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FRC publishes FRED 57: Draft amendments to FRS 101 Reduced Disclosure Framework (2014/15 cycle)

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15 Dec 2014

The UK Financial Reporting Council (FRC) has today published an exposure draft of its second set of annual amendments to FRS 101, the Reduced Disclosure Framework available to UK qualifying entities that wish to apply the recognition and measurement requirements of IFRSs in their financial statements.

FRS 101 Reduced Disclosure Framework 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, 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. FRED 57 Draft Amendments to FRS 101 Reduced Disclosure Framework (2014/15) is the second of these proposed annual updates.

The main changes proposed by the FRC are to allow exemptions from the disclosure requirements of:

In its Advice to the FRC, the Accounting Council explained that it has considered whether any exemptions should be introduced in respect of IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments. As neither of these standards will be effective for some time, it decided that no disclosure exemptions should be permitted at this stage in respect of either Standard.

The comment period for this exposure draft closes on 20 March 2015.

Click here for a link to the press release on the FRC website and here for a copy of the exposure draft itself.

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