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Impact Assessment – Amendments to FRS 102 and FRS 105 – Irish company size thresholds (August 2024)
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© The Financial Reporting Council Limited 2024
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1. Executive Summary
iThe Financial Reporting Council's (FRC) overriding objective in setting accounting standards is to enable users of accounts to receive high-quality understandable financial reporting proportionate to the size and complexity of the entity and users' information needs.
iiIn June 2024, the European Union (Adjustments of Size Criteria for Certain Companies and Groups) Regulations 2024 (SI No. 301 of 2024) were made in Ireland. These regulations increase certain monetary thresholds that form part of the company size criteria.
iiiIn August 2024, the FRC issued Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime – Irish company size thresholds, to update references in those standards to the Irish company size thresholds. This Impact Assessment accompanies those amendments.
ivThe FRC believes that the amendments to UK and Republic of Ireland accounting standards are necessary for consistency with Irish company law following changes in legislation.
2. Introduction and background
1The purpose of the FRC 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.
2The FRC's overriding objective in setting accounting standards is to enable users of accounts to receive high-quality understandable financial reporting proportionate to the size and complexity of the entity and users' information needs.
3FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland is a general-purpose financial reporting standard available for use by micro-entities and small companies, as well as larger entities, in the UK and Republic of Ireland. FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime is a general-purpose financial reporting standard available for use by micro-entities, in the UK and Republic of Ireland.
4In June 2024, the European Union (Adjustments of Size Criteria for Certain Companies and Groups) Regulations 2024 (SI No. 301 of 2024) were made in Ireland. These regulations transpose Commission Delegated Directive (EU) 2023/2775 into Irish law, increasing the turnover and balance sheet total thresholds that form part of the company size criteria.
5In August 2024, the FRC issued Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime – Irish company size thresholds, to update references in those standards to the Irish company size thresholds.
3. Impact Assessment
6The 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.
Amendments to FRS 102 and FRS 105
7The amendments update UK and Republic of Ireland accounting standards for changes in Irish company law following the European Commission's decision to increase the company size thresholds applicable to micro-entities, small, medium-sized and large companies. As the amendments reflect changes in Irish company law, they are not expected to introduce changes in financial reporting other than when required or permitted by that law. These amendments should have no practical impact on entities in the UK.
8Assessing the impact of the decision to amend legislation to increase the size thresholds was a matter for the European Commission and hence no further impact assessment has been prepared by the FRC in this respect.
9The FRC believes it is important that the financial reporting standards are updated in a timely manner to reflect these factual changes in legislation.
Conclusion
10The FRC believes that the amendments to UK and Republic of Ireland accounting standards are necessary for consistency with Irish company law following changes in legislation.
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