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FRC consults on amendments to FRS 101

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14 Dec 2016

The Financial Reporting Council (FRC) has issued, for comment Financial Reporting Exposure Drafts (FRED) 66 proposing limited amendments to FRS 101 ‘Reduced Disclosure Framework’.

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 66 Draft Amendments to FRS 101 Reduced Disclosure Framework 2016/17 cycle is the fourth of these proposed annual updates. 

In FRED 66 the FRC proposes limited amendments to FRS 101 in relation to IFRS 16 Leases.  

Specifically FRED 66 proposes to insert an additional paragraph, 8A, to prohibit qualifying entities that are lessees from taking an exemption against paragraph 58 of IFRS 16.  This requires lessees to disclose “a maturity analysis of lease liabilities applying paragraphs 39 and B11 of IFRS 7 Financial Instruments: Disclosures separately from the maturity analysis of other financial liabilities”.  As currently drafted lessees are exempt from this requirement as paragraph 8 of FRS 101 currently provides an exemption against the requirements of IFRS 7, provided equivalent disclosures are included in the consolidated financial statements of the group.  Lessors, however, are not exempt from the requirements to provide a maturity analysis which are included in paragraphs 94 and 97 of IFRS 16. 

The Accounting Council has advised that both lessees and lessors should be required to provide the maturity analyses of IFRS 16; not least as qualifying entities are already preparing and disclosing equivalent disclosures under IAS 17 Leases and this provides useful information on the financial position of a qualifying entity. 

The proposed amendments are expected to be available from when an entity applying FRS 101 first applies IFRS 16. 

Comments on FRED 66 are requested by 31 March 2017.  FRED 66 is available on the FRC website.

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