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FRED 75 Draft amendments to FRS 104 Interim Financial Reporting - Going concern

Background

The FRC became aware of an unintentional difference between the requirements of FRS 104 Interim Financial Reporting and those of IFRS Standards. In particular, IAS 1 Presentation of Financial Statements requires that paragraphs 15 to 35 of the standard apply to the preparation of condensed interim financial statements prepared in accordance with IAS 34 Interim Financial Reporting. This includes paragraphs 25 and 26 of IAS 1, which require management to assess an entity’s ability to continue as a going concern and disclose any related material uncertainties when preparing financial statements.

FRS 104 applies to the preparation of interim financial reports and is based on the requirements of IAS 34. FRS 104 does not contain any requirements that explicitly cover the assessment of or reporting on the going concern basis of accounting.  However, an entity is required to state that the same accounting policies are applied as compared with the most recent annual financial statements, which would include any statement about the going concern basis of accounting. 

FRED 75 proposes to amend FRS 104 to clarify the requirement to assess the going concern basis of accounting and require the disclosure of any related material uncertainties when preparing interim financial statements in accordance with FRS 104. These amendments are intended to ensure consistency with IFRS Standards in this regard going forward.

Status of the project

FRED 75 was issued in July 2020.  It is proposed that the amendments are effective for accounting periods beginning on or after 1 January 2021, with early application permitted. Comments are requested by 1 September 2020.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.