FRSSE - withdrawn


The Financial Reporting Standard for Smaller Entities (FRSSE) brings together in a single place the accounting standards and the accounting requirements of company law applicable to smaller companies. The measurement bases in the FRSSE are generally the same as those in existing UK GAAP. However, in many cases, the disclosure requirements of the accounting standards included as part of the FRSSE have been significantly reduced. 

In 2013 the FRSSE was amended to enable micro-entities to comply with the FRSSE whilst taking advantage of the exemptions for micro-entities contained within The Small Companies (Micro-Entities’ Accounts) Regulations 2013 (SI 2013/3008).  The amendments also avoided the potential conflict with the law under which the accounts are deemed to give a true and fair view without supplementary information.

In September 2014, the FRC published its consultation document, ‘Accounting standards for small entities - Implementation of the EU Accounting Directive’ setting out the FRC’s proposals to amend UK accounting standards as part of the implementation of the EU Accounting Directive.  As part of this consultation the FRC proposed that the FRSSE be withdrawn.  

In July 2015, the FRC published a new standard, FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime and amended FRS 102 to include new requirements for Small Entities. These become effective from 1 January 2016, at which point the FRSSE will be withdrawn.

Scope (existing FRSSE has been withdrawn from 1 January 2016)

The FRSSE is applicable to companies and groups that qualify as small under the Act and analogous entities. Its application is optional. 


Some of the key simplifications in the FRSSE by comparison to existing UK GAAP and FRS 102 are as follows:

Finance leases: allocation of interest on a straight-line basis may provide a reasonable approximation to a constant periodic rate of charge over the period of the lease;

Value in use: removal of the detailed requirements for calculating value in use (as part of recoverable amount) and subsequent monitoring of cash flows for five years following an impairment review where recoverable amount has been based on value in use;

Retirement benefits: the FRSSE omits the following requirements:

    • when assessing defined benefit scheme liabilities, to attribute benefits to periods of service according to the scheme's benefit rules;
    • for assumptions in actuarial valuations of defined benefit scheme liabilities to reflect expected future events;
    • to allocate tax relief on contributions between the profit and loss account and statement of recognised gains and losses;
    • to make a charge to the profit and loss account for expected costs of providing death-in-service or incapacity benefits
    • the FRSSE does not include the prohibition against accounting for a change in estimation technique as a prior period adjustment;

Deferred tax: the FRSSE omits the requirements:

    • to provide deferred tax when assets are 'marked to market'
    • to provide deferred tax on unremitted earnings of subsidiaries, associates and joint ventures;

Share-based payments: no expense need be recorded for equity-settled share-based payments; for cash-settled share-based payments, a best estimate of the amount required to settle the liability at the balance sheet date is used rather than fair value.

Disclosures: A number of disclosures required by existing UK GAAP and FRS 102 are not required under the FRSSE. 

Effective date

The FRSSE (effective April 2008) is effective now and will continue to be effective for periods commencing before 1 January 2015. As discussed above, the amendments to the FRSSE (effective 2008) in respect of micro-entities are effective for periods ending on or after 30 September 2013 for companies filing their accounts on or after 1 December 2013. 

 For periods beginning on or after 1 January 2015, the FRSSE (effective January 2015) will become effective. Early adoption of FRS 100 will give rise to early adoption of the FRSSE (effective January 2015).

Withdrawal of FRSSE

For periods beginning on or after 1 January 2016, the FRSSE is withdrawn.  Entities currently applying the FRSSE will need to transition to either FRS 105 (if they qualify as Micro-entities) or the small entity requirements within FRS 102.

Correction list for hyphenation

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