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United Kingdom

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Financial reporting framework in the United Kingdom

Listed companies

The United Kingdom was a member of the European Union from 1 January 1973 until 31 January 2020. A following transition period, during which UK listed companies continued to follow IFRSs as adopted by the EU, ended on 31 December 2020.

After the end of the transition period, the UK ceased to apply EU law. IFRSs as adopted by the EU as at 31 December 2020 were incorporated into Domestic UK law as IFRSs as adopted by the UK. UK incorporated groups with securities admitted to trading on a UK regulated market need to prepare accounts using UK-adopted international accounting standards for all financial years beginning on or after 1 January 2021.

A new UK Endorsement Board was established that endorses and adopts new or amended IFRSs issued by the IASB.

Use of IFRSs by other companies

The Companies Act 2006 allows companies, other than charities, to prepare their individual and/or consolidated financial statements in accordance with either UK GAAP or IFRSs.  This is subject to certain constraints about consistency within groups.  Companies that are charities must prepare their individual and group financial statements in accordance with UK GAAP.

New UK GAAP

For periods beginning on or after 1 January 2015, three new Financial Reporting Standards (FRS 100, 101 and 102) came into force marking the beginning of reporting under "New UK GAAP". 

The new suite of standards was later extended and can be summarised as follows:

  • FRS 100 Application of financial reporting requirements. FRS 100 sets out the applicable financial reporting framework for entities preparing financial statements in accordance with legislation, regulations or accounting standards applicable in the United Kingdom and Republic of Ireland.
  • FRS 101 Reduced Disclosure Framework. FRS 101 introduces a new reduced disclosure framework enabling most subsidiaries and parents to use the recognition and measurement bases of IFRSs in their individual entity financial statements, while being exempt from a number of disclosures required by full IFRSs.
  • FRS 102 The Financial Reporting Standard Applicable in the UK and Republic of Ireland. FRS 102 is a single coherent financial reporting standard replacing old UK GAAP. Derived from the IFRS for SMEs, the Financial Reporting Council has made significant modifications to address company law requirements and incorporate additional accounting options.
  • FRS 103 Insurance Contracts. FRS 103 contains specific accounting requirements for entities with insurance contracts.
  • FRS 104 Interim Financial Reporting. FRS 104 is intended for use in the preparation of interim financial reports for those entities that apply FRS 102 but may also be used as a basis for preparing interim reports by those entities applying FRS 101. The Standard is based on IAS 34 Interim Financial Reporting.
  • FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime. FRS 105 is based on FRS 102 but its accounting requirements are adapted to satisfy the legal requirements applicable to micro-entities and to reflect the simpler nature and smaller size of micro-entities.

All New UK GAAP standards can be accessed free of charge on the FRC website.

 

Correction list for hyphenation

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