FRED 58 — Draft FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime
Background
In September 2014 the FRC consulted on the future of accounting standards for micro-entities, small entities and other amendments to accounting standards necessary as result of the UK implementation of the EU Accounting Directive (“the Directive”). This followed a consultation issued by the Department for Business, Innovation and Skills (BIS) on the implementation of the Directive, which sought to consolidate existing legislation on financial reporting and reduce the regulatory burden on smaller companies. Following the government response on the UK implementation of the Directive, the FRC issued three FREDs for public comment which proposed changes to the existing UK financial reporting framework.
Project Milestones
FRED 58 - Draft FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime introduces a single financial reporting standard for entities that qualify as micro-entities as defined by the Companies Act 2006 and choose to apply the micro-entities regime ("the regime"), introduced into UK company law in November 2013. The draft FRS includes the presentation and disclosure requirements of the regime as set out in law. Micro-entities will only need to provide the disclosures required by law. The recognition and measurement requirements are based on FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland with a number of significant simplifications including exempting micro–entities from having to account for complex transactions such as equity-settled share-based payments, defined benefit pension schemes and deferred tax.
FRED 58, once finalised, will apply to entities that are eligible to apply the micro-entity regime in law for accounting periods beginning on or after 1 January 2016, with earlier application permitted.
We have created separate project pages for FREDs 59 and 60.
Current status of the project
FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime was published in July 2015.
