FRC consults on amendments to FRS 101 and FRS 103

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11 Dec, 2015

The Financial Reporting Council (FRC) has today issued, for comment, two Financial Reporting Exposure Drafts (FREDs) proposing limited amendments to FRS 101 ‘Reduced Disclosure Framework’ and FRS 103 ‘Insurance Contracts’.

Amendments to FRS 101

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 63 Draft Amendments to FRS 101 Reduced Disclosure Framework 2015/16 cycle is the third of these proposed annual updates.

In FRED 63 the FRC proposes amendments to FRS 101 to provide certain disclosure exemptions in relation to IFRS 15 Revenue from Contracts with Customers and clarify a legal requirement relating to the order in which the notes to the financial statements are presented.

Specifically FRED 63 proposes that disclosure exemptions from paragraphs 113 to 115, 118 to 127 and 129 of IFRS 15 are available to qualifying entities.

The proposed amendments are expected to be available from when an entity applying FRS 101 first applied IFRS 15.

Comments on FRED 63 are requested by 31 March 2016.

Amendments to FRS 103

FRED 64 Draft amendments to FRS 103 Insurance Contracts proposes updating the terminology and definitions used in FRS 103 as a result of the implementation of Solvency II.  The main changes that have been made are:

  • Removal of references to the PRA realistic capital regime and the Prudential Sourcebook for Insurers (INSPRU) which will be replaced with the commencement of Solvency II.
  • Clarification that entities should be permitted to continue to apply established accounting practice in their financial statements under the Solvency II regime and hence are not required to change their accounting policies.
  • Clarification of the scope of the Standard for with-profits businesses and with-profits funds in paragraph 3.1b.   

It is proposed that the amendments are effective for accounting periods ending on or after 1 January 2016, the same effective date as Solvency II.

Comments on FRED 64 are requested until 28 February 2016. 

The press release, FRED 63 and FRED 64 are available on the FRC website.

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