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FRS 101 Reduced Disclosure Framework (UK qualifying entities)

FRS 101 Reduced Disclosure Framework sets out disclosure exemptions available to UK qualifying subsidiaries and parent companies which otherwise apply the recognition, measurement and disclosure requirements of EU-adopted IFRS.

Published: November 2012. Effective for accounting periods beginning on or after 1 January 2015 with early application permitted.

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Contents

Synopsis

FRS 101 allows qualifying entities to adopt the recognition and measurement requirements of EU-adopted IFRS, with:

  • Certain amendments to standards’ requirements in order to comply with the Companies Act, and
  • A reduction in the required level of disclosures.
Any qualifying entity taking advantage of the reduced disclosure framework must state in the notes to the financial statements that the financial statements were prepared in accordance with FRS 101. Note that as the full requirements of EU-adopted IFRS are not complied with, the financial statements should not contain an unreserved statement of compliance with IFRS.
 

Amendments to EU-adopted IFRS

Accounts prepared under FRS 101 are Companies Act accounts rather than IFRS accounts, and must therefore comply with the Companies Act 2006. In order to achieve compliance, certain amendments are made to EU-adopted IFRS.

The Application Guidance to FRS 101 sets out the amendments to EU-adopted IFRSs that are necessary to achieve compliance with the Companies Act 2006 and related regulations. The application guidance forms an integral part of FRS 101.

The following IFRSs are amended for FRS 101 adopters:

Further information on the amendments is available on the relevant pages of the IFRS Standards Tracker.

Disclosure exemptions

Exemptions apply to certain disclosures in the following standards:

+ Only available when the consolidated financial statements of the parent undertaking make equivalent disclosure. FRS 100 provides detail on the interpretation of equivalent.

* Financial institutions (as defined by FRS 100) cannot take advantage of these disclosure exemptions other than to the extent that IFRS 13 disclosures relate to assets and liabilities other than financial instruments. Non-financial institutions may generally take advantage of these exemptions. However, additional disclosures are required if they hold certain financial instruments at fair value.


Further information on the specific disclosure exemptions is available on the relevant pages of the IFRS Standards Tracker.
 

Who should apply the standard?

FRS 101 may be applied to the individual financial statements of a qualifying entity that are intended to give a true and fair view. A qualifying entity is a member of a group where the parent of that group prepares publicly available consolidated financial statements which are intended to give a true and fair view and that member is included in the consolidation.

A qualifying entity that is required to prepare consolidated financial statements, or which voluntarily choses to do so, may not apply FRS 101 in its consolidated financial statements.

A charity may not be a qualifying entity.

Additional criteria

In order to take advantage of the reduced disclosure framework, a qualifying entity also needs to meet the following criteria:

(a) Its shareholders have been notified in writing about the disclosure exemptions, and do not object. Objections may be served on the qualifying entity by:
  • A shareholder that is the immediate parent of the entity; or
  • A shareholder or shareholders holding in aggregate 5% or more of the total allotted shares in the entity; or
  • A shareholder or shareholders holding in aggregate more than half the allotted shares in the entity that are not held by the parent.
(b) It otherwise applies the recognition, measurement and disclosure requirements of EU-adopted IFRS as amended. 

(c) It includes in the notes to the financial statements:
  • A brief narrative summary of the disclosure exemptions adopted; and
  • The name of the parent undertaking and details of where the consolidated financial statements can be found.

Criteria (a) is removed for accounting periods beginning on or after 1 January 2016 (see recent amendments below).

Which version of the standard?

Annual period starts on or after 1 January 2018

FRS 101 Reduced Disclosure Framework (September 2015) in conjunction with the July 2016 amendments to FRS 101 and Amendments to FRS 101 and FRS 102 – Notification of shareholders.

Annual period starts 1 January 2016 – 31 December 2017

FRS 101 Reduced Disclosure Framework (September 2015) in conjunction with Amendments to FRS 101 and FRS 102 – Notification of shareholders.

Annual period starts 1 January 2015 – 31 December 2015

FRS 101 Reduced Disclosure Framework (August 2014) in conjunction with paragraphs 5, 7A and 8(j) as amended in the July 2015 Amendments to FRS 101.

Notes

  1. Early adoption is permitted. If an entity applies FRS 101 before 1 January 2015 it must disclose that fact. An entity applies the amendments made for consistency with company law and included in FRS 101 (2015) early if it also applies SI 2015/980 (The Companies, Partnerships and Groups (Accounts and Reports) regulations 2015) early.
  2. FRS 101 Reduced Disclosure Framework (August 2014) is the full standard including amendment 1.
  3. The July 2015 Amendments to FRS 101 contain amendment 2.
  4. FRS 101 Reduced Disclosure Framework (September 2015) is the full standard including amendments 1 and 2.
  5. The July 2016 Amendments to FRS 101 contain amendment 3.
  6. Amendments to FRS 101 and FRS 102 – Notification of shareholders includes amendment 4.

Recent amendments

1. Amendments to FRS 101 (2013/2014 cycle)
The amendment is effective from the effective date of FRS 101 - 1 January 2015. Early adoption is permitted to the extent that an entity can apply the amendments of the underlying IFRSs.

The first of the annual update cycles has resulted in amendments to simplify the new disclosure requirements of IAS 36 Impairment of Assets in relation to recoverable amount.

The amendment also clarifies how entities should adopt the IFRS 10 Consolidated Financial Statements and IAS 27 Separate Financial Statements guidance on investment entities whilst still complying with legal requirements. FRS 101 is not applicable to the preparation of consolidated financial statements however IAS 27 requires that if a parent that is an investment entity is required to measure an investment at FVTPL in accordance with IFRS 10, then the investment is accounted for in the same way in its individual financial statements. Therefore if an entity meets the IFRS 10 definition of an investment entity, FRS 101 requires that it measures investments in subsidiaries at FVTPL in its individual financial statements.
2. July 2015 Amendments to FRS 101 (2014/15 cycle and other minor amendments)

The amendments arising from the 2014/2015 accounting cycle are effective for accounting periods beginning on or after 1 January 2015, with early application permitted. The amendments arising for consistency with company law are applicable for accounting periods beginning on or after 1 January 2016. Early application is permitted but a company must apply the amendments together with The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 (SI 2015/980).

  • Amendments to paragraphs 5, 7A and 8(j) arise from the 2014/2015 cycle amendments. These amendments add an exemption from the IFRS 1 requirement to present a statement of financial position at the date of transition and an exemption from the IAS 24 requirement to disclose amounts incurred for the provision of key management personnel services by a separate management entity.
  • Minor updates are made to the FRS 101 Application Guidance on amendments to IFRSs in order to maintain compliance with the Companies Act. These amendments relate to IFRS 3, IAS 1 and IAS 37.
3. July 2016 Amendments to FRS 101 - 2015/16 cycle

The amendments arising from the 2015/2016 accounting cycle are effective from when a qualifying entity applies IFRS 15 (mandatory application date 1 January 2018) and continues to ensure that the reduced disclosure framework maintains consistency with EU-adopted IFRSs. These amendments principally provide certain disclosure exemptions in relation to IFRS 15 Revenue from Contracts with Customers and clarify a legal requirement relating to the order in which the notes to the financial statements are presented.

4. Amendments to FRS 101 and FRS 102 – Notification of shareholders

Effective for accounting periods beginning on or after 1 January 2016.

The amendment removes the requirement for a qualifying entity to notify its shareholders about the proposed use of disclosure exemptions.

Current proposals

The FRC issued FRED 66 Draft amendments to FRS 101 Reduced Disclosure Framework 2016/17 cycle in December 2016. The FRED proposes limited amendments to FRS 101 in relation to IFRS 16 Leases.

Other resources

More information on the new financial reporting regime, including the full range of resources, is available on the new UK GAAP section of our website icaew.com/newukgaap

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This page was last updated on 13 January 2017