FRS 3 Reporting Financial Performance

FRS 3 (October 1992) (PDF)

Amendment to FRS 3 (March 1999) (PDF)

FRS 3 was effective for accounting periods ending on or after 22 June 1993. It was withdrawn for accounting periods beginning on or after 1 January 2015, when FRS 102 became effective. 

FRS 3 has changed the way in which performance is reported. Its objective is to require entities to highlight a range of important components of financial performance to aid users in understanding the performance achieved by the entity in a period and to assist them in forming a basis for their assessment of future results and cash flows.

The standard requires a layered format for the profit and loss account to highlight a number of important components of financial performance:

  1. results of continuing operations (including acquisitions);
  2. results of discontinued operations;
  3. profits and losses on the sale or termination of an operation, costs of a fundamental reorganisation or restructuring and profits or losses on the disposal of fixed assets; and
  4. extraordinary items.

The effect of the standard has been effectively to outlaw extraordinary items. If any were to arise, the standard requires them to be included in the earnings figure used to calculate earnings per share;

The standard also requires a statement of total recognised gains and losses to be shown. This is a primary financial statement that includes the profit or loss for the period together with all movements in reserves reflecting recognised gains and losses attributable to shareholders.

A note of historical profits, which is a memorandum item, is also required. The purpose of this note is to present the profits or losses of entities that have revalued assets on a more comparable basis with those of entities that have not.