FRC publishes amendments FRS 101 Reduced Disclosure Framework

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23 Jul, 2014

The Financial Reporting Council (FRC) has today published amendments to Financial Reporting Standard (FRS) 101 ‘Reduced Disclosure Framework’ available to UK subsidiary companies that wish to apply the recognition and measurement requirements of IFRSs in their financial statements.

FRS 101 was originally published in November 2012 as part of the FRC's project to replace current UK GAAP with a new suite of standards, which also includes FRS 100 Application of Financial Reporting Requirements, FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 103 Insurance Contracts.

FRS 101 was published in recognition of the fact that many UK groups prepare their consolidated financial statements in accordance with IFRSs rather than UK GAAP. For subsidiary entities, application of IFRSs is attractive because it would produce numbers consistent with those used to prepare the group accounts. However, many companies are put off using IFRSs for their subsidiaries by the extensive disclosure requirements.  In recognition of this, the FRC identified a number of disclosures that were, in their view, of limited usefulness in a set of subsidiary accounts. FRS 101 allows entities, in their entity only accounts, to apply the recognition and measurement requirements of IFRSs but take advantage of exemptions from these disclosures.

When FRS 101 was originally published, the FRC committed to review the standard on an annual basis and update it to ensure that it maintains consistency with IFRS and remains cost-effective for groups. The amendments published today represent the first of these annual updates.

The amendments to FRS 101 and its appendices, which follow consultation on the Exposure Draft FRED 53:

  • simplify the new disclosure requirements of IAS 36 Impairment of Assets in relation to fair value measurements used in impairment reviews; and
  • clarify how entities applying FRS 101 can adopt the new international accounting practice for investment entities (set out in IFRS 10 Investment Entities and its consequential amendments to IAS 27 Separate Financial Statements), whilst still complying with legal requirements.

A number of editorial amendments have also been made to clarify the legal requirements applicable to companies applying FRS 101 that hold financial instruments at fair value subject to paragraph 36(4) of Schedule 1 to the Regulations.

The amendments would have the same effective date as the existing standard i.e. periods commencing on or after 1 January 2015.

Alongside the amendments the FRC has also issued an Impact Assessment and Feedback Statement that summarises the feedback received in relation to FRED 53.

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