE ON THE COMPANY’S BALANCE SHEET. The date on which the financial statements are approved by the board of directors
shall be disclosed in the financial statements. THE BALANCE SHEET MUST CONTAIN, IN A PROMINENT POSITION ABOVE THE SIGNATURE, A STATEMENT THAT THE ACCOUNTS HAVE BEEN PREPARED IN ACCORDANCE WITH THE
PROVISIONS APPLICABLE TO SMALL COMPANIES WITHIN
PART 15 OF THE COMPANIES ACT 2006
RELATING TO SMALL COMPANIES
To make the FRSSE a more manageable document, it no longer includes derivation tables in the Appendices. Instead, derivation information in respect of accounting standards and legislation is available for download below.
Derivation tables in respect of accounting standards
Derivation tables in respect of legislation
Background to FRSSE
The updated FRSSE (effective April 2008) includes at Appendix IV information on the development of the FRSSE. Prompted by concerns to reduce burdens on business, the ASB asked the Consultative Committee of Accountancy Bodies (CCAB) to establish a Working Party to examine the application of accounting standards for smaller companies. The CCAB Working party published a Consultative Document in 1994 and then in December 1995 Paper recommended in its Paper “Designed to fit” that there should be a specific Financial Reporting Standard for Smaller Entities.
The ASB, largely accepting the CCAB Working Party’s recommendations, duly published an Exposure Draft of the proposed FRSSE in 1996 which led to the issue of the FRSSE in November 1997. The FRSSE (effective April 2008) is the fifth update of the FRSSE with details of the changes made for each update included in Appendix IV.
The FRSSE brings together the relevant accounting requirements and disclosures from the other accounting standards and UITF Abstracts, simplified and modified as appropriate for smaller entities. The basic measurement requirements in the FRSSE are the same as those in other accounting standards (although with some slight simplifications), but many of the disclosure and presentation requirements of other standards have not been included in the FRSSE.
The FRSSE is a standard that may be applied by companies that qualify as small under the Companies Act and other entities that would have qualified as ’small’ had they been incorporated. TheCompanies Act definition of ’small’ encompasses most companies with an annual turnover of up to £6.5 million. This represents a 20 per cent increase on the threshold that was in place for the FRSSE (effective January 2007). Entities adopting the FRSSE are exempt from applying all other accounting standards and UITF Abstracts. This considerably reduces the volume of accounting standards those entities need to comply with or refer to. However, it remains open to them to choose not to adopt the FRSSE and to comply with the other UK accounting standards and UITF Abstracts instead or, if they are companies, international accounting standards.
Further information on the future of the FRSSE can be found here