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FRS 101 Feedback Statement
Financial Reporting Council
The FRC's purpose is to serve the public interest by setting high standards of corporate governance, reporting and audit and by holding to account those responsible for delivering them. The FRC sets the UK Corporate Governance and Stewardship Codes and UK standards for accounting and actuarial work; monitors and takes action to promote the quality of corporate reporting; and operates independent enforcement arrangements for accountants and actuaries. As the Competent Authority for audit in the UK the FRC sets auditing and ethical standards and monitors and enforces audit quality.
The FRC does not accept any liability to any party for any loss, damage or costs howsoever arising, whether directly or indirectly, whether in contract, tort or otherwise from any action or decision taken (or not taken) as a result of any person relying on or otherwise using this document or arising from any omission from it.
© The Financial Reporting Council Limited 2021 The Financial Reporting Council Limited is a company limited by guarantee. Registered in England number 2486368. Registered Office: 8th Floor, 125 London Wall, London EC2Y 5AS
Overview
iIn May 2021, FRS 101 Reduced Disclosure Framework was amended by Amendments to FRS 101 – 2020/21 cycle. This Impact Assessment and Feedback Statement accompanies those amendments, which arose as a result of the annual review of FRS 101.
iiThe Impact Assessment and Feedback Statement:
- sets out the Impact Assessment for these amendments, after taking account of respondents' comments on the Consultation stage impact assessment; and
- summarises the six responses received to FRED 77 Draft amendments to FRS 101 – 2020/21 cycle and the FRC's response to them.
Impact Assessment
Introduction
1The Financial Reporting Council (FRC) is committed to a proportionate approach to the use of its powers, making effective use of impact assessments and having regard to the impact of regulation on small enterprises.
2FRS 101 Reduced Disclosure Framework is an optional standard that is intended to enable cost-efficient financial reporting within groups, particularly those applying adopted IFRS in their consolidated financial statements. Therefore, it is only applied by those qualifying entities that consider it a cost-effective option for the preparation of their individual financial statements.
3FRS 101 requires an entity to apply adopted IFRS subject to specified disclosure exemptions. Therefore, without intervention to amend FRS 101, an entity applying FRS 101 would need to provide all the disclosures required by any new IFRS or amendments to existing standards issued.
Amendments to FRS 101
4The amendments to FRS 101 provide exemptions from certain of the disclosures that would otherwise be required by IAS 16 Property, Plant and Equipment, and are therefore expected to reduce the cost of compliance with FRS 101.
Conclusion
5Overall, the FRC believes that the amendments to FRS 101 will have a positive impact on the cost-effectiveness of the preparation of the financial statements.
Feedback Statement
6The purpose of this Feedback Statement is to summarise the comments received in response to FRED 77 Draft amendments to FRS 101 – 2020/21 cycle. FRED 77 was issued in November 2020 and the comment period closed on 28 February 2021.
7The table below shows the number of respondents and analyses them by category.
| No. of respondents | |
|---|---|
| Accountancy firms | 4 |
| Accounting professional bodies | 2 |
| 6 |
8FRED 77 posed three questions, and the feedback and FRC response to them are summarised below.
Question 1
Do you agree with the proposed amendments to FRS 101? If not, why not?
| Table 2: Respondents' views on Question 1 | No. of respondents |
|---|---|
| Agreed | 5 |
| Agreed, with recommendations for improvement | 1 |
| Disagreed | – |
| 6 |
9All respondents agreed with the proposed amendments. One respondent recommended that the effective date of the proposed amendments be shown separately.
FRC response
10After considering the response to Question 1, the FRC has proceeded with the proposed amendments.
11No amendment has been made for the effective date of the amendments. Paragraph 8 notes that the disclosure exemptions provided are available from when the relevant standard is applied. Therefore, a qualifying entity may take advantage of the exemption introduced by paragraph 8(iA) from when Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) is applied. Similarly, the amendments to paragraph AG1(h) of FRS 101 apply from when Classification of Liabilities as Current or Non-current (Amendments to IAS 1) is applied.
Question 2
Do you agree that no other amendments to FRS 101 are required for the other IASB projects outlined in paragraph 7 of the Basis for Conclusions?
In particular, do you agree that an exemption should not be provided from the disclosure requirements introduced by Covid-19-Related Rent Concessions (Amendments to IFRS 16)?
| Table 3: Respondents' views on Question 2 | No. of respondents |
|---|---|
| Agreed | 4 |
| Disagreed | – |
| Did not comment | 2 |
| 6 |
12All respondents commenting agreed that no other amendments to FRS 101 were required for the other IASB projects completed since the last annual review of FRS 101. These respondents also agreed that an exemption should not be provided from the disclosure requirements introduced by Covid-19-Related Rent Concessions (Amendments to IFRS 16).
FRC response
13No amendments have been made to FRS 101 for these IASB projects, which have been added to Table 2 of the Basis for Conclusions FRS 101 Reduced Disclosure Framework.
Question 3
In relation to the Consultation stage impact assessment, do you have any comments on the costs and benefits identified? Please provide evidence to support your views.
| Table 4: Respondents' views on Question 3 | No. of respondents |
|---|---|
| Agreed | 1 |
| Disagreed | – |
| Did not comment1 | 5 |
| 6 |
14All but one respondent did not comment on the Consultation stage impact assessment. The respondent commenting agreed with the conclusion that the proposed amendments will have a positive impact on the cost-effectiveness of the preparation of the financial statements.
Other issue – UK exit from the European Union
15Overall, the FRC believes that the amendments to FRS 101 will have a positive impact on the cost-effectiveness of the preparation of the financial statements.
16Two respondents' comments related to the amendments made to FRS 101 in December 2020 for changes in UK company law following the UK exit from the European Union2.
17One respondent noted that the amendments to the Basis for Conclusions would have to reflect the terminology now used in FRS 101 as a consequence of these amendments. Another respondent recommended that the FRC issue a new edition of FRS 101 which reflects all amendments made prior to these amendments.
FRC response
18The amendments to the Basis for Conclusions reflect the amendments made to FRS 101 in December 2020 for changes in UK company law following the UK exit from the European Union.
19The next edition of FRS 101 will reflect all amendments made since the last edition issued in March 2018 and provide a single up-to-date reference point for the standard.
Contact Information
Financial Reporting Council 8th Floor 125 London Wall London EC2Y 5AS +44 (0)20 7492 2300 www.frc.org.uk