News November 2012 FRC announces new accounting standards for the UK and Republic of Ireland

FRC announces new accounting standards for the UK and Republic of Ireland

22 November 2012

PN 024

The Financial Reporting Council, today, issues FRS 100 Application of Financial Reporting Requirements and FRS 101 Reduced Disclosure Framework.

These new standards are issued as part of the FRC’s fundamental reform of existing accounting standards. The standards will be applicable to all companies and entities in the UK and Republic of Ireland, other than listed groups. They will be effective from 1 January 2015, but may be adopted early.
The FRC has taken into account feedback received over many years to issue the first in a suite of accounting standards that will simplify accounting and reporting for unlisted entities, improve reporting of financial instruments and provide cost savings for subsidiaries of listed groups.  By using an international-based framework all entities, and users, will be using the same accounting language regardless of size, but a proportionate approach to disclosure aims to meet users’ information needs, without imposing undue reporting burdens.
FRS 100: sets out the overall financial reporting requirements, giving many entities a choice of detailed accounting requirements depending on factors such as size, and whether or not they are part of a listed group. Importantly FRS 100 does not require any entities to apply international accounting standards that are not already required to do so, responding to a key piece of feedback from smaller financial institutions and registered providers of social housing.
FRS 101: applies to the individual financial statements of subsidiaries and ultimate parents, allowing them to apply the same accounting as in their listed group accounts, but with fewer disclosures.  This will reduce the reporting burden on listed groups.
Roger Marshall, FRC Board member and Chair of the Accounting Council, said,

“I am pleased that, after a long period of development involving extensive consultation with preparers and users, we have issued FRS 100 and FRS 101, which set out a clear and proportionate framework for financial reporting in the UK and Republic of Ireland.
Respondents asked us for a reduced disclosure framework, principally so that subsidiaries within groups reporting in accordance with EU-adopted IFRS could use the same reporting principles as the group, but with reduced disclosures, given the often limited use for those financial statements.  This will result in cost savings for those groups. "

FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland will complete the suite of new financial reporting standards.  The FRC expects to issue FRS 102 early in 2013.

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 Accounting Council was established by the FRC as the relevant Council to assist it in the setting of accounting standards.  It comprises of up to twelve members, at least half of which are practising members of the relevant profession and the remainder will be other stakeholders.
  3. In January 2012 the Accounting Standards Board issued FRED 46 (draft FRS 100) Application of Financial Reporting Requirements and FRED 47 (draft FRS 101) Reduced Disclosure Framework.  FRS 100 and FRS 101 have been developed from these FREDs.
  4. The 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.  In meeting this objective, the FRC aims to provide succinct financial reporting standards, which amongst other things, have consistency with international accounting standards, reflect up-to-date thinking and developments in the way entities operate and the transactions they undertake; balance consistent principles with practical solutions; promote efficiency within groups and are cost-effective to apply.  The FRC believes it has met these aims in developing FRS 100 and FRS 101.
  5. Hard copies will be available when FRS 102 is issued in 2013.
  6. FRS 100 also sets out consequential amendments to the Financial Reporting Standard for Smaller Entities (effective April 2008) (the FRSSE).  The FRC intends to reprint the FRSSE reflecting the consequential amendments.  Hard copies will be available with FRS 100, FRS 101 and FRS 102 in 2013.