FRS 105 summary and timeline

A summary of FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime, including information on who can apply the standard, current proposals and a timeline of past amendments, announcements, exposure drafts and consultations.

Summary

FRS 105 is a single accounting standard for use by entities that are eligible for, and choose to apply, the micro-entities regime. It is based on ‘FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland’, although it has been adapted to accommodate the legal requirements of the micro-entities regime, for example, the prohibition on revaluing or subsequently measuring assets or liabilities at fair value. Further simplifications have also been made to reflect the nature and size of micro-entities. For example, no deferred tax or equity-settled share-based payment amounts are recognised and accounting choices set out in FRS 102 are removed.

The standard comprises 28 sections, each dealing with a specific area of accounting. FRS 105 requires that micro-entities prepare a balance sheet and profit and loss account, however other primary statements are not required. The standard requires only limited disclosures.

Who may apply the standard?

FRS 105 is applicable to entities that are eligible for, and choose to apply, the micro-entities regime.

An entity meets the qualifying conditions for a micro-entity if it meets at least two out of three of the following thresholds:

• Turnover not more than £632,000 (adjusted for periods longer or shorter than 12 months)
• Balance sheet total not more than £316,000
• Average number of employees not more than 10.

After the first financial year of the entity, the criteria must be met in two consecutive years for an entity to qualify as a micro-entity and must be exceeded in two consecutive years to cease to qualify.

Any entity that is excluded from the small companies regime (or small LLPs regime) may not apply FRS 105. In addition the following types of entity are excluded from being treated as a micro-entity:

• charitable companies;
• investment undertakings;
• financial institutions;
• subsidiaries that are fully consolidated in group accounts; and
• parent companies that prepare group accounts.

Timeline

Date	Update
31 January 2022	January 2022 editions of accounting standards reflect amendments made since the previous editions were issued in 2018 as well as changes in Irish company law.
9 June 2021	FRC issues Amendments to FRS 102 and FRS 105 – COVID-19-related rent concessions beyond 30 June 2021. Amendments are effective for accounting periods beginning on or after 1 January 2021, with early application permitted.
20 April 2021	FRC issues exposure draft FRED 78 Draft amendments to FRS 102 and FRS 105 – COVID-19-related rent concessions beyond 30 June 2021. The consultation period ends on 11 May 2021.
21 December 2020	Amendments to accounting standards – UK exit from the EU Amendments to FRS 100, 101, 102, 103, 104 and 105 issued by the FRC to ensure consistency with UK company law and to update legal references and terminology used in the standards, reflecting changes in legislation as the EU exit transition period ends.
19 October 2020	Amendments to FRS 105 – COVID-19-related rent concessions News update from the FRC announcing publication of Amendments to FRS 102 and FRS 105 – COVID-19-related rent concessions, which sets clear requirements for recognising changes in operating lease payments arising from COVID-19-related rent concessions on a systematic basis over the periods the change in lease payments is intended to compensate.
23 July 2020	FRC proposes amendments to UK accounting standards The FRC has issued an exposure draft FRED 76 Draft amendments to FRS 102 and FRS 105 – COVID-19-related rent concessions, which proposes explicit requirements for accounting for temporary rent concessions for operating leases occurring as a direct consequence of the COVID-19 pandemic.
28 March 2018	March 2018 editions of accounting standards reflect triennial review amendments Press notice issued by the FRC on 28 March 2018 announcing the publication of new editions of all UK and Ireland accounting standards.
14 December 2017	Simplification of UK GAAP benefits up to 4 million businesses News update issued on 14 December 2017 announcing the completion of the FRC's triennial review of FRS 102 along with the publication of amendments and clarifications to the standard.
17 May 2016	FRC issues amendments to FRS 105 to bring limited liability partnerships and qualifying partnerships within the scope of the micro-entities regime Press notice issued by the FRC on 17 May 2016.
16 July 2015	New accounting standards offer simplification for micro-entities and small entities Press notice issued by the FRC on 16 July 2015.
19 February 2015	FRC consults on amendments to UK and Irish GAAP Press notice issued by the FRC on 19 February 2015.