FRC proposes to simplify accounting for smaller businesses

News types: Codes and Standards Announcements, Consultation Announcement

Published: 10 December 2013

PN 104 The FRC has today issued for consultation proposals to amend the Financial Reporting Standard for Smaller Entities (FRSSE) to reflect new legislation, introduced by BIS in November 2013, applicable to the UK’s smallest companies, known as micro-entities. Micro-entities are now able to prepare more simplified financial statements with fewer disclosure notes.

Roger Marshall, FRC Board member and Chair of the Accounting Council said:

“The FRC is proposing these amendments to allow micro-entities taking advantage of the new legal provisions, which permit reduced disclosure, to continue to apply the accounting principles of the FRSSE. This will ease the burden considerably on the UK’s 1.56 million smallest companies, many of which offer unique, specialist services and include the types of business the government sees as critical to the UK’s future economic growth.”  

The FRC invites comments on these proposals, which are set out in FRED 52 Draft Amendments to the Financial Reporting Standard for Smaller Entities (effective April 2008) – Micro-entities.  The comment period closes on 12 February 2014.

The Exposure Draft is available in hard copy at FRC Publications .

Notes to editors:
  1. The FRC is responsible for promoting high quality corporate governance and reporting to foster investment.  We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work.  We represent UK interests in international standard-setting.  We also monitor and take action to promote the quality of corporate reporting and auditing.  We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.
  2. The Small Companies (Micro-Entities’ Accounts) Regulations 2013 (SI 2013/3008) was made in November 2013 and is effective in respect of financial years ending on or after 30 September 2013 for micro-entities filing their accounts or on after 1 December 2013.
  3. A micro-entity is a company which on its balance sheet date does not exceed the limits of two of the three following criteria:
    • turnover: £632,000
    • balance sheet total: £316,000; and
    • average number of employees during the financial year: 10

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