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.
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.
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:
+ 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 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 criteriaIn 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.
(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 2019
Annual period starts on or after 1 January 2018
Annual period starts 1 January 2016 – 31 December 2017
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.
- 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.
- FRS 101 Reduced Disclosure Framework (August 2014) is the full standard including amendment 1.
- The July 2015 Amendments to FRS 101 contain amendment 2.
- FRS 101 Reduced Disclosure Framework (September 2015) is the full standard including amendments 1 and 2.
- The July 2016 Amendments to FRS 101 contain amendment 3.
- Amendments to FRS 101 and FRS 102 – Notification of shareholders includes amendment 4.
- FRS 101 Reduced Disclosure Framework (March 2018) is the full standard including amendments 1 – 6.
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.
5. The July 2017 Amendments to FRS 101 - 2016/17 cycle
The amendments arising from the 2016/2017 accounting cycle are effective from when a qualifying entity applies IFRS 16 (mandatory application date 1 January 2019) and continues to ensure that the reduced disclosure framework maintains consistency with EU-adopted IFRSs. The amendments provide some limited exemptions from some of the disclosure requirements of IFRS 16, in particular with respect to the form such disclosures might take. However, much of the detailed disclosure will still be required, similar to the current position under IAS 17. The 2016/17 cycle amendments also clarify that recognition in other comprehensive income of fair value gains and losses attributable to changes in own credit risk, as required by IFRS 9, will usually be a departure from CA 2006, requiring true and fair override disclosures to be given.
6. Amendments to FRS 102 – Triennial Review 2017
The amendment is effective for accounting periods beginning on or after 1 January 2019, with early application permitted as long as all amendments are applied at the same time.
As a result of amendments made to FRS 102 in the 2017 Triennial Review, a number of amendments are made to FRS 101. Several of these are editorial in nature, and in addition:
- It is clarified that when an entity applies the IFRS 1 exemption in respect of assets and liabilities of subsidiaries, associates and joint ventures it must ensure that those assets and liabilities are measured in compliance with company law.
- Within the Glossary the definition of financial institution is amended and definitions of FRS 101, FRS 102, IAS Regulation and public benefit entity are deleted.
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/newukgaapThis page was last updated on 17 April 2018