The content on this page has been converted from PDF to HTML format using an artificial intelligence (AI) tool as part of our ongoing efforts to improve accessibility and usability of our publications. Note:
- No human verification has been conducted of the converted content.
- While we strive for accuracy errors or omissions may exist.
- This content is provided for informational purposes only and should not be relied upon as a definitive or authoritative source.
- For the official and verified version of the publication, refer to the original PDF document.
If you identify any inaccuracies or have concerns about the content, please contact us at [email protected].
Feedback Statement and Impact Assessment – Amendments to FRS 101 Reduced Disclosure Framework – 2025/26 cycle
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 2026
The Financial Reporting Council Limited is a company limited by guarantee. Registered in England number 2486368. Registered Office: 13th Floor, 1 Harbour Exchange Square, London, E14 9GE
Executive Summary
- The 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. FRS 101 'Reduced Disclosure Framework' is an optional reduced disclosure framework that is intended to enable cost-effective financial reporting within groups, particularly those applying IFRS Accounting Standards in their consolidated financial statements.
- In October 2025, the FRC issued FRED 88 'FRS 101 Reduced Disclosure Framework – 2025/26 cycle', which proposed no amendments to FRS 101 after considering developments in IFRS Accounting Standards in the year to 31 August 2025, notably 'Contracts Referencing Nature-dependent Electricity—Amendments to IFRS 9 and IFRS 7'. The FRC received 11 responses to FRED 88, from accountancy firms, accountancy professional bodies and a representative body of accountancy firms. The list of respondents is set out in Appendix A.
- All but one respondent agreed with the FRC's proposal not to amend FRS 101.
- In May 2026, the FRC issued 'Amendments to FRS 101 Reduced Disclosure Framework – 2025/26 cycle', finalising the proposals set out in FRED 88 and making limited drafting amendments.
- Overall, the FRC believes that FRS 101 will continue to have a positive impact on the cost-effectiveness of the preparation of financial statements.
1. Introduction and background
1The purpose of the FRC is to serve the public interest and support UK economic growth by upholding high standards of corporate governance, corporate reporting, audit and actuarial work.
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.
3The FRC issued FRED 88 FRS 101 Reduced Disclosure Framework – 2025/26 cycle on 1 October 2025, with the comment period closing on 16 January 2026.
4The FRC received 11 responses to FRED 88. Copies of the responses received to FRED 88 can be found on the FRC website, and a list of the respondents is set out in Appendix A.
5The table below sets out the number and category of respondents to the consultation.
| Category of respondent | Number |
|---|---|
| Accountancy firms | 7 |
| Accountancy professional bodies | 3 |
| Representative body of accountancy firms | 1 |
| Total | 11 |
2. Feedback Statement
Responses to the public consultation
6The purpose of this Feedback Statement is to summarise the comments received in response to FRED 88, and the FRC's response to them.
7In analysing the responses, judgement has been applied in categorising the comments.
8FRED 88 posed two questions. The feedback and the FRC's response are summarised below.
Question 1: No amendments proposed to FRS 101
Do you agree that no amendments are required to FRS 101 in this cycle? Why or why not?
| Category of response | Number |
|---|---|
| Agreed | 10 |
| Disagreed | 1 |
| Total | 11 |
9The FRC proposed in FRED 88 not to amend FRS 101 in relation to 'Contracts Referencing Nature-dependent Electricity—Amendments to IFRS 9 and IFRS 7'. All but one respondent agreed with the proposal not to amend FRS 101. The respondent who disagreed noted that FRS 101 does not permit financial institutions to take exemption from any disclosure requirements of IFRS 7 'Financial Instruments: Disclosures', and that this reflects the fact that financial instruments are a significant part of the business of financial institutions. The respondent commented that in contrast, contracts referencing nature-dependent electricity are not expected to be a significant part of the business of financial institutions, but may be a significant part of the business of non-financial institutions. The respondent stated that FRS 101 should not differentiate between financial institutions and non-financial institutions with respect to contracts referencing nature-dependent electricity, and specified that their preferred option was for the FRC to extend a disclosure exemption to all qualifying entities.
FRC response
10The FRC has proceeded with its proposal to make no amendments to FRS 101 in relation to this topic. The extant requirements of FRS 101 mean that a qualifying entity that is a financial institution will be required to make disclosure about contracts referencing nature-dependent electricity; if it has no such contracts, it will have nothing to disclose in this respect.
Question 2: Consultation stage impact assessment
Do you agree with the conclusion in the consultation stage impact assessment? Why or why not?
| Category of response | Number |
|---|---|
| Agreed | 4 |
| Did not comment | 7 |
| Total | 11 |
11All respondents that commented on the consultation stage impact assessment agreed with the conclusion.
FRC response
12The FRC has considered these responses in finalising the Impact Assessment.
3. Impact Assessment
Introduction
13The 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.
14Because FRS 101 is an optional standard that is intended to enable cost-effective financial reporting within groups, it is only expected to be applied by those qualifying entities that consider it a cost-effective option.
15FRS 101 requires an entity to apply IFRS Accounting Standards that have been adopted in the relevant jurisdiction, subject to specified disclosure exemptions. This approach helps to enable cost-effective financial reporting within groups because those entities would be likely to have to prepare information in accordance with those standards for the group accounts and therefore alignment may minimise costs compared to preparing different information for individual accounts.
16Without intervention to amend FRS 101, an entity applying FRS 101 would need to provide all the disclosures required by any new IFRS Accounting Standard, or amendment to an IFRS Accounting Standard, adopted in the relevant jurisdiction.
17In developing financial reporting standards, the overriding objective of the FRC 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. The FRC continues to believe that qualifying entities usually have few users of their financial statements, and particularly few users that would be external to the group that the qualifying entity is part of. Any external users are likely to be providers of credit to the qualifying entity whose interest is generally likely to be focused on information about the liquidity and solvency of the qualifying entity.
Amendments to FRS 101
18The FRC reviewed all new standards and amendments issued by the International Accounting Standards Board (IASB)1 in the year to 31 August 2025:
- Contracts Referencing Nature-dependent Electricity—Amendments to IFRS 9 and IFRS 7; and
- Amendments to IFRS 19 Subsidiaries without Public Accountability: Disclosures.
19As a result of that review:
- limited drafting amendments were made to FRS 101, but no amendments were made in relation to the amendments issued by the IASB; and
- the extant exemption (except for financial institutions) from the requirements of IFRS 7 (provided that equivalent disclosures are included in the consolidated financial statements of the group in which the entity is consolidated) will apply automatically to the new disclosure requirements in that standard about contracts referencing nature-dependent electricity.
Impact of amendments
20When the requirements of 'Contracts Referencing Nature-dependent Electricity' are effective, a qualifying entity applying FRS 101 will need to determine whether it is party to contracts referencing nature-dependent electricity. If it is, it will be able to apply the changes relating to the scope of the 'own-use' exemption and to the hedge accounting requirements of IFRS Accounting Standards.
21The FRC's decision not to change the extant exemptions from disclosure requirements in IFRS 7 will mean that a qualifying entity which is a financial institution will be required to make the disclosures about its contracts referencing nature-dependent electricity (if any), but a qualifying entity which is not a financial institution will not (provided that equivalent disclosure is provided in the consolidated financial statements).
22Accordingly, the FRC expects this decision to result in no incremental cost to preparers. By maintaining the extant exemptions from IFRS 7 disclosure requirements, costs to preparers applying FRS 101 are expected to be reduced compared with preparers applying IFRS Accounting Standards, which is consistent with the objective of FRS 101.
23While there are expected to be few users of FRS 101 financial statements, the FRC anticipates some reduction in useful information, compared with the information that would have been provided had no exemption from the new disclosure requirements been available. However, the FRC has no evidence for how prevalent contracts referencing nature-dependent electricity are among FRS 101 preparers, nor how significant information about such contracts is to users of FRS 101 financial statements.
24The drafting amendments are expected to have a minor positive impact by providing clearer requirements, making FRS 101 easier for preparers to apply.
Conclusion
25Overall, the FRC believes that FRS 101 will continue to have a positive impact on the cost-effectiveness of the preparation of financial statements.
Appendix A: List of respondents to consultation
- PricewaterhouseCoopers LLP
- KPMG LLP
- Deloitte LLP
- Ernst & Young LLP
- ICAS
- Chartered Accountants Ireland
- ICAEW
- Grant Thornton UK LLP
- Forvis Mazars LLP
- Price Bailey LLP
- The Association of Practising Accountants
Financial Reporting Council
London office:
13th Floor, 1 Harbour Exchange Square,
London, E14 9GE
Birmingham office:
5th Floor, 3 Arena Central, Bridge Street,
Birmingham, B1 2AX
+44 (0)20 7492 2300
Follow us on LinkedIn