FRS 100 - Application of financial reporting requirements

Publication date: 28 Mar 2018

FRS 100 Application of Financial Reporting Requirements was issued by the Accounting Standards Board in November 2012. Since then, FRS 100 has been amended by the following documents:
  • Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015) (Effective for accounting periods beginning on or after 1 January 2016)
  • Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017) (Effective for accounting periods beginning on or after 1 January 2019)

References in this document to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland will not have effect until FRS 102 has been issued by the FRC in 2013.


FRS 100 Application of Financial Reporting Requirements is an accounting standard. It is issued by the Financial Reporting Council in respect of its application in the United Kingdom and promulgated by the Institute of Chartered Accountants in Ireland in respect of its application in the Republic of Ireland.

Overview

Publication date: 28 Mar 2018

(i) The FRC’s overriding objective in setting accounting standards is to enable users of accounts to receive high-quality understandable financial reporting proportionate to the size and complexity of the entity and users’ information needs.

Overview - FRS 100 Application of Financial Reporting Requirements

Publication date: 28 Mar 2018

(ii) This FRS sets out the financial reporting requirements for UK and Republic of Ireland entities. Financial statements (whether consolidated financial statements or individual financial statements) that are within the scope of this FRS must be prepared in accordance with the following requirements:

  1. If the financial statements are those of an entity that is eligible to apply FRS 105, they may be prepared in accordance with that standard.
  2. If the financial statements are those of an entity that is not eligible to apply FRS 105, or of an entity that is eligible to apply FRS 105 but chooses not to do so, they must be prepared in accordance with FRS 102, EU-adopted IFRS or, if the financial statements are the individual financial statements of a qualifying entity, FRS 1011.

(iii) FRS 101 sets out an optional reduced disclosure framework which addresses the financial reporting requirements and disclosure exemptions for the individual financial statements of subsidiaries and ultimate parents that otherwise apply the recognition, measurement and disclosure requirements of EU-adopted IFRS.

(iv) FRS 102 is a single financial reporting standard that applies to the financial statements of entities that are not applying EU-adopted IFRS, FRS 101 or FRS 105.

(v) FRS 105 sets out the financial reporting requirements for micro-entities, as defined in law, choosing to apply the micro-entities regime.

Overview - Organisation of FRS 100

Publication date: 28 Mar 2018

(vi) Terms defined in the Glossary (Appendix I) are in bold type the first time they appear in FRS 100.

(vii) This edition of FRS 100 issued in March 2018 updates the edition of FRS 100 issued in September 2015 for the following:

  1. Triennial review 2017 amendments issued in December 2017; and
  2. some minor typographical or presentational corrections.

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1 Under company law in the Republic of Ireland, certain entities are permitted to prepare 'Companies Act financial statements' under a financial reporting framework based on accounting standards other than those issued by the FRC. Please refer to Appendix III Republic of Ireland legal references for further details.

Financial Reporting Standard 100 - Application of financial reporting requirements - Objective

Publication date: 28 Mar 2018

1 The objective of this Financial Reporting Standard (FRS) is to set 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.

Financial Reporting Standard 100 - Application of financial reporting requirements - Scope

Publication date: 28 Mar 2018

2 This FRS applies to financial statements that are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss for a period.

[AMD 25]

Financial Reporting Standard 100 - Application of financial reporting requirements - Abbreviations and definitions

Publication date: 28 Mar 2018

3 [AMD 1] The terms Accounting Directive, Act, date of transition, EU-adopted IFRS, financial institution, FRS 100, FRS 101, FRS 102, FRS 105, IAS Regulation, IFRS, individual financial statements, public benefit entity, qualifying entity, small entity and SORP are defined in the glossary included as Appendix I to this FRS. [AMD 1] [AMD 25]

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AMD 25
Amendment
Paragraph 3 and preceding heading deleted by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
3 [Deleted]

AMD 1
Amendment
Paragraph 3 amended by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
3 The terms Act, date of transition, EU-adopted IFRS, financial institution, FRS 100, FRS 101, FRS 102, FRSSE, IAS Regulation, IFRS, individual financial statements, public benefit entity, qualifying entity, Regulations and SORP are defined in the glossary included as Appendix I to this FRS.

Financial Reporting Standard 100 - Application of financial reporting requirements - Basis of preparation of financial statements

Publication date: 28 Mar 2018

4 [AMD 2] [AMD 26] Financial statements (whether consolidated financial statements or individual financial statements) that are within the scope of this FRS, and that are not required by the IAS Regulation or other legislation or regulation to be prepared in accordance with EU-adopted IFRS, must be prepared in accordance with the following requirements:

  1. If the financial statements are those of an entity that is eligible to apply the FRS 1052, they may be prepared in accordance with that standard;,
  2. If the financial statements are those of an entity that is not eligible to apply the FRS 105, or of an entity that is eligible to apply the FRS 105 but chooses not to do so, they must 3 be prepared in accordance with FRS 102, EU-adopted IFRS 4 or, if the financial statements are the individual financial statements of a qualifying entity, FRS 1015. [AMD 26] [AMD 2]

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2 The eligibility criteria for applying FRS 105 are set out in legislation and FRS 105. In establishing whether the eligibility criteria have been met, turnover and balance sheet total shall be measured in accordance with FRS 105; the measurement of turnover and balance sheet total in accordance with FRS 101 or FRS 102 need not be considered.
3 Under company law in the Republic of Ireland, certain entities are permitted to prepare ‘Companies Act financial statements’ under a financial reporting framework based on accounting standards other than those issued by the FRC. Please refer to Appendix III Republic of Ireland legal references for further details.
4 Some entities are prohibited from applying EU-adopted IFRS; for example, section 395(2) of the Act states that ‘the individual accounts of a company that is a charity must be Companies Act individual accounts’, and section 403(3) of the Act mirrors this for the group accounts of a parent company that is a charity.
5 Individual accounts that are prepared by a company in accordance with FRS 101, FRS 102 or FRS 105 are Companies Act individual accounts (section 395(1)(a) of the Act), whereas individual accounts that are prepared by a company in accordance with EU-adopted IFRS are IAS individual accounts (section 395(1)(b) of the Act).

AMD 2
Amendment
Paragraph 4 and footnotes 2 and 5 amended by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
Financial statements (whether consolidated financial statements or individual financial statements) that are within the scope of this FRS, and that are not required by the IAS Regulation or other legislation or regulation to be prepared in accordance with EU-adopted IFRS, must be prepared in accordance with the following requirements:

  1. If the financial statements are those of an entity that is eligible to apply FRSSE2, they may be prepared in accordance with that standard.
  2. If the financial statements are those of an entity that is not eligible to apply FRSSE, or of an entity that is eligible to apply FRSSE but chooses not to do so, they must3 be prepared in accordance with FRS 102, EU-adopted IFRS4 or, if the financial statements are the individual financial statements of a qualifying entity, FRS 101.5

2 The eligibility criteria for applying FRS 105 are set out in legislation and FRS 105. In establishing whether the eligibility criteria have been met turnover and balance sheet total shall be measured in accordance with FRS 105; the measurement of turnover and balance sheet total in accordance with FRS 101 or FRS 102 need not be considered.
5
Individual accounts that are prepared by a company in accordance with FRS 101 or FRS 102 are Companies Act individual accounts (section 395(1)(a) of the Act), whereas individual accounts that are prepared by a company in accordance with EU adopted IFRS are IAS individual accounts (section 395(1)(b) of the Act).

AMD 26
Amendment
Paragraph 4 amended by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
4 Financial statements (whether consolidated financial statements or individual financial statements) that are within the scope of this FRS, and that are not required by the IAS Regulation or other legislation or regulation to be prepared in accordance with EU-adopted IFRS, must be prepared in accordance with the following requirements:
(a) If the financial statements are those of an entity that is eligible to apply the FRS 1052, they may be prepared in accordance with that standard;,
(b) If the financial statements are those of an entity that is not eligible to apply the FRS 105, or of an entity that is eligible to apply the FRS 105 but chooses not to do so, they must 3 be prepared in accordance with FRS 102, EU-adopted IFRS 4 or, if the financial statements are the individual financial statements of a qualifying entity, FRS 1015.

Financial Reporting Standard 100 - Application of financial reporting requirements - Application of statements of recommended practice (SORPs)

Publication date: 28 Mar 2018

5 [AMD 3] [AMD 27] If an entity’s financial statements are prepared in accordance with FRS 102 SORPs will apply in the circumstances set out in that FRS. [AMD 27] [AMD 3]

6 [AMD 4] [AMD 28] When a SORP applies, an entity, other than a small entity applying the small entities regime in FRS102, shall state in its financial statements the title of the SORP and whether its financial statements have been prepared in accordance with the SORP’s provisions that are currently in effect 6. In the event of a departure from those provisions, the entity shall give a brief description of how the financial statements depart from the recommended practice set out in the SORP, which shall include: [AMD 28]

  1. for any treatment that is not in accordance with the SORP, the reasons why the treatment adopted is judged more appropriate to the entity’s particular circumstances; and
  2. brief details of any disclosures recommended by the SORP that have not been provided, and the reasons why they have not been provided.

A small entity applying the small entities regime in FRS 102 is encouraged to provide these disclosures. [AMD 4]

7 SORPs recommend particular accounting treatments and disclosures with the aim of narrowing areas of difference and variety between comparable entities. Compliance with a SORP that has been generally accepted by an industry or sector leads to enhanced comparability between the financial statements of entities in that industry or sector. Comparability is further enhanced if users are made aware of the extent to which an entity complies with a SORP, and the reasons for any departures. The effect of a departure from a SORP need not be quantified, except in those rare cases where such quantification is necessary for the entity’s financial statements to give a true and fair view.

8 Entities whose financial statements do not fall within the scope of a SORP may, if the SORP is otherwise relevant to them, nevertheless choose to comply with the SORP’s recommendations when preparing financial statements, provided that the SORP does not conflict with the requirements of the framework adopted. Where this is the case, entities are encouraged to disclose that fact.

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6 The provisions of a SORP will cease to have effect, for example, to the extent that they conflict with a more recent financial reporting standard.

AMD 3
Amendment
Paragraph 5 amended by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
5 If an entity’s financial statements are prepared in accordance with the FRSSE or FRS 102, SORPs will apply in the circumstances set out in those standards.

AMD 27
Amendment
Paragraph 5 amended by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
5 If an entity's financial statements are prepared in accordance with FRS 102, SORPs will apply in the circumstances set out in those SORPs.

AMD 4
Amendment
Paragraph 6 amended by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
6 When a SORP applies, the entity should state in its financial statements the title of the SORP and whether its financial statements have been prepared in accordance with the SORP’s provisions that are currently in effect6. In the event of a departure from those provisions, the entity should give a brief description of how the financial statements depart from the recommended practice set out in the SORP, which shall include:
(a) for any treatment that is not in accordance with the SORP, the reasons why the treatment adopted is judged more appropriate to the entity’s particular circumstances; and
(b) brief details of any disclosures recommended by the SORP that have not been provided, and the reasons why they have not been provided.

AMD 28
Amendment
Paragraph 6 amended by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
6 When a SORP applies, an entity, other than a small entity applying the small entities regime in FRS 102, shall state in its financial statements the title of the SORP and whether its financial statements have been prepared in accordance with the SORP's provisions that are currently in effect6. In the event of a departure from those provisions, the entity shall give a brief description of how the financial statements depart from the recommended practice set out in the SORP, which shall include:

Financial Reporting Standard 100 - Application of financial reporting requirements - Statement of compliance

Publication date: 28 Mar 2018

9 [AMD 5] Where an entity prepares its financial statements in accordance with FRS 101 or FRS 102, it shall include a statement of compliance in the notes to the financial statements in accordance with the requirements set out in the relevant standard unless it is a small entity applying the small entities regime in FRS 102, in which case it is encouraged to include a statement of compliance in the notes to the financial statements.7 [AMD 5]

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7 Irish small entities are required to include a statement of compliance.

AMD 5
Amendment
Paragraph 9 amended by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
9 Where an entity prepares its financial statements in accordance with FRS 101, FRS 102 or the FRSSE, it shall include a statement of compliance in the notes to the financial statements in accordance with the requirements set out in the relevant standard.

Financial Reporting Standard 100 - Application of financial reporting requirements - Date from which effective and transitional arrangements

Publication date: 28 Mar 2018

10 [AMD 6] An entity shall apply this FRS for accounting periods beginning on or after 1 January 2016. Early application of this FRS is permitted, providing an entity also applies the edition of FRS 101, FRS 102 and FRS 105 effective for accounting periods beginning on or after 1 January 2016 and is subject to the early application provisions set out in those standards. An entity choosing not to apply these amendments to accounting periods beginning before 1 January 2016 shall not adopt the associated amendments made to FRS 101, FRS 102 nor FRS 105 to accounting periods beginning before 1 January 2016. If an entity applies this FRS before 1 January 2016 it shall disclose that fact, unless the entity is a micro-entity or a small entity. A small entity is encouraged to provide this disclosure. [AMD 6]

10A [AMD 29] 10A [AMD 29]

11 [AMD 7] On first-time application of this FRS, or when an entity changes the basis of preparation of its financial statements within the requirements of this FRS, it shall apply the transitional arrangements relevant to its circumstances as follows:

  1. An entity transitioning to EU-adopted IFRS shall apply the transitional arrangements set out in IFRS 1 First-time Adoption of International Financial Reporting Standards as adopted in the EU.
  2. [AMD 30] A qualifying entity transitioning to FRS 101 shall, unless it is applying EU-adopted IFRS prior to the date of transition (see paragraph 12), apply the requirements of paragraphs 6 to 33 of IFRS 1 as adopted in the EU including the relevant appendices except for the requirement of paragraphs 6 and 21 to present an opening statement of financial position at the date of transition; references to IFRS in IFRS 1 are interpreted to mean EU-adopted IFRS as amended in accordance with paragraph 5(b) of FRS 101. [AMD 30]
  3. An entity transitioning to FRS 102 shall apply the transitional arrangements set out in that standard.
  4. An entity transitioning to FRS 105 shall apply the transitional arrangements set out in that standard.[AMD 7]

12 [AMD 31] A qualifying entity applying EU-adopted IFRS prior to the date of transition to FRS 101 will then be preparing Companies Act individual accounts in accordance with section 395(1)(a) of the Act and thus will no longer be preparing IAS individual accounts in accordance with section 395(1)(b) of the Act.7 It shall consider whether amendments are required to comply with paragraph 5(b) of FRS 101, but it does not reapply the provisions of IFRS 1. Where amendments to the recognition, measurement and disclosure requirements of EU-adopted IFRS in accordance with paragraph 5(b) of FRS 101 are required, the entity shall determine whether the amendments have a material effect on the first financial statements presented. Where there is: [AMD 31]

  1. no material effect, the qualifying entity shall disclose that it has undergone transition to FRS 101 and a brief narrative of the disclosure exemptions adopted, for all periods presented; or
  2. a material effect, the qualifying entity’s first financial statements shall include:
    1. a description of the nature of each material change in accounting policy;
    2. reconciliations of its equity determined in accordance with EU-adopted IFRS to its equity determined in accordance with FRS 101 for both the date of transition to FRS 101 and for the end of the latest period presented in the entity’s most recent annual financial statements prepared in accordance with EU-adopted IFRS; and
    3. a reconciliation of the profit or loss determined in accordance with EU-adopted IFRS to its profit or loss determined in accordance with FRS 101 for the latest period presented in the entity’s most recent annual financial statements prepared in accordance with EU-adopted IFRS.

13 Where paragraph 12(b) applies but it is impracticable to apply the amendments retrospectively, a qualifying entity shall apply the amendments to the earliest period for which it is practicable to do so, and it shall identify the data presented for prior periods that are not comparable with data for the period in which it prepares its first financial statements that conform with the reduced disclosure framework set out in FRS 101.

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7 Further relevant information can be found at paragraph A2.14 of Appendix II.

AMD 6
Amendment
Paragraph 10 amended by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
10 An entity shall apply this FRS for accounting periods beginning on or after 1 January 2015. Early application of this FRS is permitted subject to the early application provisions set out in FRS 101, FRS 102 and the FRSSE (effective January 2015). If an entity applies this FRS before 1 January 2015 it shall disclose that fact.

AMD 29
Amendment
Paragraph 10A added by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
10A In December 2017 amendments were made to this FRS as a result of the triennial review 2017. An entity shall apply the amendments to this FRS as set out in the Triennial review 2017 amendments for accounting periods beginning on or after 1 January 2019. Early application is permitted provided that all the amendments to this FRS are applied at the same time.

AMD 7
Amendment
Paragraph 11 amended by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
11 On first-time application of this FRS, or when an entity changes the basis of preparation of its financial statements within the requirements of this FRS, it shall apply the transitional arrangements relevant to its circumstances as follows:
(a) An entity transitioning to EU-adopted IFRS shall apply the transitional arrangements set out in IFRS 1 First-time Adoption of International Financial Reporting Standards as adopted by the EU.
(b) A qualifying entity transitioning to FRS 101 shall, unless it is applying EU-adopted IFRS prior to the date of transition (see paragraph 12), apply the requirements of paragraphs 6 to 33 of IFRS 1 as adopted by the EU including the relevant appendices; references to IFRSs in IFRS 1 are interpreted to mean EU-adopted IFRS as amended in accordance with paragraph 5(b) of FRS 101.
(c) An entity transitioning to FRS 102 shall apply the transitional arrangements set out in that standard.
(d) An entity transitioning to the FRSSE shall apply the transitional arrangements set out in the FRSSE.

AMD 30
Amendment
Paragraph 11(b) amended by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
(b) A qualifying entity transitioning to FRS 101 shall, unless it is applying EU-adopted IFRS prior to the date of transition (see paragraph 12), apply the requirements of paragraphs 6 to 33 of IFRS 1 as adopted in the EU including the relevant appendices except for the requirement of paragraphs 6 and 21 to present an opening statement of financial position at the date of transition; references to IFRSs in IFRS 1 are interpreted to mean EU-adopted IFRS as amended in accordance with paragraph 5(b) of FRS 101.

AMD 31
Amendment
Paragraph 12 amended by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
12 A qualifying entity applying EU-adopted IFRS prior to the date of transition to FRS 101 will then be preparing Companies Act individual accounts in accordance with section 395(1)(a) of the Act and thus will no longer be preparing IAS individual accounts in accordance with section 395(1)(b) of the Act.8 It shall consider whether amendments are required to comply with paragraph 5(b) of FRS 101, but it does not reapply the provisions of IFRS 1. Where amendments to the recognition, measurement and disclosure requirements of EU-adopted IFRS in accordance with paragraph 5(b) of FRS 101 are required, the entity shall determine whether the amendments have a material effect on the first financial statements presented. Where there is:

8 Further relevant information can be found at paragraph A2.14 of Appendix II Note on legal requirements.

Financial Reporting Standard 100 - Application of financial reporting requirements - Withdrawal of previous accounting standards

Publication date: 28 Mar 2018

14 Other than as noted in paragraph 15A, all previous SSAPs, FRSs and UITF Abstracts9 were superseded on the early application of this FRS, and withdrawn for accounting periods beginning on or after 1 January 2015.


15 The following statements were also withdrawn:

Statement of Principles for Financial Reporting;
Statement of Principles for Financial Reporting – Interpretation for public benefit entities;
Reporting Statement: Retirement Benefits – Disclosures;
Reporting Statement: Preliminary announcements; and
Reporting Statement: Half-yearly financial reports.

15A [AMD 8] The Financial Reporting Standard for Smaller Entities (effective January 2015) (FRSSE) is superseded on the early application of the amendments set out in Amendments to FRS 100 (and the related amendments to other accounting standards, particularly FRS 102 and FRS 105) issued in July 2015 and the early application of The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 (SI 2015/980), and is withdrawn for accounting periods beginning on or after 1 January 2016. [AMD 8]

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9 The list of SSAPs, FRSs and UITF Abstracts withdrawn is included in earlier editions of this FRS, which are available on the FRC website.

AMD 8
Amendment
Paragraph 15A added by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
N/A as new text.

Financial Reporting Standard 100 - Application of financial reporting requirements - Consequential amendments to the FRSSE

Publication date: 28 Mar 2018

16 [AMD 9] [Deleted] [AMD 9]

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AMD 9
Amendment
Paragraph 16 and preceding heading deleted by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
16 The following consequential amendments are made to the FRSSE (deleted text is struck through, inserted text is underlined):

a Paragraph 1 of the Status of the FRSSE is amended as follows:
  The Financial Reporting Standard for Smaller Entities (effective January 2015 April 2008) – the FRSSE – prescribes the basis, for those entities within its scope that have chosen to adopt it, for preparing and presenting their financial statements. The definitions and accounting treatments are consistent with the requirements of companies legislation and, for the generality of small entities, are the same as those previously required by other accounting standards or a simplified version of those requirements. The disclosure requirements exclude a number of those stipulated in other accounting standards
b Paragraph 2 of the Status of the FRSSE is amended as follows:
  Reporting entities that apply the FRSSE, together with FRS 100 Application of Financial Reporting Requirements, are exempt from complying with other Financial Reporting Standards (FRSs) accounting standards. (Statements of Standard Accounting Practice and Financial Reporting Standards) and Urgent Issues Task Force (UITF) Abstracts, unless preparing consolidated financial statements, in which case certain other accounting standards apply, as set out in paragraph 16.1.
c Paragraph 4 of the Status of the FRSSE is deleted and a new paragraph is inserted:
  The significant differences between this version of the FRSSE (effective January 2015) and the FRSSE (effective April 2008) are in respect of the revised reporting framework introduced into the UK effective January 2015. As part of the revised reporting framework, the FRC has withdrawn extant Financial Reporting Standards and Urgent Issues consequential amendments to Task Force (UITF) Abstracts. It has made the FRSSE where it previously referred to standards or Abstracts that are now withdrawn.
d Paragraph 5 of the Status of the FRSSE is amended as follows:
  Financial statements will generally be prepared using accepted practice and, accordingly, for transactions or events not dealt with in the FRSSE, smaller entities should first have regard to their own existing accounting policies. Where an entity applying the FRSSE undertakes a new transaction not dealt with in the FRSSE for which it has no existing policy, in developing a new policy it should have regard to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, other accounting standards and UITF Abstracts, not as a mandatory documents, but as a means of establishing current practice.
e Paragraph 5A is inserted:
  Public benefit entities (PBEs), only, shall have regard to the requirements in FRS 102 that are specific to PBEs not as mandatory requirements, but as a means of establishing current practice.
f Paragraph 6 of the Status of the FRSSE is amended as follows:
  When considering the application of accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, to smaller entities, the Accounting Standards Board FRC has had, and will continue to have, regard to the following criteria...
g Paragraph 10 of the Status of the FRSSE is amended and footnote inserted as follows:
  Reporting entities that are entitled to adopt the FRSSE, but choose not to do so, are required to apply EU-adopted IFRS, FRS 101 Reduced Disclosure Framework (in the individual financial statements of qualifying entities) or FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, in accordance with the requirements of FRS 100 Application of Financial Reporting Requirements, should apply Statements of Standard Accounting Practice (SSAPs), other Financial Reporting Standards (FRSs) and UITF Abstracts when preparing financial statements intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the entity 7.
h Paragraph 11 of the Status of the FRSSE is amended as follows:
  Statements of Recommended Practice (SORPs) and other equivalent guidance developed or revised after the FRSSE was first issued (in November 1997) may specify the circumstances, if any, in which entities in the industry or sector addressed in the SORP or equivalent guidance may adopt the current version of the FRSSE.
  [insert paragraph break]
  Where Financial statements that purport to comply with existing SORPs that are drafted on the basis that the financial statements comply with of the requirements of SSAPs, FRSs (other than the FRSSE) FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, and UITF Abstracts, financial statements cannot be said to comply with those SORPs if they are prepared in accordance with should also observe those requirements rather than adopt the FRSSE.
i Paragraph 2.6 of the FRSSE is amended as follows:
  The financial statements shall state that they have been prepared in accordance with the Financial Reporting Standard for Smaller Entities (effective January 2015 April 2008).
j The footnote to paragraph 2.6 of the FRSSE is amended as follows:
  This statement may be included with the note of accounting policies or, for those entities taking advantage of the exemptions for small companies in companies legislation, in the statement required by companies legislation to be given on the balance sheet. For example, in the United Kingdom the combined statement could read as follows ‘‘These accounts have been prepared in accordance with the special provisions relating applicable to small companies within Part 15 of the Companies Act 2006 and with the Financial Reporting Standard for Smaller Entities (effective January 2015 April 2008).’’ If abbreviated accounts are also to be prepared, the statement referring to the Financial Reporting Standard for Smaller Entities (effective January 2015 April 2008) shall be included with the note of accounting policies so that it is reproduced in the abbreviated accounts.
k Paragraph 6.13 of the FRSSE is amended as follows:
  Capitalised goodwill and intangible assets shall be considered to have a finite useful life, and shall be depreciated on a straight-line (or more appropriate) basis over their useful economic lives., which If an entity is unable to make a reliable estimate of the useful life of goodwill or intangible assets, the life shall be presumed not to exceed not exceed 20 five years. THE PERIOD CHOSEN FOR DEPRECIATING GOODWILL AND THE REASONS FOR CHOOSING THAT PERIOD MUST BE DISCLOSED IN A NOTE TO THE ACCOUNTS.
l Paragraph 6.45 is amended:
  Fixed assets and goodwill shall be carried in the balance sheet at no more than recoverable amount. If the net book amount of a fixed asset or goodwill is considered not to be recoverable in full at the balance sheet date (perhaps as a result of obsolescence or a fall in demand for a product), the net book amount shall be written down to the estimated recoverable amount, which shall then be written off over the remaining useful economic life of the asset.
m Paragraph 6.45A to 6.45C are inserted:

  6.45A At each reporting date an assessment shall be carried out of whether there is any indication that an asset should be written down (ie whether its carrying amount is more than its recoverable amount). If any such indication exists, the recoverable amount of the asset shall be estimated. If there is no indication that an asset should be written down, it is not necessary to estimate the recoverable amount.
     
  6.45B In assessing whether there is any indication that an asset should be written down, the following might be considered:
     
    (a) During the period, an asset’s market value has declined significantly more than would be expected as a result of the passage of time or normal use.
    (b) Significant changes with an adverse effect on an asset, or the entity, have taken place during the period, or will take place in the near future, (for example external factors such as technological, market, economic or legal changes or internal factors such as the asset becoming idle, or plans to dispose of an asset before the previously expected date).
    (c) Market interest rates have increased during the period, and those increases are likely to affect materially the asset’s recoverable amount.
    (d) Evidence is available of obsolescence or physical damage of an asset.
    (e) Evidence is available from internal reporting that indicates that operating results or cash flows from the use of the asset are, or will be, worse than expected.
       
  6.45C If there is an indication that an asset should be written down, this may indicate that the entity should review the remaining useful economic life, the depreciation method or the residual value of the asset and adjust it in accordance with paragraph 6.40 even if no loss is recognised for writing down the asset.
  1. Paragraph 15.7 of the FRSSE is amended as follows:

    Disclosure, as a related party transaction, is not required of:

  (a) pension contributions paid to a pension fund;
  (b) emoluments in respect of services as an employee of the reporting entity; or
  (c) transactions with the parties listed below simply as a result of their role as:
    (i) providers of finance in the course of their business in that regard;
    (ii) utility companies;
    (iii) government departments and their sponsored bodies; or
    (iv) a customer, supplier, franchiser, distributor or general agent.;or
  (d) related party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member.
  1. Paragraph 16.2 of the FRSSE is amended as follows:

    Where the reporting entity is preparing consolidated financial statements, it should have regard to paragraph 5 of the Status of the FRSSE as a means of developing its policies and practices for the preparation of its consolidated financial statements. as standard the accounting practices and disclosure requirements set out in FRSs 2, 6, 7 and, as they apply in respect of consolidated financial statements, FRSs 5, 9, 104, 11 and 28. Where the reporting entity is part of a group that prepares publicly available consolidated financial statements, it is entitled to the exemptions given in FRS 8 paragraph 3(a)-(c).

    FRS 10 and, as directed by FRS 10, FRS 11 need be applied only in respect of purchased goodwill arising on consolidation.

  2. Paragraph 19.1 of the FRSSE is amended as follows:

    The accounting practices set out in this Financial Reporting Standard for Smaller Entities (effective January 2015 April 2008) shall be regarded as standard in respect of financial statements relating to accounting periods beginning on or after 1 January 2015 6 April 2008. Earlier application is permitted.

  3. Paragraph 20.1 of the FRSSE is amended as follows:

    The Financial Reporting Standard for Smaller Entities (effective January 2015 April 2008) supersedes the FRSSE (effective April 2008 January 2007).

  4. In Part C ‘Definitions’, the definition of ‘Close family’ is amended as follows:

    Close members of the family of a person:

    Close members of the family of an individual a person are those family members, or members of the same household, who may be expected to influence, or be influenced by, that person in their dealings with the reporting entity and include:

  (a) that person’s children and spouse or domestic partner;
  (b) children of that person’s spouse or domestic partner; and
  (c) dependents of that person or that person’s spouse or domestic partner.

  1. In Part C ‘Definitions’, the definition of ‘Key management personnel’ is inserted:

    Key management personnel:-
    Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity.


  2. In Part C ‘Definitions’, the definition of ‘Public benefit entities’ is inserted:

    An entity whose primary objective is to provide goods or services for the general public, community or social benefit and where any equity is provided with a view to supporting the entity’s primary objectives rather than with a view to providing a financial return to equity providers, shareholders or members.

  3. In Part C ‘Definitions’, the definition of a related party is deleted and replaced with:

    A related party is a person or entity that is related to the entity that is preparing its financial statements (in this Standard referred to as the ‘reporting entity’).

  (a) A person or a close member of that person’s family is related to a reporting entity if that person:
    (i)

has control or joint control over the reporting entity;

    (ii) has significant influence over the reporting entity; or
  (b) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity. An entity is related to a reporting entity if any of the following conditions applies:
    (i) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).
    (ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).
    (iii) Both entities are joint ventures of the same third party.
    (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
    (v) The entity is a retirement benefit scheme for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a scheme, the sponsoring employers are also related to the reporting entity.
    (vi) The entity is controlled or jointly controlled by a person identified in (a).
    (vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
       
     
  1. The final sentence of paragraph 35 to Appendix IV ‘Development of the FRSSE’ is deleted. Appendix V of the FRSSE (effective April 2008) is deleted in full.

  2. In Appendix IV ‘Development of the FRSSE’ paragraphs 38 and 39 are renumbered 41 and 42 and new paragraphs 38, 39 and 40, including the heading, are inserted as follows:
  The FRSSE (effective January 2015)
     
  38 In November 2012 the FRC 8 amended the FRSSE as a consequence of the significant changes that were made to UK and Republic of Ireland financial reporting standards at this date. In November 2012 the FRC revised extant Financial Reporting Standards, withdrawing its existing financial reporting standards and supplementary literature from 1 January 2015 and replacing them with revised financial reporting requirements, based on International Financial Reporting Standards (for example, the IFRS for SMEs was used as a basis for FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland). The FRSSE (effective April 2008) was amended as a consequence of these changes.
       
  39 The consequential amendments to the FRSSE were to update references in the FRSSE (effective April 2008) to accounting standards that were withdrawn or for greater consistency with legislation. In addition, the FRC explained that where an entity applying the FRSSE undertakes a new transaction for which it has no existing accounting policy it should have regard to FRS 102, not as a mandatory document but as a means of establishing current practice. The FRC removed the reference to the accounting standards applicable to consolidated financial statements because the general requirements in the FRSSE for developing accounting policies for transactions or events that are not dealt with in the FRSSE are equally applicable to consolidated financial statements.
       
  40 The FRC made two further amendments to the FRSSE:
       
    (a) it introduced a requirement which is consistent with the EU Directives, that if an entity is unable to make a reliable estimate of the useful life of goodwill or intangible assets, the life shall be presumed not to exceed five years.
         
    (b) it clarified that an entity shall assess annually whether there is any indication that an asset should be written down. This will assist entities applying the existing requirement for fixed assets and goodwill to be carried at no more than their recoverable amount.
         
    These amendments relate to applying existing company law requirements.


Renumbered paragraphs 41 and 42 are amended:
38 41 The FRSSE is designed to provide smaller entities with a single accounting standard that is focused on their particular circumstances. Smaller entities that choose to adopt the FRSSE are exempt from other accounting standards and UITF Abstracts (with certain exceptions for those small groups preparing consolidated financial statements). The Board FRC accepts that the FRSSE is not comprehensive and that there may be issues of general application on which guidance will be sought. Preparers may come across transactions on which accounting guidance is not provided in the FRSSE. This raises the question of whether, in the absence of guidance within the FRSSE, preparers and auditors would be required to follow all SSAPs, other FRSs FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and UITF Abstracts to the extent that they it provides guidance on transactions of relevance to the smaller entity. The Board FRC’s view, formulated after consultation with legal advisers and others, is that users expect financial statements to be prepared using accepted practice. If a practice was clearly established and accepted, it should be followed unless there were good reasons to depart from it. Accordingly, preparers and auditors should have regard to SSAPs, FRSs (including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland), and UITF Abstracts not as mandatory documents, but as a means of establishing current practice.
 
39 42 In relation to earlier versions of the FRSSE, some respondents asked that there should be specific cross references within the FRSSE to SSAPs, other FRSs and UITF Abstracts (the equivalent cross references would now be to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland). The Board FRC rejected this suggestion because the inclusion of cross-references would lead to preparers and auditors having to consider those other pronouncements in all cases, as well as the FRSSE, thereby lengthening checklists and adding to the burden. Furthermore, it is recognised that as new FRSs are issued (including introducing FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland) that amend generally accepted accounting practice as it applies to larger entities, it may not be appropriate for such rules to apply to smaller entities. An example that has been frequently cited, but on which the Board has not established a firm position, is that some of the likely proposals on marking to market fixed interest instruments, while appropriate for larger entities, would not be appropriate for smaller entities. Because generally accepted accounting practice had not been established for all in this area then there would not be an expectation that smaller entities should have regard to such a rule.

7 Under company law in the Republic of Ireland, certain companies are permitted to prepare Companies Act accounts using a financial reporting framework based on accounting standards other than those issued by the FRC.
8 The Financial Reporting Council (FRC) became the prescribed body for issuing accounting standards on 2 July 2012; the prescribed body was previously the Accounting Standards Board (ASB).

Application Guidance: The Interpretation of Equivalence

Publication date: 28 Mar 2018

[AMD 32] This application guidance forms an integral part of FRS 100. [AMD 32]

Application Guidance: The Interpretation of Equivalence - Introduction

Publication date: 28 Mar 2018

AG1 [AMD 10] Section 401 of the Act exempts, subject to certain conditions, an intermediate parent from the requirement to prepare consolidated financial statements where its parent is not established under the law of an EEA state. The exemption is conditional on the company and all of its subsidiaries being included in consolidated financial statements for a larger group drawn up to the same date, or an earlier date in the same financial year, and those financial statements must be drawn up:

    (a) [AMD 33] in accordance with, or in a manner that is equivalent to, the Accounting Directive (Section 401(2)(b)(i) and (ii)); [AMD 33]
       
    (b) in accordance with EU-adopted IFRS (Section 401(2)(b)(iii)); or
       
     (c) in accordance with accounting standards which are equivalent to EU-adopted IFRS, as determined in accordance with the EU mechanism (see paragraph AG7) (Section 401(2)(b)(iv)). [AMD 10]

AG2 [AMD 34] FRS 101 and FRS 102 permit certain exemptions from disclosures, but those exemptions are in some cases subject to equivalent disclosures being included in the consolidated financial statements of the group in which the entity is consolidated. [AMD 34]

AG3 [AMD 35] This Application Guidance provides guidance on interpreting the meaning of equivalence in the two circumstances set out above. [AMD 35]

———————————

AMD 32
Amendment
Application Guidance: The Interpretation of Equivalence, leading sentence amended by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
This application guidance is an integral part of this FRS.

AMD 10
Amendment
Paragraph AG1 amended by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
AG1 Section 401 of the Act exempts, subject to certain conditions, an intermediate parent from the requirement to prepare consolidated financial statements where its parent is not established under the law of an EEA state.
Section 401 states that:
(2) Exemption is conditional upon compliance with all of the following conditions—
(a) the company and all of its subsidiary undertakings must be included in consolidated accounts for a larger group drawn up to the same date, or to an earlier date in the same financial year, by a parent undertaking;
(b) those accounts and, where appropriate, the group’s annual report, must be drawn up—

(i) in accordance with the provisions of the Seventh Directive (83/349/EEC) (as modified, where relevant, by the provisions of the Bank Accounts Directive (86/635/EEC) or the Insurance Accounts Directive (91/674/EEC)), or
(ii) in a manner equivalent to consolidated accounts and consolidated annual reports so drawn up;... (emphasis added)

AMD 33
Amendment
Paragraph AG1(a) amended by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
(a) in accordance with, or in a manner that is equivalent to, the Accounting Directive (Section 401(2)(b)(i) and (ii));

AMD 34
Amendment
Paragraph AG2 amended by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
AG2 FRS 101 and FRS 102 permit certain exemptions from disclosures, but those exemptions are in some cases subject to equivalent disclosures being included in the consolidated financial statements of the group in which the entity is consolidated. FRS 102 also permits an alternative measurement option for certain share-based payment transactions provided an equivalent basis is used.

AMD 35
Amendment
Paragraph AG3 amended by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
AG3 This Application Guidance provides guidance on interpreting the meaning of equivalence in the circumstances set out above.

Application Guidance: The Interpretation of Equivalence - Section 401 of the Companies Act 2006

Publication date: 28 Mar 2018

AG4 [AMD 11] Use of the exemption in section 401(2)(b)(ii) requires an analysis of a particular set of consolidated financial statements to determine whether they are drawn up in a manner equivalent to consolidated financial statements that are drawn up in accordance with the Accounting Directive. This Application Guidance aims to assist entities in adopting a consistent approach to this issue. In the absence of this guidance, companies and their auditors might feel obliged to take an overly cautious approach in response to uncertainty about whether the exemptions can be used. [AMD 11]

AG5 [AMD 12] It is generally accepted that the reference to equivalence in section 401(2)(b)(ii) of the Act does not mean compliance with every detail of the Accounting Directive. When assessing whether consolidated financial statements of a higher non-EEA parent are drawn up in a manner equivalent to consolidated financial statements drawn up in accordance with the Accounting Directive, it is necessary to consider whether they meet the basic requirements of the Accounting Directive; in particular the requirement to give a true and fair view, without implying strict conformity with each and every provision. A qualitative approach is more in keeping with the deregulatory nature of the exemption than a requirement to consider the detailed requirements on a checklist basis. [AMD 12]

AG6 [AMD 13] The consequences of the exemptions in section 401(2)(b) and adopting the principle in paragraph AG5 in relation to section 401(2)(b)(ii) are that consolidated financial statements of the higher parent will meet the exemption or the test of equivalence in the Accounting Directive if they are intended to give a true and fair view and:

  1. are prepared in accordance with FRS 102;
  2. are prepared in accordance with EU-adopted IFRS;
  3. [AMD 36] are prepared in accordance with IFRS, subject to the consideration of the reasons for any failure by the European Commission to adopt a standard or interpretation; or [AMD 36]
  4. are prepared using other GAAPs which are closely related to IFRS, subject to consideration of the effect of any differences from EU-adopted IFRS.

Consolidated financial statements of the higher parent prepared using other GAAPs or the IFRS for SMEs should be assessed for equivalence with the Accounting Directive based on the particular facts, including the similarities to and differences from the Accounting Directive. [AMD 13]

AG7 [AMD 14] A mechanism to determine the equivalence of the Generally Accepted Accounting Principles (GAAP) from third countries was established in 2007. Subsequently, the European Commission has identified as equivalent to IFRS the following:

GAAP Applicable from
GAAP of Japan 1 January 2009
GAAP of the United States of America 1 January 2009
GAAP of the People’s Republic of China 1 January 2012
GAAP of Canada 1 January 2012
GAAP of the Republic of Korea 1 January 2012

[AMD 37] Further, third country issuers shall be permitted to prepare their annual consolidated financial statements and half-yearly consolidated financial statements in accordance with the Generally Accepted Accounting Principles of the Republic of India for financial years starting before 1 January 2015. For reporting periods beginning on or after 1 January 2015, in relation to GAAP of the Republic of India, equivalence should be assessed on the basis of the particular facts. [AMD 37] [AMD 14]

———————————

AMD 11
Amendment
Paragraph AG4 amended by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
AG4 Use of the exemption in section 401 requires an analysis of a particular set of consolidated financial statements to determine whether they are drawn up in a manner equivalent to consolidated financial statements that are in accordance with the Seventh Directive 9. This Application Guidance aims to assist entities in adopting a consistent approach to this issue. In the absence of this guidance, companies and their auditors might feel obliged to take an overly cautious approach in response to uncertainty about whether the exemptions can be used.

AMD 12
Amendment
Paragraph AG5 amended by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
AG5 It is generally accepted that the reference to equivalence in section 401 of the Act does not mean compliance with every detail of the Seventh Directive. When assessing whether consolidated financial statements of a higher non-EEA parent are drawn up in a manner equivalent to consolidated financial statements drawn up in accordance with the Seventh Directive, it is necessary to consider whether they meet the basic requirements of the Fourth and Seventh Directives; in particular the requirement to give a true and fair view, without implying strict conformity with each and every provision. A qualitative approach is more in keeping with the deregulatory nature of the exemption than a requirement to consider the detailed requirements on a checklist basis.

AMD 13
Amendment
Paragraph AG6 amended by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
AG6 The consequences of adopting the principle in paragraph AG5 are that consolidated financial statements of the higher parent will meet the test of equivalence in the Seventh Directive if they:
(a) give a true and fair view and comply with FRS 102;
(b) are prepared in accordance with EU-adopted IFRS;
(c) are prepared in accordance with IFRS, subject to the consideration of the reasons for any failure by the European Commission to adopt a standard or interpretation; and
(d) are prepared using other GAAPs which are closely related to IFRS, subject to consideration of the effect of any differences from EU-adopted IFRS.
Consolidated financial statements of the higher parent prepared using:
(e)other GAAPs should be assessed for equivalence with the Seventh Directive based on the particular facts, including the similarities to and differences from the Seventh Directive (see paragraph AG7); and
(f) the IFRS for SMEs shall be assessed for equivalence with the Seventh Directive where the following factors are considered:
(i) applying the disclosure requirements for extraordinary items;
(ii) requiring additional disclosures for financial liabilities that were held at fair value but were neither held as part of a trading portfolio nor a derivative;
(iii) shortening the presumed life of goodwill from 10 to not exceeding five years, where an entity is unable to make a reliable estimate of the useful life;
(iv) recognising negative goodwill in the income statement only when it meets the definition of a realised profit;
(v)replacing the prohibition on reversal of impairment losses of goodwill with a requirement to reverse the loss if, and only if, the reasons for the impairment cease to apply; and
(vi) removing the requirement for unpaid called-up share capital to be recognised as an offset to equity.

AMD 36
Amendment
Paragraph AG6(c) amended by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
(c) are prepared in accordance with IFRS, subject to the consideration of the reasons for any failure by the European Commission to adopt a standard or interpretation; or

AMD 14
Amendment
Paragraph AG7 amended by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
AG7 A mechanism to determine the equivalence of the Generally Accepted Accounting Principles (GAAP) from third countries was established in 2007. Accordingly, the European Commission adopted a Decision and Regulation which identified as equivalent to IFRS the US GAAP, the Japanese GAAP, and accepted financial statements using the GAAP of China, Canada, India and South Korea within the EU on a temporary basis until 31 December 2011. In accordance with relevant EU legislation the European Commission has been updating the European Parliament at regular intervals on the progress made by these countries with their respective programmes to converge their GAAP with IFRS 10.

This decision was amended on 11 April 2012 11 to state that from 1 January 2012, with regard to annual consolidated financial statements and half-yearly consolidated financial statements, the following standards shall be considered as equivalent to IFRS adopted pursuant to Regulation (EC) No 1606/2002:

  1. GAAP of the People’s Republic of China;
  2. GAAP of Canada; and
  3. GAAP of the Republic of Korea.

Further, third country issuers shall be permitted to prepare their annual consolidated financial statements and half-yearly consolidated financial statements in accordance with the Generally Accepted Accounting Principles of the Republic of India for financial years starting before 1 January 2015.

10 As set out in a European Commission Staff Working Paper State of play on convergence between International Financial Reporting Standards (IFRS) and third country national Generally Accepted Accounting Principles (GAAP) (Ref: SEC(2011) 911 final).
11 Commission Implementing Decision of 11 April 2012 amending Decision 2008/961/EC on the use by third countries’ issuers of securities of certain third country’s national accounting standards and International Financial Reporting Standards to prepare their consolidated financial statements (Ref: 2012/194/EU).

AMD 37
Amendment
Paragraph AG7 amended by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
AG7 Further, third country issuers shall be permitted to prepare their annual consolidated financial statements and half-yearly consolidated financial statements in accordance with the Generally Accepted Accounting Principles of the Republic of India for financial years starting before 1 April 2016. For reporting periods beginning on or after 1 April 2016, in relation to GAAP of the Republic of India, equivalence should be assessed on the basis of the particular facts.

Application Guidance: The Interpretation of Equivalence - Equivalent disclosures are included in the consolidated financial statements of the group

Publication date: 28 Mar 2018

AG8 In deciding whether the consolidated financial statements of the parent provide disclosures which are equivalent to the requirements of EU-adopted IFRS or FRS 102, from which relief is provided in paragraphs 8 to 9 of FRS 101 and paragraphs 1.12 to 1.13 of FRS 102 respectively, it is necessary to consider whether the consolidated financial statements of the parent provide disclosures that meet the basic disclosure requirements of the relevant standard or interpretation issued (or adopted) by the relevant standard setter, without requiring strict conformity with each and every disclosure. This assessment should be based on the particular facts, including the similarities to and differences from the requirements of the relevant standard from which relief is provided.

AG9 The concept of ‘equivalence’ described in paragraph AG8 is intended to be aligned to that described for section 401 of the Act.

AG10 [AMD 15] Disclosure exemptions for subsidiaries are permitted where the relevant disclosure requirements are met in the consolidated financial statements, even where the disclosures are made in aggregate or in an abbreviated form, or in relation to intra-group balances, where those intra-group balances have been eliminated on consolidation. If, however, no disclosure is made in the consolidated financial statements on the grounds of materiality, the relevant disclosures should be made at the subsidiary level if material in those financial statements .[AMD 15]

———————————

AMD 15
Amendment
Paragraph AG10 amended by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
AG10 Disclosure exemptions for subsidiaries are permitted where the relevant disclosure requirements are met in the consolidated financial statements, even where the disclosures are made in aggregate or in an abbreviated form. If, however, no disclosure is made in the consolidated financial statements on the grounds of materiality, the relevant disclosures should be made at the subsidiary level if material in those financial statements.

Appendix I: Glossary

Publication date: 28 Mar 2018

[AMD 18] Accounting Directive

Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 [AMD 18]

Act

The Companies Act 2006.

date of transition

The beginning of the earliest period for which an entity presents full comparative information under a given standard in its first financial statements that comply with that standard.

EU-adopted IFRS

IFRS that have been adopted in the European Union in accordance with EU Regulation 1606/2002.

[AMD 38] financial institution

Any of the following:

  1. a bank which is:
    1. a firm with a Part IV permission 12 which includes accepting deposits and:
      1. which is a credit institution; or
      2. whose Part IV permission includes a requirement that it complies with the rules in the General Prudential sourcebook and the Prudential sourcebook for Banks, Building Societies and Investment Firms relating to banks, but which is not a building society, a friendly society or a credit union;
    2. an EEA bank which is a full credit institution;
  2. a building society which is defined in section 119(1) of the Building Societies Act 1986 as a building society incorporated (or deemed to be incorporated) under that act;
  3. a credit union, being a body corporate registered under the Industrial and Provident Societies Act 1965 as a credit union in accordance with the Credit Unions Act 1979, which is an authorised person;
  4. custodian bank, broker-dealer or stockbroker;
  5. an entity that undertakes the business of effecting or carrying out insurance contracts, including general and life assurance entities;
  6. an incorporated friendly society incorporated under the Friendly Societies Act 1992 or a registered friendly society registered under section 7(1)(a) of the Friendly Societies Act 1974 or any enactment which it replaced, including any registered branches;
  7. an investment trust, Irish investment company, venture capital trust, mutual fund, exchange traded fund, unit trust, open-ended investment company (OEIC);
  8. a retirement benefit plan; or
  9. any other entity whose principal activity is to generate wealth or manage risk through financial instruments. This is intended to cover entities that have business activities similar to those listed above but are not specifically included in the list above.

    A parent entity whose sole activity is to hold investments in other group entities is not a financial institution. [AMD 38]

[AMD 39] FRS 100

FRS 100 Application of Financial Reporting Requirements [AMD 39]
FRS 101 FRS 101 Reduced Disclosure Framework
FRS 102 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland
[AMD 19] FRS 105 FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime [AMD 19]
[AMD 16] [Deleted]
[Deleted] [AMD 16]
IAS Regulation EU Regulation 1606/2002.
IFRS

Standards and interpretations issued (or adopted) by the International Accounting Standards Board (IASB). They comprise:

  1. International Financial Reporting Standards;
  2. International Accounting Standards; and
  3. Interpretations developed by the IFRS Interpretations Committee (the Interpretations Committee) or the former Standing Interpretations Committee (SIC).
individual financial statements

The accounts that are required to be prepared by an entity in accordance with the Act or relevant legislation, for example:

  1. ‘individual accounts’, as set out in section 394 of the Act;
  2. ‘statement of accounts’, as set out in section 132 of the Charities Act 2011; or
  3. ‘individual accounts’, as set out in section 72A of the Building Societies Act 1986.

Separate financial statements are included in the meaning of this term.

[AMD 40] public benefit entity An entity whose primary objective is to provide goods or services for the general public, community or social benefit and where any equity is provided with a view to supporting the entity’s primary objectives rather than with a view to providing a financial return to equity providers, shareholders or members. [AMD 40]
qualifying entity (for the purposes of FRS 100 and FRS 101) 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 (of the assets, liabilities, financial position and profit or loss) and that member is included in the consolidation10.

A charity shall not be a qualifying entity.

[AMD 17] [Deleted] [Deleted] [AMD 17]
[AMD 20] [AMD 41] small entity (a) A company meeting the definition of a small company as set out in section 382 or 383 of the Act and not excluded from the small companies regime by section 384;
(b) an LLP qualifying as small and not excluded from the small LLPs regime, as set out in LLP Regulations; or
(c) any other entity that would have met the criteria in (a) had it been a company incorporated under company law. [AMD 41] [AMD 20]
[AMD 42] Statement of Recommended Practice (SORP) An extant Statement of Recommended Practice developed in accordance with SORPs: Policy and Code of Practice. SORPs recommend accounting practices for specialised industries or sectors. They supplement accounting standards and other legal and regulatory requirements in the light of the special factors prevailing or transactions undertaken in a particular industry or sector. [AMD 42]

———————————

12 As defined in section 40(4) of the Financial Services and Markets Act 2000 or references to equivalent provisions of any successor legislation.
10 As set out in section 474(1) of the Act.

AMD 18
Amendment
Appendix I, definition ‘Accounting Directive’ added by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
N/A as new text.

AMD 38
Amendment
Appendix I, definition 'financial institution' deleted by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
[Deleted]

AMD 39
Amendment
Appendix I, definition 'FRS 100' deleted by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
[Deleted]

AMD 19
Amendment
Appendix I, definition ‘FRS 105’ added by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
N/A as new text.

AMD 16
Amendment
Appendix I, definition ‘FRSSE’ deleted by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
FRSSE
The extant version17 of the Financial Reporting Standard for Smaller Entities

17 At the date of issue of this FRS, the extant version of the FRSSE is the Financial Reporting Standard for Smaller Entities (effective April 2008). The Financial Reporting Standard for Smaller Entities (effective January 2015) will replace it as the extant standard from 1 January 2015.

AMD 40
Amendment
Appendix I, definition 'public benefit entity' deleted by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
[Deleted]

AMD 17
Amendment
Appendix I, definition ‘Regulations’ deleted by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
Regulations
The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410).

AMD 20
Amendment
Appendix I, definition ‘small entity’ added by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
N/A as new text.

AMD 41
Amendment
Appendix I, definition 'small entity' amended and footnoted by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
small entity
A small entity is:
(a) a company meeting the definition of a small company as set out in section 382 or 383 of the Act11 and not excluded from the small companies regime by section 384;
(b) an LLP qualifying as small and not excluded from the small LLPs regime, as set out in LLP Regulations; or
(c) any other entity that would have met the criteria in (a) had it been a company incorporated under company law

11 Irish small entities (including partnerships that are required to comply with Part 6 of the Companies Act 2014, by virtue of the European Communities (Accounts) Regulations 1993 (as amended)) shall refer to sections 280A and 280B of the Companies Act 2014.

AMD 42
Amendment
Appendix I, definition 'Statement of Recommended Practice (SORP)' amended by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
Statement of Recommended Practice (SORP)
An extant Statement of Recommended Practice developed in accordance with Policy on Developing Statements of Recommended Practice (SORPs). SORPs recommend accounting practices for specialised industries or sectors. They supplement accounting standards and other legal and regulatory requirements in the light of the special factors prevailing or transactions undertaken in a particular industry or sector.

Appendix II: Note on legal requirements - Introduction

Publication date: 28 Mar 2018

A2.1 This appendix provides an overview of how the requirements in FRS 100 address United Kingdom company law requirements. It is therefore written from the perspective of a company to which the Companies Act 2006 applies12. Appendix III discusses the Republic of Ireland legal references.

A2.2 Many entities that are not constituted as companies apply accounting standards promulgated by the FRC for the purposes of preparing financial statements that present a true and fair view. A brief consideration of the legal framework for some other entities can be found at A2.20 and A2.21. For those entities that are within the scope of a SORP, the relevant SORP may provide more details on the legal framework.

A2.3 References to the Act in this appendix are to the Companies Act 2006. References to the Regulations are to The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410).

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12 Some charities are also companies, and are therefore required to apply the requirements of both the Companies Act 2006 and the Charities Act 2011.

Appendix II: Note on legal requirements - Applicable accounting framework

Publication date: 28 Mar 2018

A2.4 Group accounts of certain parent entities (those with securities admitted for trading on a regulated market in an EU Member State) are required by Article 4 of EU Regulation 1606/2002 (IAS Regulation) to be prepared in accordance with EU-adopted IFRS.

A2.5 [AMD 21] All other entities, except those that are eligible and choose to apply FRS 105 The Financial Reporting Standard applicable to the Micro-entitles Regime, must apply either FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, EU-adopted IFRS or, for financial statements that are the individual financial statements of a qualifying entity, FRS 101 Reduced Disclosure Framework13. [AMD 21]

A2.6 Section 395(1) of the Act states:

‘‘A company’s individual accounts may be prepared—

  1. in accordance with section 396 (‘‘Companies Act individual accounts’’), or
  2. in accordance with international accounting standards (‘‘IAS individual accounts’’).’’

Section 403(2) of the Act states:

‘‘The group accounts of other companies may be prepared—

  1. in accordance with section 404 (‘‘Companies Act group accounts’’), or
  2. in accordance with international accounting standards (‘‘IAS group accounts’’).’’

A2.7 Accounts prepared in accordance with EU-adopted IFRS are therefore within the scope of the IAS Regulation. All other accounts are classified as either ‘Companies Act individual accounts’, including those of qualifying entities applying FRS 101, or ‘Companies Act group accounts’ and are therefore required to comply with the applicable provisions of Parts 15 and 16 of the Act and with the Regulations.

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13 Under company law in the Republic of Ireland, certain entities are permitted to prepare ‘Companies Act financial statements’ under a financial reporting framework based on accounting standards other than those issued by the FRC. Please refer to Appendix III for further details.

AMD 21
Amendment
Appendix II: Note on Legal Requirements, paragraph A2.5 amended by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
A2.5
All other entities, except those that are eligible to apply the Financial Reporting Standard for Smaller Entities (effective January 2015) (FRSSE), must apply either FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, EU-adopted IFRS or, for financial statements that are the individual financial statements of a qualifying entity, FRS 101 Reduced Disclosure Framework15.

Appendix II: Note on legal requirements - Financial reporting by small entities

Publication date: 28 Mar 2018

A2.8 [AMD 22] The Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008 (SI 2008/409) set out the legal framework for both the micro-entities regime and the small companies regime, with the eligibility criteria for both set out in Part 15 of the Act. FRS 105 and FRS 102 contain notes on legal requirements applicable to these regimes.

  Turnover £6,500,000  
  Balance sheet total £3,260,000  
  Average number of employees 50 [AMD 22]  

[AMD 23] A2.9–A2.12 [Deleted] [AMD 23]

———————————

AMD 22
Amendment
Paragraph A2.8 amended by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
A2.8 Entities that are eligible, in accordance with the Act (or by analogy), to apply the small companies regime may apply the FRSSE (which includes all relevant extracts of company law) or may elect to apply either FRS 102, EU-adopted IFRS or, for financial statements that are the individual financial statements of a qualifying entity, FRS 101. The conditions applicable to the small companies regime are contained in sections 381 to 384 of the Act. The qualifying conditions are met by a company in a year in which it does not exceed two or more of the following limits:

AMD 23
Amendment
Paragraphs A2.9 to A2.12 deleted by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
A2.9 For any company, other than a newly incorporated company, to qualify as small, the qualifying conditions must be met for two consecutive years 21. A company will cease to qualify as small if it fails to meet the qualifying conditions for two consecutive years.
A2.10 Certain companies are excluded by section 384 of the Act from the small companies regime and may not apply the FRSSE 22. These companies are those that meet any of the following conditions or are part of an ineligible group, which is, or was at any time during the financial year, a group with a member meeting one of the conditions:
(a) a public company;
(b) a company that is an authorised insurance company, a banking company, an e-money issuer, a MiFID investment firm or a UCITS management company or a company that carries on insurance market activity;
(c) a body corporate (other than a company) whose shares are admitted to trading on a regulated market in an EEA State; or
(d) a person (other than a small company) who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity.
A2.11 A parent company shall not be treated as qualifying as a small company in relation to a financial year unless the group headed by it qualifies as a small group.
A2.12 The conditions applicable to a small group are contained in section 383 of the Act. The qualifying criteria are met by a group in a year in which it does not exceed two or more of the following limits :

  Aggregate turnover £6,500,000 net (or £7,800,000 gross)
  Aggregate balance sheet total £3,260,000 net (or £3,900,000 gross)
  Aggregate number of employees 50

21 An entity will continue to qualify as small in the first financial year in which it does not meet the size criteria, if it met the qualifying conditions in the preceding year and qualified as small in relation to that year.
22 In addition, the FRSSE is not available to companies preparing individual or group accounts in accordance with the fair value rules. The FRSSE does, however, permit revaluation of fixed assets (including investments) using the alternative accounting rules.
23 ‘Net’ means after any set-offs and other adjustments required by Schedule 6 to the Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008 (SI 2008/409) in the case of group accounts, and ‘gross’ means without those set-offs and other adjustments. A company may satisfy any relevant requirement on the basis of either the net or the gross figure.

Appendix II: Note on legal requirements - Financial reporting by charitable companies

Publication date: 28 Mar 2018

A2.13 Section 395(2) of the Act states that ‘the individual accounts of a company that is a charity must be Companies Act individual accounts’, and section 403(3) of the Act mirrors this for a parent company that is a charity.

Appendix II: Note on legal requirements - Moving between IAS accounts and Companies Act accounts

Publication date: 28 Mar 2018

A2.14 Sections 395 and 403 of the Act restrict an entity’s ability to move from preparing IAS individual accounts to preparing Companies Act individual accounts and from preparing IAS group accounts to preparing Companies Act group accounts respectively. A company or group is permitted to switch from IAS accounts to Companies Act accounts preparation:

  1. if there is a ‘relevant change in circumstance’ (as defined in the Act); or
  2. for financial years ending on or after 1 October 2012, for a reason other than a relevant change of circumstance, once in a five-year period.14

A2.15 For example, provided the condition in section 395(4A) is met, a subsidiary company which previously prepared IAS individual accounts is permitted to move to preparing Companies Act individual accounts in applying FRS 101 or FRS 102, providing it is also complying with other requirements of the Act, such as those relating to consistency of financial reporting within groups.

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14 The Companies and Limited Liability Partnership (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012 (SI 2012/2301).

Appendix II: Note on legal requirements - Consistency of financial reporting within groups

Publication date: 28 Mar 2018

A2.16 Section 407 of the Act requires that the directors of the parent company secure that individual accounts of a parent company and each of its subsidiaries15 are prepared using the same financial reporting framework, except to the extent that in the directors’ opinion there are good reasons for not doing so.

In addition, consistency is not required in the following situations:

  1. when the parent company does not prepare consolidated accounts; or
  2. when some subsidiaries are charities (consistency is not needed between the framework used for these and for other subsidiaries).

Where the directors of a parent company prepare IAS group accounts and IAS individual accounts, there only has to be consistency across the individual financial statements of the subsidiaries.

A2.17 All companies, other than those which elect or are required to prepare IAS individual accounts in accordance with law, prepare Companies Act individual accounts.

———————————

15 This only applies to accounts of subsidiaries that are required to be prepared under Part 15 of the Act.

Appendix II: Note on legal requirements - Applicability of UK company law to entities preparing IAS accounts

Publication date: 28 Mar 2018

A2.18 Entities that prepare IAS accounts, either voluntarily or because they are required to do so by law, only need apply certain sections of the Act as it relates to financial reporting. They are not required to comply with Schedules 1 and 6 to the Regulations (for companies and groups), nor with Schedules 2 or 3 (for banks and insurance companies). Schedules 4, 5, 7 and 8 to the Regulations are, however, still applicable.

A2.19 The sections of parts 15 and 16 of the Act that contain financial reporting requirements applying to IAS accounts, as well as to Companies Act accounts, are as follows (in some cases the requirements only apply to companies meeting certain criteria):

  Section 410A
Off-balance sheet arrangements;
 
  Section 411
Employee numbers and costs;
 
  Section 412
Directors’ benefits: Remuneration;
 
  Section 413
Directors’ benefits: Advances, credit and guarantees;  
  Sections 414A to 414D
Strategic Report;  
  Sections 415 to 419 Directors’ Report;
 
  Sections 420 to 421 Directors’ Remuneration Report; and  
  Section 494
Services provided by auditor and associates and related remuneration
 

Appendix II: Note on legal requirements - Entities not subject to company law

Publication date: 28 Mar 2018

A2.20 Many entities that may apply FRS 102 are not companies, but are nevertheless required by their governing legislation or other regulation or requirement, to prepare financial statements that present a true and fair view of the financial performance and financial position of the reporting entity. However, the FRC sets accounting standards within the framework of the Act and therefore it is the company law requirements that the FRC primarily considered when developing FRS 102. Entities preparing financial statements within other legal frameworks will need to satisfy themselves that FRS 102 does not conflict with any relevant legal obligations.

A2.21 However, the FRC notes the following:

Legislation

Overview of requirements

Building Societies Act 1986

The annual accounts of a building society shall give a true and fair view of the income and expenditure for the year and the balance sheet shall give a true and fair view of the state of affairs of the society at the end of the financial year.

Regulations make further requirements about the form and content of building society accounts, which do not appear inconsistent with the requirement of FRS 102.

Charity law in England and Wales: Charities Act 2011 and regulations made thereunder

All charities are required to prepare accounts.  The regulations require financial statements (other than cash-based receipts and payments accounts prepared by smaller charities) to present a true and fair view of the incoming resources, application of resources and the balance sheet, and to be prepared in accordance with the SORP. However company charities prepare their accounts in accordance with UK company law to give a ‘true and fair view’.

The Charities (FRS 102) is compatible with the legal requirements, clarifying how they apply to accounting by charities. The SORP will be updated to reflect the requirements of FRS 102.

UK company law prohibits charities from preparing IAS accounts.

Charity law in Scotland: Charities and Trustee Investments Act (Scotland) 2005 and regulations made thereunder All charities are required to prepare accounts. The regulations require financial statements (other than cash-based receipts and payments accounts prepared by smaller charities) to present a true and fair view of the incoming resources, application of resources and the balance sheet, and to be prepared in accordance with the SORP. These regulations apply equally to company charities.
Charity law in Northern Ireland: Charities Act (Northern Ireland) 2008 and regulations made thereunder

All charities are required to prepare accounts. The regulations require financial statements (other than cash-based receipts and payments accounts prepared by smaller charities) to present a true and fair view of the incoming resources, expenditure of resources and the balance sheet, and to be prepared in accordance with FRS 102 and the SORP.

Company charities prepare their accounts in accordance with UK company law to give a ‘true and fair view’.

Co-operative and Community Benefit Socities Act 2014

Every Society shall prepare a revenue account and a balance sheet giving a true and fair view of the income and expenditure and state of affairs of the Society.

FRS 102 does not appear to give rise to any legal conflicts for Societies. However, Societies often carry out activities that are regulated and may be required to comply with additional regulations on top of the legal requirements and accounting standards. Some Societies fall within the scope of SORPs, which reflect the requirements of FRS 102.

Friendly Societies Act 1992

Every society shall prepare a balance sheet and an income and expenditure account for each financial year giving a true and fair view of the affairs of the society and its income and expenditure for the year.

The Regulations16 make further requirements about the form and content of friendly society accounts, which do not appear inconsistent with the requirements of FRS 102.

The Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996

The accounts of pension funds within the scope of the regulations should show a true and fair view of the transactions during the year, assets held at the end of the year and liabilities of the scheme, other than those to pay pensions and benefits.

FRS 102 includes retirement benefit plans as a specialised activity.

———————————

16 The Friendly Societies (Accounts and Related Provisions) Regulations 1994 (as amended).

[AMD 43]

Appendix III: Previous consultations - History of previous consultations

Publication date: 28 Mar 2018

A3.1 The requirements in FRSs 100 to 102 are the outcome of a lengthy and extensive consultation. The FRC (and formerly the ASB) together with the Department for Business, Innovation and Skills have consulted on the future of accounting standards in the UK and Republic of Ireland (RoI) over a ten-year period.

Table 1 – Consultations conducted Year Consultation

Year

Consultation

2002

DTI 19 consults on adoption of IAS Regulation

2004

Discussion Paper – Strategy for Convergence with IFRS

2005

Exposure Draft – Policy Statement: The Role of the ASB

2006

Public Meeting and Proposals for Comment

2006

Press Notice seeking views

2007

Consultation Paper – Proposed IFRS for SMEs

2009

Consultation Paper – Policy Proposal: The future of UK GAAP

2010

Request for Responses – Development of the Impact Assessment

2010

Financial Reporting Exposure Drafts 43 and 44

2011

Financial Reporting Exposure Draft 45

2012

Financial Reporting Exposure Drafts 46, 47 and 48

———————————

19 The Department of Trade and Industry (DTI) was a United Kingdom government department which was replaced with the announcement of the creation of the Department for Business, Enterprise and Regulatory Reform and the Department for Innovation, Universities and Skills on 28 June 2007, which were themselves merged into the Department for Business, Innovation and Skills (BIS) on 6 June 2009.

Appendix III: Previous consultations - History of previous consultations - 2004

Publication date: 28 Mar 2018

A3.2 In 2004 the Discussion Paper contained two key elements underpinning the proposals: firstly that UK and Republic of Ireland (RoI) accounting standards should be based on IFRS and secondly that a phased approach to the introduction of the standards should be adopted.

A3.3 The ASB embarked on the phased approach and issued a number of standards based on IFRS. The majority of respondents agreed with a framework based on IFRS, and although supportive overall, the response to the phased approach was mixed.

Appendix III: Previous consultations - History of previous consultations - 2005

Publication date: 28 Mar 2018

A3.4 In its 2005 Exposure Draft (2005 ED) of a Policy Statement Accounting standard-setting in a changing environment: The role of the Accounting Standards Board, amongst other aspects of its role, the ASB identified its intention to converge with IFRS by implementing new IFRS in the UK as soon as possible. It also proposed to continue the phased approach to adopting UK accounting standards based on older IFRSs, but recognised there was little case for being more prescriptive than IFRS.

A3.5 Although the ASB had, in the 2005 ED, wanted to move the debate on to how it would seek to influence the IASB’s agenda, respondents’ main concern remained about convergence. In 2005, the ASB issued an exposure draft proposing the IASB’s standard on Business Combinations be adopted in the UK and RoI. This exposure draft highlighted the complexity of a mixed set of UK accounting standards, with some based on IFRSs and others developed independently by the ASB. The majority of respondents continued to agree with the aim of basing UK accounting standards on IFRS, but a broader set of views on how to achieve this was emerging.

A3.6 As time progressed the ASB formed the view that convergence by adopting certain IFRSs was not meeting the needs of its constituents, which no longer included quoted groups. The ASB was concerned about the complexity of certain IFRSs, and it noted that introducing them piecemeal created complications and anomalies within the body of current FRSs. This arose because IFRS-based standards were not an exact replacement for current FRSs and many consequential amendments were required to ‘fit’ each replacement IFRS-based standard into the existing body of UK FRS. The ASB agreed to continue with its convergence programme, but decided to re-examine how to achieve this.

Appendix III: Previous consultations - History of previous consultations - 2006

Publication date: 28 Mar 2018

A3.7 The ASB published revised proposals to be discussed at the 2006 public meeting. By this time the IASB had started its IFRS for SMEs project, and the ASB decided this might have a role as one of the tiers in the UK financial reporting framework. The ASB proposed a ‘big bang’ with new IFRS-based UK accounting standards mandatory from a single date, 1 January 2009. The ASB’s proposal was for a three-tier system, with Tier 1 being EU-adopted IFRS, and the other two tiers being developed as the IASB progressed with its project on the IFRS for SMEs.

A3.8 Those attending the public meeting supported the aim of basing UK and RoI accounting standards on IFRS and adapting them to ensure they were appropriate for the entities applying them.

A3.9 Taking this feedback into account, later in 2006 the ASB issued a Press Notice (PN 289) seeking views on its current thinking:

  1. All quoted and publicly accountable companies should apply EU-adopted IFRS.
  2. The FRSSE should be retained and extended to include medium-sized entities.
  3. UK subsidiaries of groups applying full IFRS should apply EU-adopted IFRS, but with reduced disclosure requirements.
  4. No firm decision on the remainder (Tier 2), but options included extending the FRSSE, extending full IFRS, maintaining separate UK accounting standards or some combination of these.

A3.10 The responses were mixed, but there was agreement that whatever the solution, it should be based on IFRS and there should be different reporting tiers to ensure proportionality.

Appendix III: Previous consultations - History of previous consultations - 2007

Publication date: 28 Mar 2018

A3.11 The IASB published an exposure draft of its IFRS for SMEs in early 2007; shortly afterwards the ASB published its own consultation paper. This sought views on how the IFRS for SMEs might fit into the future UK financial reporting framework, for example whether it might be appropriate for Tier 2, with the FRSSE continuing for those eligible for the small companies’ regime.

A3.12 Feedback on the IFRS for SMEs was largely positive: it would be suitable for Tier 2, it was international, it was compatible with IFRS, and it represented a significant simplification. Overall, it was seen as a workable alternative to IFRS. In addition, respondents wanted to retain the FRSSE (because it reduces the regulatory burden on smaller entities) and to give subsidiaries the option of applying the IFRS for SMEs as well as a reduced disclosure regime if applying full IFRS.

Appendix III: Previous consultations - History of previous consultations - 2009

Publication date: 28 Mar 2018

A3.13 The IFRS for SMEs was published in 2009, allowing the ASB to further develop its proposals in the Consultation Paper Policy Proposal: The future of UK GAAP. The proposals were largely consistent with the cumulative results of the preceding consultations and included:

  1. a move to an IFRS-based framework;
  2. a three-tier approach;
  3. publicly accountable entities would be Tier 1 and would apply EU-adopted IFRS;
  4. small companies would be Tier 3 and continue to apply the FRSSE; and
  5. other entities would be Tier 2 and should apply a UK and RoI accounting standard based on the IFRS for SMEs.

A3.14 The only significant proposal that was inconsistent with respondents’ previous comments was that subsidiaries should simply apply the requirement of the tier they individually met – respondents had wanted subsidiaries to be able to take advantage of disclosure exemptions, and at that time the ASB had yet to be convinced that significant cost savings were available from a reduced disclosure framework. Taking into account the feedback received, this proposal was subsequently reversed and the reduced disclosure framework was incorporated into FREDs 43 and then 46, and it is now set out in FRS 101.

A3.15 In addition to the many useful and detailed points made, some common themes included general agreement that change was needed to UK accounting standards and that there was support for many of the changes proposed in the consultation paper.

Appendix III: Previous consultations - History of previous consultations - 2010 onwards

Publication date: 28 Mar 2018

A3.16 The request for responses to aid development of the Impact Assessment focused on obtaining feedback on the expected costs, benefits and impact of the proposals subsequently set out in FREDs 43 and 44, rather than on the accounting principles. As the focus was on costs and benefits no specific question was asked about the principle of the proposed introduction of an IFRS-based framework, but nevertheless respondents commented on this: of the 32 responses received only 12.5% did not agree with the introduction of an IFRS-based framework.

A3.17 FRED 43 and 44 issued in October 2010 set out the draft suggested text for two new accounting standards that would replace the majority of extant Financial Reporting Standards (current FRS) in the UK and RoI. The ASB issued a supplementary FRED addressing specific needs of public benefit entities (FRED 45) in March 2011. The ASB then updated FREDs 43, 44 and 45, replacing them with the revised FREDs 46, 47 and 48 in January 2012, by eliminating the concept of public accountability and by introducing a number of accounting treatment options that are available in EU-adopted IFRS. The Accounting Council’s advice to the FRC to issue FRSs 100 to 102 includes more discussion of the feedback received on FREDs 43 to 48 and how the proposals have been refined and developed into the standards.

Appendix III: Previous consultations - How have the proposals been developed?

Publication date: 28 Mar 2018

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A3.18 As set out above, the FRC, the Accounting Council (and previously the ASB) have consulted regularly on the future of financial reporting in the UK and RoI. Over the consultations the ASB’s (and the Accounting Council’s) thinking has evolved based on careful consideration of the feedback at each stage. Whilst responses were sometimes mixed, there has been agreement that:

  1. current FRS, which are a mixture of Statements of Standard Accounting Practice (SSAPs) issued by the Consultative Committee of Accounting Bodies, FRSs developed and issued by the ASB and IFRS-based standards issued by the ASB to converge with international standards, are an uncomfortable mismatch that lack strong underlying principles or cohesion; and
  2. whatever the solution, it should be based on IFRS and there should be different reporting tiers to ensure proportionality.

A3.19 During the consultation process to date, the Accounting Council and formerly the ASB have been guided by the following principles:

  1. The framework must be fit for purpose, so that each entity required to produce true and fair financial statements under UK and RoI law will deliver financial statements that are suited to the needs of its primary users. The Accounting Council has kept in close contact with constituent users on this point, including investors, creditor institutions and the tax authorities.
  2. The framework must be proportionate, so that preparing entities are not unduly burdened by costs that outweigh the benefit to them and to the primary users of information in their financial statements. The FRC believes that the proposals will produce a lower cost regime, while enhancing user benefits. It has carried out a consultation stage impact assessment with input from interested parties, and will continue to assess cost-benefit issues.
  3. The framework must be in line with UK company law. This determines which entities must produce true and fair financial statements. Exemptions within the law have generally been retained. The detailed requirements of the Companies Act 2006 are driven to a great extent by the European Accounting Directives, which are being revised 20.
  4. The framework must be future-proofed, where possible. The FRC will continue to monitor the situation and has sovereignty over UK accounting standards (subject to the law). Changes to the Accounting Directives may lead to further developments, for example the European Council and European Parliament decision to permit Member States an option to treat micro-entities as a separate category of Company and exempt them from certain accounting requirements.

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20 The EU’s consultation process on review of the Accounting Directives is summarised at http://ec.europa.eu/internal_market/ accounting/sme_accounting/review_directives_en.htm

Appendix III: Previous consultations - Summary of outreach

Publication date: 28 Mar 2018

A3.20 During the development and throughout the consultation period of FREDs 43 to 48, the ASB undertook an extensive programme of outreach aimed at raising awareness of the proposals and to address the view (held by some) that previous consultations had not gathered sufficient evidence to support and test the assumptions made.

A3.21 As part of the outreach programme to obtain both formal and informal feedback, a series of meetings and events took place with users, including with lenders to small and medium-sized entities. Lenders noted that financial statements are an important part of their decision-making process when considering whether to provide finance and, whilst a decision to provide finance is not based on financial statements alone, they provide useful information and verification to the lender.

A3.22 Although the ASB and the Accounting Council employed their best efforts to obtain feedback from users (a constituent group historically difficult to engage with formally) it is disappointing that limited formal responses were received and the Accounting Council has not been more successful in obtaining input from users.

A3.23 In addition, a review was made of academic research that addressed the users of the financial statements of small and medium-sized entities. The conclusion drawn from the research was that many entities requested financial statements from Companies House when considering whether to trade with another entity. The European Federation of Accountants and Auditors (EFAA) issued, in May 2011, a statement that identified the users of financial statements, noting who the users of SMEs’ financial statements are and that information on the public record assists all users of financial statements of SMEs by providing, in an efficient manner, basic information that protects their rights.

A3.24 The ASB considered that the outreach programme had gleaned information from people who would not normally submit formal responses to a consultation and provided very useful information that could be used in developing the next stage of the project. The ASB noted that whilst this information was not part of the public record, as are formal consultation responses, it could use the information to assist in developing the revised FREDs 46 to 48, supplementing information contained in responses, and would seek further comment in the next stage of its deliberations.

A3.25 The Accounting Council continued the work of the ASB in finalising FRSs 100 to 102. The responses to FREDs 46 to 48 were analysed and discussed, and engagements were conducted to take into account the views and suggestions of all relevant associations and contacts. Respondents and outreach contacts were satisfied with FREDs 46 to 48, and many of the response letters were forthcoming in their overall praise for the proposals. A significant number of constituents anticipated cost savings arising from the application of FRS 101. Many respondents considered that FRS 102 would improve UK accounting standards, in particular by introducing requirements for accounting for financial instruments. Further they considered that the improvements will be achieved in a way that will be proportionate to the needs of users, and that once the transition phase has been overcome, it will have the effect of reducing the reporting burden on those UK companies that adopt it.

[AMD 43]

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AMD 43
Amendment
Appendix III: Previous consultations deleted by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
[Deleted]

[AMD 24] [AMD 44]

Appendix IV: Republic of Ireland (RoI) legal references

Publication date: 28 Mar 2018

Appendix IV: Republic of Ireland (RoI) legal references - Introduction

Publication date: 28 Mar 2018

Appendix IV: Republic of Ireland (RoI) Legal References will be updated as appropriate for both the Companies Act 2014 and the Irish legislation implementing the EU Accounting Directive once the latter has been made. This will be included in the next edition of FRS 100. [AMD 24] [AMD 44]

———————————

AMD 44
Amendment
Appendix IV: Republic of Ireland (RoI) legal references renumbered Appendix III, paragraphs renumbered A4. to A3. by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland - Triennial review 2017 - Incremental improvements and clarifications (issued December 2017)
Effective date
01 Jan 2019
New text
Appendix III: Republic of Ireland (RoI) Legal References Introduction
A3.1 The table below outlines the provisions in the Companies Act 2014 corresponding to the provisions of the UK Companies Act 2006 (the Act) and the UK Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (the Regulations) (SI 2008/410) referred to in this FRS, unless the UK legal reference in this FRS is already footnoted with an Irish reference, or written separately in an Irish context. References to the Companies Act 2014 in this FRS, including in this appendix, are to the Companies Act 2014, as amended by the Companies (Accounting) Act 2017 and the Companies (Amendment) Act 2017.
Company law is structured differently in the two jurisdictions. The Companies Act 2014 consists of 2617 ‘Parts’ such that:
• Parts 1 to 14 (along with the relevant Schedules) apply to private companies limited by shares (LTDs);
• Parts 16 to 24 cover the other types of companies under the Companies Act 2014 – eg designated activity companies (DACs), public limited companies (PLCs), and companies limited by guarantee (CLGs); and
• Parts 15, 25 and 26 cover Functions of the Registrar and of Regulatory and Advisory Bodies; Miscellaneous provisions; and reports on Payments to Governments, respectively.
The provisions of Parts 1 to 14 also apply to the other types of companies, unless disapplied or modified by the relevant Part (eg Part 16 for DACs). References in the text of this FRS, including in the table below, are to the primary source of requirements in Parts 1 to 14 of, and the relevant Schedules to, the Companies Act 2014 as pertaining to a private company limited by shares. For other company types, reference should be made to the relevant Part of the Companies Act 2014 as applicable.
17 For information, the Companies (Statutory Audits) Bill 2017 proposes the insertion of a new Part 27 to Companies Act 2014 dealing with statutory audit. This Bill is due to be enacted during 2018.
A3.2 General references are made in this FRS to UK legislation such as the ‘Companies Act 2006’, ‘the Act’, ‘The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410)’, ‘the Regulations’, ‘The Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008 (SI 2008/409)’, ‘The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 (SI 2015/980)’, ‘The Companies and Limited Liability Partnership (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012 (SI 2012/2301)’ and ‘The Small Companies (Micro-entities’ Accounts) Regulations 2013 (SI 2013/3008). In an Irish context reference should be made to the relevant sections and paragraphs of Irish company law. Such general references are not dealt with in the table below. References in the text to ‘IAS accounts’ are equivalent to ‘IFRS financial statements’ in Irish company law.
For the purposes of the table below, where general references are made in the text of this FRS to Schedules to the Regulations, the approach taken is that the corresponding Schedule to the Companies Act 2014 is referenced. For example, a reference to Schedule 1 to the Regulations would correspond to a reference to Schedule 3 to the Companies Act 2014 (Accounting principles, form and content of entity financial statements).

Where reference is made in this Appendix to Schedule 3 to the Companies Act 2014, Irish entities applying the Credit Institutions Regulations 2015 (the European Union (Credit Institutions: Financial Statements) Regulations 2015 (S.I. No. 266 of 2015)) or the Insurance Undertakings Regulations 2015 (as amended) (the European Union (Insurance Undertakings: Financial Statements) Regulations 2015 (S.I. No. 262 of 2015), as amended by the European Union (Insurance Undertakings: Financial Statements) (Amendment) Regulations 2016 (S.I. No. 213 of 2016)) should read the references as referring to the corresponding paragraphs in those regulations where applicable. The requirements of Schedule 3 to the Companies Act 2014 are not necessarily the same as those contained in the Credit Institutions Regulations 2015 or in the Insurance Undertakings Regulations 2015 (as amended) in all cases. References should be made to the specific requirement as appropriate.
A3.3 The following Irish legislation is also referenced in the table below:
• The Building Societies Act, 1989;
• The Charities Act 2009;
• The Industrial and Provident Societies (Amendment) Act, 1978;
• The Friendly Societies (Amendment) Act, 1977;
• The Friendly Societies Regulations, 1988 – S.I. No. 74 of 1988;
• The Pensions Act, 1990; and
• The Occupational Pension Schemes (Disclosure of Information) Regulations, 2006 – S.I. No. 301 of 2006.
Companies Act financial statements under Irish company law
A3.4 Certain entities are permitted under Irish company law to prepare their Companies Act financial statements under a financial reporting framework based on accounting standards other than those issued by the Financial Reporting Council (FRC).
Specifically, and subject to certain conditions:
• Pursuant to section 279 of the Companies Act 2014, relevant holding companies are permitted to prepare ‘Companies Act entity financial statements’ and/or ‘Companies Act group financial statements’ in accordance with US GAAP, as modified to ensure consistency with Irish company law.
• Investment companies subject to Part 24 of the Companies Act 2014 or the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (S.I. No. 352 of 2011) may adopt an alternative body of accounting standards, being standards which apply in the United States of America, Canada or Japan in preparing ‘Companies Act entity or group financial statements’ or ‘Companies Act entity financial statements’ respectively.
Such entities, therefore, may adopt standards other than those issued by the FRC in preparing Companies Act financial statements under Irish company law.
Other notes
Applicability of Irish company law to entities preparing EU-adopted IFRS (‘IFRS’) financial statements
A3.5 Paragraphs A2.18 and A2.19 provide information regarding the applicability of UK company law to entities preparing IAS accounts.
Irish companies that prepare IFRS financial statements, either voluntarily or because they are required to do so by law, are not required to comply with the financial reporting requirements of the Companies Act 2014, except as provided for in sections 292 and 295 of the Companies Act 2014. The provisions of these sections shall also apply to the IFRS financial statements of credit institutions and to the IFRS financial statements of insurance undertakings except to the extent that they are disapplied or modified by the Credit Institutions Regulations 2015 or the Insurance Undertakings Regulations 2015 (as amended) respectively.
The sections of the Companies Act 2014 that contain the financial reporting requirements applying to IFRS financial statements are contained primarily in Part 6 of the Companies Act 2014. IFRS financial statements are not required to comply with the provisions of Schedules 3, 3A, 3B, 4 and 4A, as applicable; however, while such provisions may not be legally required, the disclosure requirements of IFRS may contain similar requirements.
Limited Liability Partnerships
A3.6 There are a number of references in this FRS to Limited Liability Partnerships (LLPs) and legislation relating thereto. There is no such equivalent legislation in Ireland, however, certain Irish partnerships are required to comply with Part 6 of the Companies Act 2014 by virtue of the European Communities (Accounts) Regulations 1993 (as amended).
Other
A3.7 The following tables are intended as a reference guide to the corresponding or similar provisions in Irish law and do not purport to be complete. As such, it may be necessary to make reference to other Irish law as appropriate. It should be noted too that not all Irish legal provisions are equivalent to the corresponding UK legal provisions and reference should be made to Irish law for an understanding of the relevant requirements. It should also be noted that various sections and paragraphs referenced may have been amended by legislation subsequent to the issuing of this FRS, and reference should be made to such amended text where applicable.
FRS 100 Application of Financial Reporting Requirements

 

UK references

RoI references

Paragraph

Act and the Regulations (unless otherwise stated)

Companies Act 2014

Other legislative reference

4(b) (Footnote 4)

Sections 395(2) and 403(3)

Sections 290(5) and 293(5) respectively require a company or a group 'not trading for the acquisition of gain by its members' to prepare Companies Act entity financial statements or Companies Act group financial statements.

 

4(b) (Footnote 5) and 12

Section 395(1)(a)

Sections 290(3)(a), 290(4)(a)

 

4(b) (Footnote 5) and 12

Section 395(1)(b)

Sections 290(3)(b), 290(4)(b)

 

15

Schedule 3 to the Regulations

 

Insurance Undertakings Regulations 2015 (as amended) Refer also to A3.2 in the Introduction to this Appendix.

Application Guidance The Interpretation of Equivalence

 

UK references

RoI references

Paragraph

Act and the Regulations (unless otherwise stated)

Companies Act 2014

Other legislative reference

AG1 / AG9

Section 401

Section 300

 

AG1

Section 401(2)(b)(i) and (ii)

Section 300(4)(b)(i) and (ii)

 

AG1

Section 401(2)(b)(iii)

Section 300(4)(b)(iii)

 

AG1

Section 401(2)(b)(iv)

Section 300(4)(b)(iv)

 

AG4, AG5 and AG6

Section 401(2)(b)(ii)

Section 300(4)(b)(ii)

 

AG6

Section 401(2)(b)

Section 300(4)(b)

 


Appendix I Glossary

 

UK references

RoI references

Paragraph

Act and the Regulations (unless otherwise stated)

Companies Act 2014

Other legislative reference

'individual financial statements'

Section 394

Section 290

 

'individual financial statements'

Section 132 of the Charities Act 2011

 

Section 48 of the Charities Act 2009 provides that certain charities are to prepare an annual statement of accounts, the form and content of which can be prescribed by Regulations of the Minister. At the date of publication of this FRS, no Regulations regarding the form and content of charities' annual statements of accounts have been published. Charity companies are required to prepare financial statements, which give a true and fair view in accordance with the Companies Act.

Sections 290(5) and 293(5) of the Companies Act 2014 respectively require that a company or a group 'not trading for the acquisition of gain by its members' must prepare Companies Act financial statements (ie not IFRS financial statements), and this provision may apply to many Irish charity companies.

'individual financial statements'

Section 72A of the Building Societies Act 1986

 

Section 77 of the Building Societies Act, 1989 requires the preparation of (a) an income and expenditure account giving a true and fair view of its income and expenditure for that year, (b) a balance sheet giving a true and fair view of the state of its affairs as at the end of that year, (c) a statement of the source and application of funds giving a true and fair view of the manner in which its business has been financed and in which its financial resources have been used during that year, and also requires (d) that the annual accounts shall also contain, whether in the form of notes or otherwise, such supplementary information as is required by or under that Act.

'qualifying entity' (Footnote 10)

Section 474(1) of the Act

Section 274(5)

 

'qualifying entity (for the purposes of this FRS)' and footnote 11

Schedule 3 to the Regulations

 

Insurance Undertakings Regulations 2015 (as amended) Refer also to A3.2 in the Introduction to this Appendix.

'qualifying entity' (Footnote 11)

Schedules 1 and 2 to The Friendly Societies (Accounts and Related Provisions) Regulations 1994

 

There is no equivalent legislation in Ireland.

'qualifying entity' (Footnote 11)

Schedule 1 to the Insurance Accounts Directive (Lloyd's Syndicate and Aggregate Accounts) Regulations 2008

 

There is no equivalent legislation in Ireland.

'qualifying entity' (Footnote 11)

Syndicate Accounting Byelaw No 8 of 2005

 

There is no equivalent legislation in Ireland.

'qualifying entity' (Footnote 11)

The Insurance Accounts Directive (Miscellaneous Insurance Undertakings) Regulations 2008

 

There is no equivalent legislation in Ireland.

'small entity'

LLP Regulations

Refer to A3.6 in the Introduction to this Appendix.


Appendix II Note on legal requirements

 

UK references

RoI references

Paragraph

Act and the Regulations (unless otherwise stated)

Companies Act 2014

Other legislative reference

A2.1 (Footnote 12)

Charities Act 2011

 

Section 48 of the Charities Act 2009 provides that certain charities are to prepare an annual statement of accounts, the form and content of which can be prescribed by Regulations of the Minister. At the date of publication of this FRS, no Regulations regarding the form and content of charities' annual statements of accounts have been published. Charity companies are required to prepare financial statements, which give a true and fair view in accordance with the Companies Act.

Sections 290(5) and 293(5) of the Companies Act 2014 respectively require that a company or a group 'not trading for the acquisition of gain by its members' must prepare Companies Act financial statements (ie not IFRS financial statements), and this provision may apply to many Irish charity companies.

A2.6

Section 395(1)

Sections 290(3), 290(4)

 

A2.6

Section 396

Section 291

 

A2.6

Section 403(2)

Sections 293(3), 293(4)

 

A2.6

Section 404

Section 294

 

A2.7

Parts 15 and 16 of the Act

Part 6 of the Companies Act 2014

 

A2.8

Part 15 of the Act

Part 6 of the Companies Act 2014

 

A2.13

Sections 395(2) and 403(3)

Sections 290(5) and 293(5) respectively require a company or a group 'not trading for the acquisition of gain by its members' to prepare Companies Act entity financial statements or Companies Act group financial statements.

 

A2.14

Sections 395 and 403

Sections 290 and 293

 

A2.15

Section 395(4A)

Section 290(6A)

 

A2.16

Section 407

Section 296

 

A2.16 (Footnote 15)

'.... accounts of subsidiaries that are required to be prepared under Part 15 of the Act'

'....financial statements of subsidiaries that are required to be prepared under the Companies Act 2014'

 

A2.18

'Entities that prepare IAS accounts, either voluntarily or because they are required to do so by law, only need apply certain sections of the Act as it relates to financial reporting. They are not required to comply with Schedules 1 and 6 to the Regulations (for companies and groups), nor with Schedules 2 or 3 (for banks and insurance companies). Schedules 4, 5, 7 and 8 to the Regulations are, however, still applicable.'

Refer to A3.5 in the Introduction to this Appendix.

 

A2.19

'The sections of parts 15 and 16 of the Act that contain financial reporting requirements applying to 'IAS accounts......'

Section 410A

Section 411

Section 412

Section 413

Sections 414A to 414D

Sections 415 to 419

Sections 420 to 421

Section 494

Refer to A3.5 in the Introduction to this Appendix.

 

A2.21

Building Societies Act 1986

 

Building Societies Act, 1989

A2.21

Charities Act 2011 and regulations made thereunder

 

Section 48 of the Charities Act 2009 provides that certain charities are to prepare an annual statement of accounts, the form and content of which can be prescribed by Regulations of the Minister. At the date of publication of this FRS, no Regulations regarding the form and content of charities' annual statements of accounts have been published. Charity companies are required to prepare financial statements, which give a true and fair view in accordance with the Companies Act.

Sections 290(5) and 293(5) of the Companies Act 2014 respectively require that a company or a group 'not trading for the acquisition of gain by its members' must prepare Companies Act financial statements (ie not IFRS financial statements), and this provision may apply to many Irish charity companies.

A2.21

Co-operative and Community Benefit Societies Act 2014

 

Section 30 of Part IV of the Industrial and Provident Societies (Amendment) Act, 1978; Regulations 4 and 5 of the Friendly Societies Regulations, 1988, pursuant to Section 3 of the Friendly Societies (Amendment) Act, 1977

A2.21 and footnote 16

Friendly Societies Act 1992 and the Friendly Societies (Accounts and Related Provisions) Regulations 1994 (as amended)

 

Regulations 4 and 5 of the Friendly Societies Regulations, 1988, pursuant to Section 3 of the Friendly Societies (Amendment) Act, 1977

A2.21

The Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996

 

Section 56 of the Pensions Act, 1990; Regulation 5 and paragraphs 1 and 2(a)(ii) of Schedule A of the Occupational Pension Schemes (Disclosure of Information) Regulations, 2006


AMD 24
Amendment
Appendix IV deleted by Amendments to FRS 100 Application of Financial Reporting Requirements (issued July 2015)
Superseded date
01 Jan 2016 (Earlier application permitted subject to certain conditions – see paragraph 10)
Previous text
A4.1 Appendix IV: Republic of Ireland (RoI) legal references will be updated as appropriate for both the Companies Act 2014 and the Irish legislation implementing the EU Accounting Directive once the latter has been made. This will be made available on the FRC website and included in the next edition of FRS 100.

A4.2 The principal Irish companies’ legislation referred to in the table below is:
  • The Companies Act 1963 (1963 Act);
  • The Companies (Amendment) Act 1986 (1986 Act);
  • The Companies Act 1990 (1990 Act);
  • The European Communities (Companies: Group Accounts) Regulations 1992 – S.I. No. 201 of 1992 (Group Accounts Regulations 1992 or GAR 1992);
  • The European Communities (Credit Institutions: Accounts) Regulations 1992 – S.I. No. 294 of 1992 (Credit Institutions Regulations 1992 or CIR 1992);
  • The European Communities (Insurance Undertakings: Accounts) Regulations 1996 – S.I. No. 23 of 1996 (Insurance Undertakings Regulations 1996 or IUR 1996);
  • European Communities (Directive 2006/46/EC) Regulations, 2009 – S.I. No. 450 of 2009.
A4.3 Where general references are made in this FRS to the ‘2006 Act’, ‘Companies Act 2006 (‘and the Regulations’)’, ‘the Companies Act’, ‘the Act’, ‘the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008’, ‘the 2008 Regulations’ and ‘the Regulations’, readers should refer, in an Irish context, to the relevant sections and paragraphs of the Irish companies’ legislation listed above. Such general references are not included in the table below. References in the text to ‘IAS accounts’ are equivalent to ‘IFRS accounts’ in Irish company law.
A4.4 The following Irish legislation is also referenced in the table below:
  • The Building Societies Act 1989;
  • The Credit Union Act 1997;
  • The Central Bank Act 1971;
  • The Charities Act 2009;
  • The Industrial and Provident Societies (Amendment) Act 1978; . Friendly Societies (Amendment) Act 1977;
  • Friendly Societies Regulations 1988 – SI 74 of 1988;
  • The Pensions Act 1990; and
  • The Occupational Pension Schemes (Disclosure of Information) Regulations 2006 – S.I. No. 301 of 2006.
Companies Act accounts under Irish company law
A4.5 Certain companies are permitted under Irish company law to prepare their Companies Act accounts under a financial reporting framework based on accounting standards other than those issued by the Financial Reporting Council (FRC) and promulgated by the Institute of Chartered Accountants in Ireland in respect of their application in the Republic of Ireland. Specifically:
  • Pursuant to the Companies (Miscellaneous Provisions) Act 2009, as amended by the Companies (Amendment) Act 2012, relevant parent undertakings are permitted to prepare ‘Companies Act individual accounts’ and/or ‘Companies Act group accounts’ in accordance with US GAAP, as modified to ensure consistency with the EU Accounting Directives.
  • Investment companies subject to Part XIII of the Companies Act 1990 or the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 may adopt an alternative body of accounting standards, being standards which apply in the United States of America, Canada or Japan in preparing ‘Companies Act individual accounts’.
Such companies, therefore, may adopt standards other than those issued by the FRC in preparing Companies Act accounts under Irish company law.
Small companies under Irish law
A4.6 There is no equivalent to the UK small companies regime (see Sections 381 to 384 of the 2006 Act) in Irish company law. Section 8 of the Companies (Amendment) Act 1986 (as amended by the European Union (Accounts) Regulations 2012 (S.I. No. 304 of 2012) defines small companies for the purposes of Irish company law. However, whilst Sections 10 and 12 provide certain exemptions for such companies in relation to their financial statements filed with the Registrar of Companies, there are no exemptions for individual or group accounts prepared for members. Under Section 8 (as amended) the qualifying conditions for a company to be treated as a small company in respect of any financial year are as follows:
  • The amount of its turnover for that year shall not exceed €8,800,000;
  • The balance sheet total for that year shall not exceed €4,400,000; and
  • The average number of persons employed by the company in that year shall not exceed 50.
A4.7 Except for companies in their first financial year, Section 8(1)(a) provides that companies qualify to be treated as small if, in respect of that year and the financial year immediately preceding that year, the company satisfies at least two of the above criteria. Section 9 provides that where a company has qualified as small, it continues to be so qualified until it does not meet two of the above three criteria for two consecutive years. Similarly, where a company no longer qualifies as small, two consecutive years of meeting two of the three criteria are required to qualify again as small.
A4.8 The following do not qualify as small under Irish company law:
  • Companies subject to the European Communities (Credit Institutions: Accounts) Regulations 1992;
  • Companies subject to the European Communities (Insurance Undertakings: Accounts) Regulations 1996; and
  • Private companies whose securities are admitted to trading on a regulated market.
Size exemptions from the preparation of group accounts under Irish company law A4.9 In Ireland, there is an exemption from the preparation of group accounts for medium sized groups under the European Communities (Companies: Group Accounts) Regulations 1992. An Irish parent company within the scope of those Regulations is exempt from the requirement to prepare group accounts if it meets the size and other criteria set out in Regulation 7. The size criteria in summary require that the parent and subsidiaries together meet two of the following three conditions:
  • The amount of turnover for that year does not exceed €15,236,858;
  • The balance sheet total for that year does not exceed €7,618,428; and
  • Average number of employees does not exceed 250.

A4.10 Exemptions from preparing group accounts on the basis of size, in accordance with Regulation 7 of the European Communities (Companies: Group Accounts) Regulations 1992, are only available to parent companies that are private companies and are not available to parent companies subject to the European Communities (Credit Institutions: Accounts) Regulations 1992 or the European Communities (Insurance Undertakings: Accounts) Regulations 1996.
Other notes A4.11 The table below is intended as a reference guide to the corresponding or similar provisions in Irish company law and does not purport to be complete. Readers should note that not all Irish provisions are equivalent to the corresponding UK provisions and are advised to refer to the Irish legislation for an understanding of relevant requirements. Readers should also be aware that various sections and paragraphs referenced below have been amended by subsequent legislation and readers should ensure that they refer to such amended text where applicable.
Summary

  UK References RoI References
Paragraph 2006 Act and the 2008 Regulations (unless otherwise stated) 1963 Act 1986 Act 1990 Act GAR 1992 CIR 1992 IUR 1996
ix

‘smaller entities as defined by company law’

There are no equivalent provisions in Irish company law to the UK small companies regime or to the Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008. Small companies are defined in Section 8 of the 1986 Act. Please refer to the note above in the introduction to this table.
FRS 100 Application of financial reporting requirements
  UK References RoI References
Paragraph 2006 Act and the 2008 Regulations (unless otherwise stated) 1963 Act 1986 Act 1990 Act GAR 1992 CIR 1992 IUR 1996
4(a) (Footnote 2) ‘smaller entities as defined by company law’ There are no equivalent provisions in Irish company law to the UK small companies regime or to the Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008. Small companies are defined in Section 8 of the 1986 Act. Please refer to the note above in the introduction to this table.
4(b) (Footnote 3) Sections 395(2) and 403(3) There are no directly equivalent provisions in Irish company law to Sections 395(2) and 403(3), although Sections 148(3) and 150(4) respectively of the 1963 Act do require certain categories of entities to prepare ‘Companies Act individual accounts’ or ‘Companies Act group accounts’, including those ‘not trading for the acquisition of gain by members’.
4(b) (Footnote 4) and 12 Section 395(1)(a) Section 148(2)(a)       Regulation 5(1) Regulation 5(1)
4(b) (Footnote 4) and 12 Section 395(1)(b) Section 148(2)(b)       Regulation 5(1) Regulation 5(1)
Application guidance: The interpretation of equivalence
  UK References RoI References
Paragraph 2006 Act and the 2008 Regulations (unless otherwise stated) 1963 Act 1986 Act 1990 Act GAR 1992 CIR 1992 IUR 1996
AG1 / AG4 / AG5 / AG6 / AG9 Section 401       Regulation 9A Regulation 8A Regulation 12A
AG1 Section 401(2)       Regulation 9A(3) Regulation 8A(3) Regulation 12A(3)
Appendix I: Glossary
  UK References RoI References
Paragraph 2006 Act and the 2008 Regulations (unless otherwise stated) 1963 Act 1986 Act 1990 Act GAR 1992 CIR 1992 IUR 1996
‘Financial institution’ and footnote 15 Part IV permission; Section 40(4) of the Financial Services and Markets Act 2000 There is no equivalent legislation in Ireland to the Financial Services and Markets Act 2000. Banks in Ireland are licensed under Section 9 of the Central Bank Act 1971.
‘Financial institution’ Section 119(1) of the Building Societies Act 1986 Section 2(1) of the Building Societies Act 1989
‘Financial institution’ Industrial and Provident Societies Act 1965 and Credit Unions Act 1979 Credit Unions Act 1997
‘Financial institution Friendly Societies Act 1992; section 7(1)(a) of the Friendly Societies Act 1974 Friendly Societies Acts 1896 to 1977
‘Individual financial statements’ ‘The term ‘individual accounts’ from the Act...’ Sections 148 and 149          
‘Qualifying entity’ (Footnote 18) S474(1) of the Act       Regulation 3(1) ‘‘undertakings dealt with in the group  accounts’’ shall be construed as a reference to the parent undertaking drawing up the group accounts together with any subsidiary undertakings of that parent dealt with in the group accounts (excluding any undertakings dealt with in the group accounts in accordance with Regulation 32) Paragraph 1 of part IVIncluded in the consolidation’, in relation to group accounts, or ‘included in consolidated group  accounts’, means that the undertaking is included in the accounts by the method of full (and not proportional) consolidation, and references to an undertaking excluded from consolidation shall be construed accordingly;  
Appendix II: Note on legal requirements
  UK References RoI References
Paragraph 2006 Act and the 2008 Regulations (unless otherwise stated) 1963 Act 1986 Act 1990 Act GAR 1992 CIR 1992 IUR 1996
A2.1 (Footnote 19) Charities Act 2011 Charities Act 2009, Section 48 provides that all charities are to prepare an annual statement of accounts, the form and content of which can be prescribed by regulations of the Minister. Section 48 is, at the date of publication of this FRS, not commenced and no regulations regarding the form and content of charities’ annual statements of accounts have been produced. Charity companies are required to prepare financial statements in accordance with the Companies Acts. Sections 148(3) and 150(4) of the 1963 Act requires that companies ‘not trading for the acquisition of gain by the members’ must prepare Companies Act accounts (i.e. not IFRS accounts), and this definition may apply to many Irish charity companies.
A2.6 Section 395(1) Section 148(2)       Regulation 5(1) Regulation 5(1)
A2.7 ‘Parts 15 and 16 of the Act and with the Regulations’ Sections 148, 149, 150, 150A, 150C, 151, 152, 153 and 161D Sections 3 to 6 and the Schedule Sections 41-43 and Section 63 Regulations 5 to 35 and the Schedule Regulations 5(1), 5(1A), 7, 8, 8A, 9 and 10 and the Schedule Regulations 5(1), 5(1A), 6, 7, 8, 10, 12, 12A and 13 and the Schedule
See also section 33(4) of the Companies (Amendment) (No.2) Act 1999 (as amended)
A2.8 the small companies regime’ and Sections 381-384 There are no equivalent provisions in Irish company law to the UK small companies regime or to the Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008. Small companies are defined in Section 8 of the 1986 Act. Please refer to the note above in the introduction to this table.
A2.9 Section 384 and ‘the small companies regime There are no equivalent provisions in Irish company law to the UK small companies regime. Section 2 of the 1986 Act sets out which companies cannot qualify as small under Section 8 of the 1986 Act and cannot, therefore, avail of the filing exemptions under Sections 10 and 12 or apply the FRSSE in preparing their financial statements. Please refer to the note above in the introduction to this table.
A2.10 Part 4 of the FSMA 2000 (companies excluded from the small companies regime) There is no equivalent legislation in Ireland to the Financial Services and Markets Act 2000. There are also no equivalent provisions in Irish company law to the UK small companies regime or to the Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008. Small companies are defined in Section 8 of the 1986 Act. Please refer to the note above in the introduction to this table.
Para. A2.12 Section 383 There is no equivalent provision in Irish company law dealing with the criteria for a small parent company or a definition of small groups.
Para. A2.12 and footnote 23 Schedule 6 of the Small companies and Groups (Accounts and Directors’ Report) Regulations 2008 There are no equivalent provisions in Irish company law to the UK small companies regime or to the Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008. Small companies are defined in Section 8 of the 1986 Act. Please refer to the note above in the introduction to this table.
Para. A2.13 Sections 395(2) and 403(3) There are no directly equivalent provisions in Irish company law to Sections 395(2) and 403(3), although Sections 148(3) and 150(4) respectively of the 1963 Act do require certain categories of companies to prepare ‘Companies Act individual accounts’ or ‘Companies Act group accounts’, including those ‘not trading for the acquisition of gain by members’.
Para. A2.14 Sections 395 and 403 Sections 148(5) and 150 (6) allow a company to switch from IFRS accounts to Companies Act accounts, for individual accounts and group accounts respectively, where there is a ‘relevant change in circumstance’. As at the date of publication of this FRS, there are no equivalent provisions in Irish company law to sections 395(4A) and 403(5A), providing for the ability of companies to switch from IFRS accounts to Companies Act accounts every five years for reasons other than a relevant change in circumstance.
Para. A2.15 Section 395(4A) As at the date of publication of this FRS, there are no equivalent provisions in Irish company law providing for the ability of companies to switch from IFRS accounts to Companies Act accounts every five years for reasons other than a relevant change in circumstance.
Para A2.16 Section 407 Section 150C          
Para. A2.16 (Footnote 25) ‘Accounts of subsidiaries that are required to be prepared under Part 15 of the Act.’ Section 148       Regulation 5 Regulation 5
Para. A2.18 Entities preparing IAS accounts either voluntarily or because they are required to do so by law:
  • only need apply certain sections of the Act as it relates to financial reporting; and
  • are not required to comply with Schedules 1 and 6 (for companies and groups) nor with Schedules 2 or 3 (for bank and insurance companies) .
Companies that prepare IFRS accounts either voluntarily or because they are required to do so in accordance with Sections 148 (individual accounts) and 150 (group accounts) of the 1963 Act, are not required to comply with the detailed accounting requirements of the Companies Acts 1963-2012 (and related Regulations), save for certain disclosures as detailed in Section 149(A)(1)(b) and Section 150B(2) of the 1963 Act. Regulations 5(1B) and 7(5) of the CIR 1992 set out the required disclosures for the IFRS accounts of credit institutions and regulations 5(1B) and 10(5) of the IUR 1996 set out the required disclosures for the IFRS accounts of insurance undertakings.
Para. A2.18 Schedules 4,5, 7 and 8 are still applicable to ‘IAS accounts’ Please refer to the references to these Schedules below. Readers should refer to Sections 149(a)(1)(b) and 150B(2) of the 1963 Act as the additional disclosure requirements for IFRS accounts in UK and Irish company law are not the same in all cases.
Para. A2.18 Schedule 4 (application to IAS accounts)   Section 16 and 16A   Paragraphs 18 to 22 of Part 2 of the Schedule Regulation 10 and Part III of the Schedule Paragraphs 32- 36 of Part IV of the Schedule
Para. A2.18 Schedule 5 (application to IAS accounts) Section 191 Paragraph 39(6) of Part IV of the Schedule   Paragraph 16 of Part 2 of the Schedule Paragraph 74(4) of Part I and paragraph 1 of Part II of the Schedule Paragraph 21(e) of Part III and paragraph 1 of Part IV of the Schedule
Para. A2.18 Schedule 7 Sections 158 Sections 13 and 14 Section 63 Regulation 37 Regulations 11 and 11A Regulations 14 and 14A
Para. A2.18 Schedule 8 Section 191 of the 1963 Act sets out the disclosure requirements with regard to directors’ salaries and payments. There are no specific requirements with regard to the disclosure of directors’ remuneration for quoted companies in Irish company law. However, the Listing Rules of the Irish Stock Exchange contain further requirements in this regard.
Para. A2.19 Various sections of Parts 15 and 16 of the Act that contain financial reporting requirements applying to ‘IAS accounts’ Companies that prepare ‘IFRS accounts’ in accordance with Sections 149 (individual accounts) and 150 (group accounts) of the 1963 Act, are not required to comply with the detailed accounting requirements of the Companies Acts 1963-2012 (and related Regulations), save for certain disclosures as detailed in Section 149(A)(1)(b) and Section 150B(2). Regulations 5(1B) and 7(5) of the CIR 1992 set out the required disclosures for the IFRS accounts of credit institutions and regulations 5(1B) and 10(5) of the IUR 1996 set out the required disclosures for the IFRS accounts of insurance undertakings.
Para. A2.19 Section 410A Sections 149A(1)(b)(xii) and 150B(2)(l) applying Section 7(1)(a) of SI 450 of 2009 Paragraph 36A of Part IV of the Schedule, (pursuant to Section 149A(1)(b)(xii) of the 1963 Act)     Regulation 5(1B)(l) applying paragraph 66A of Part I of the Schedule and Regulation 7(5)(l) applying Section 7A(2)(a) of Part II of the Schedule Regulation 5(1B)(k) applying paragraph 19A of Part III of the Schedule and Regulation 10(5)(k) applying paragraph 37(a) of Part IV, of the Schedule
Para. A2.19 Section 411 Section 149A(1)(b)(ix) and Section 150B(2)(e) Paragraph 42 of Part IV of the Schedule, (pursuant to Section 149A(1)(b)(ix) of the 1963 Act)   Paragraph 15 of Part 2 of the Schedule (pursuant to Section 150B(2)(e) of the 1963 Act) Regulations 5(1B)(e) and 7(5)(e) applying paragraph 77 of Part I of the Schedule Regulation 5(1B)(e) applying paragraph 27 of Part III of the Schedule and Regulation 10(5)(e) applying paragraph 29 of Part IV of the Schedule
Para. A2.19 Section 412 Sections 149A(1)(b)(i) and 150B(2)(a) applying Section 191 Paragraph 39(6) of Part IV of the Schedule (pursuant to Section 149A(1)(b)(i) of the 1963 Act)   Paragraph 16 of Part 2 of the Schedule (pursuant to Section 150(2)(a) of the 1963 Act) Regulation 5(1B)(a) applying paragraph 74(4) of Part I of the Schedule and Regulation 7(5)(a) applying paragraph 4 of Part IV of the Schedule Regulation 5(1B)(a) applying paragraph 21(e) of Part III of the Schedule and Regulation 10(5)(a) applying paragraph 30(1) of Part IV of the Schedule
Para. A2.19 Section 413     Sections 41 to 43      
Para. A2.19 Sections 415-419 Section 158 Sections 13 and 14 Section 63 Regulation 37 Regulations 11 and 11A Regulations 14 and 14A
    Sections 26 and 46 of the Electoral Act 1997 also require disclosures in respect of political donations to be provided in the directors’ report.
Para. A2.19 Sections 420-421 Section 191 of the 1963 Act sets out the disclosure requirements with regard to directors’ salaries and payments. There are no specific requirements with regard to the disclosure of directors’ remuneration for quoted companies in Irish company law. However, the Listing Rules of the Irish Stock Exchange contain further requirements in this regard.
Para. A2.19 Section 494 Section 161D          
Para. A2.21 Building Societies Act 1986 Building Societies Act 1989, Section 2(1)
Para. A2.21 Charities Act 2011and regulations made thereunder Section 48 of the Charities Act, 2009 provides that all charities are to prepare an annual statement of accounts, the form and content of which can be prescribed by regulations of the Minister. Section 48 is, as of the date of publication of this FRS, not commenced and no regulations regarding the form and content of charities’ annual statements of accounts have been published. Charity companies are required to prepare financial statements in accordance with the Companies Acts. Sections 148(3) and 150(4) of the 1963 Act requires that companies ‘not trading for the acquisition of gain by the members’ must prepare Companies Act accounts (i.e. not IFRS accounts) and this definition may apply to many Irish charity companies.
Para. A2.21 Friendly and Industrial and Provident Societies Act 1968 Section 30 of part IV of the Industrial and Provident Societies (Amendment) Act, 1978; Regulation 4 of the Friendly Societies Regulation 1988, pursuant to Section 3 of the Friendly Societies (Amendment) Act 1977
Para. A2.21 and footnote 26 Friendly Societies Act 1992 and the Friendly Societies (Accounts and Related Provisions) Regulations 1994 (as amended) Regulation 4 of the Friendly Societies Regulation 1988, pursuant to Section 3 of the Friendly Societies (Amendment) Act 1977
Para. A2.21 The Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996 Section 56 of the Pensions Act 1990; Regulation 5 and paragraphs 1 and 2(a)(ii) of Schedule A of the Occupational Pension Schemes (Disclosure of Information) Regulations 2006
Para. A3.12 small companies regime There are no equivalent provisions in Irish company law to the UK small companies regime or to the Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008. Small companies are defined in Section 8 of the 1986 Act. Please refer to the note above in the introduction to this table.

Approval by the FRC

Publication date: 28 Mar 2018

Financial Reporting Standard 100 Application of Financial Reporting Requirements was approved for issue by the Board of the Financial Reporting Council on 1 November 2012, following its consideration of the Accounting Council’s advice for this FRS.

Approval by the FRC – Amendments to FRS 100 Application of Financial Reporting Requirements issued July 2015

Publication date: 28 Mar 2018

Amendments to FRS 100 Application of Financial Reporting Requirements was approved for issue by the Board of the Financial Reporting Council on 1 July 2015, following its consideration of the Accounting Council’s Advice.

Approval by The FRC – Amendments to FRS 102 The Financial Reporting Standard Applicable in the UK and Republic of Ireland – Triennial review 2017 – Incremental Improvements and Clarifications issued December 2017

Publication date: 28 Mar 2018

Amendments to FRS 102 – Triennial review 2017 – Incremental improvements and clarifications was approved for issue by the Financial Reporting Council on 6 December 2017.

Basis for Conclusions

Publication date: 28 Mar 2018

This Basis for Conclusions18 accompanies, but is not part of, FRS 100 Application of Financial Reporting Requirements and summarises the main issues considered by the Financial Reporting Council (FRC) in developing FRS 100.

Feedback from a number of exposure drafts and consultation documents has been considered in the development of FRS 100 (see Table 1 at the end of this Basis for Conclusions). Unless otherwise stated, respondents to the consultations supported the proposals made; detailed feedback statements to all consultations are available on the FRC website.

The effective dates and any transitional arrangements for FRS 100, and any amendments to it, are set out in the FRS.

———————————

18 This Basis for Conclusions replaces the Accounting Council’s Advice included in previous editions of FRS 100.

Basis for Conclusions - Objective

Publication date: 28 Mar 2018

  1. In developing financial reporting standards, the overriding objective of the FRC is to enable users of accounts to receive high-quality understandable financial reporting proportionate to the size and complexity of the entity and users’ information needs.
  2. In achieving this objective, the FRC aims to provide succinct financial reporting standards that:
    1. have consistency with global accounting standards through the application of an IFRS-based solution unless an alternative clearly better meets the overriding objective;
    2. balance improvement, through reflecting up-to-date thinking and developments in the way businesses operate and the transactions they undertake, with stability;
    3. balance consistent principles for accounting by all UK and Republic of Ireland entities with proportionate and practical solutions, based on size, complexity, public interest and users’ information needs;
    4. promote efficiency within groups; and
    5. are cost-effective to apply.

Basis for Conclusions - A differential financial reporting system and the elimination of ‘public accountability’

Publication date: 28 Mar 2018

  1. In the early stages of developing this FRS, a differential financial reporting system was proposed based on three tiers of entities using public accountability and size as differentiators. The proposals would have extended the application of EU-adopted IFRS to those entities with public accountability19. Whilst there was some support for a differential financial reporting system, entities that would be required to apply EU-adopted IFRS did not support the proposal, principally on the basis of costs and benefits.
  2. It was concluded that public accountability (and therefore the differential financial reporting system) could be eliminated if the proposals were extended to include additional requirements for entities with publicly traded debt or equity, and for financial institutions. As a result, it was then proposed that the majority of extant financial reporting standards were replaced with a single standard based on the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) (what is now FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland), which would apply to a broader group of entities.
  3. Respondents supported the removal of the public accountability criteria and the proposal not to extend the application of EU-adopted IFRS beyond that already required by company law or other legislation or regulation.

———————————

19 It was proposed that an entity had public accountability if: (a) as at the reporting date, its debt or equity instruments are traded in a public market or it is in the process of issuing such instruments for trading in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets); or (b) as one of its primary businesses, it holds assets in a fiduciary capacity for a broad group of outsiders and/or it is a deposit taking entity for a broad group of outsiders. This is typically the case for banks, credit unions, insurance companies, securities brokers/dealers, mutual funds or investment banks.

Basis for Conclusions - Applicable financial reporting standards

Publication date: 28 Mar 2018

  1. For accounting periods beginning on or after 1 January 2015, but before 1 January 2016, the following FRSs were applicable in the UK and Republic of Ireland:
    1. FRS 100 Application of Financial Reporting Requirements;
    2. FRS 101 Reduced Disclosure Framework;
    3. FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland;
    4. FRS 103 Insurance Contracts;
    5. FRS 104 Interim Financial Reporting; and
  2. The Financial Reporting Standard for Smaller Entities (effective January 2015) (the FRSSE).
    1. For accounting periods beginning on or after 1 January 2016, the following FRSs are applicable in the UK and Republic of Ireland20:
    2. FRS 100 Application of Financial Reporting Requirements;
    3. FRS 101 Reduced Disclosure Framework;
    4. FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland;
    5. FRS 103 Insurance Contracts;
    6. FRS 104 Interim Financial Reporting; and
    7. FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime.

———————————

20 For micro-entities in the Republic of Ireland, FRS 105 was effective from 1 January 2017.

Basis for Conclusions - Applicable financial reporting standards - FRS 101 Reduced Disclosure Framework

Publication date: 28 Mar 2018

  1. FRS 101 sets out an optional reduced disclosure framework which addresses the financial reporting requirements for individual financial statements of subsidiaries and ultimate parents that otherwise apply the recognition, measurement and disclosure requirements of EU-adopted IFRS. Disclosure exemptions are available to a qualifying entity in its individual financial statements.
  2. FRS 101 was developed in response to concerns that arose from earlier consultations that a move to the IFRS for SMEs for subsidiaries of entities that apply EU-adopted IFRS would require recognition and measurement differences to be monitored and maintained at group level, and yet the alternative of a move to EU-adopted IFRS would increase disclosure in comparison to current accounting standards.
  3. A qualifying entity may apply the reduced disclosure framework regardless of the financial reporting framework applied in the consolidated financial statements of the group.
  4. Further details regarding the development of FRS 101 are set out in the Basis for Conclusions accompanying that FRS.

Basis for Conclusions - Applicable financial reporting standards - FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland

Publication date: 28 Mar 2018

  1. FRS 102 replaced accounting standards applicable in the UK and Republic of Ireland with a single FRS developed from the IFRS for SMEs. FRS 102 applies to general-purpose financial statements and the financial reporting of entities including those that are not constituted as companies and those that are not profit-oriented. FRS 102 applies to the financial statements of entities that are not applying EU-adopted IFRS, FRS 101 or   FRS 105.
  2. Further details on the development of FRS 102 are set out in the Basis for Conclusions accompanying that FRS.

Basis for Conclusions - Applicable financial reporting standards - FRS 103 Insurance Contracts

Publication date: 28 Mar 2018

  1. FRS 103 and the accompanying non-mandatory implementation guidance consolidate existing financial reporting requirements and guidance for insurance contracts and are based on IFRS 4 Insurance Contracts extant in 2013 (except to the extent that it was amended by IFRS 13 Fair Value Measurement), the requirements of FRS 27 Life Insurance and elements of the Association of British Insurers’ Statement of Recommended Practice on Accounting for Insurance Business (the ABI SORP).
  2. An entity applying FRS 102, whether or not it is an insurance company, shall also apply FRS 103 to insurance contracts (including reinsurance contracts) that it issues and reinsurance contracts that it holds, and to other financial instruments that it issues with a discretionary participation feature.
  3. Further details on the development of FRS 103 are set out in the Basis for Conclusions accompanying that FRS.

Basis for Conclusions - Applicable financial reporting standards - FRS 104 Interim  Financial Reporting

Publication date: 28 Mar 2018

  1. FRS 104 replaced the Statement Half-yearly financial reports. FRS 104 is based on the interim financial reporting requirements set out in IAS 34 Interim Financial Reporting and is intended for use in the preparation of interim reports by entities that apply FRS 102 when preparing their annual financial statements. Entities applying FRS 101 to prepare the annual financial statements may also use FRS 104 as a basis for their interim financial reports.
  2. FRS 104 does not require any entity to prepare an interim report, nor does it change the extent to which law or regulation may require the preparation of such a report.
  3. Further details on the development of FRS 104 are set out in the Basis for Conclusions accompanying that FRS.

Basis for Conclusions - Applicable financial reporting standards - FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime

Publication date: 28 Mar 2018

  1. In November 2013, The Small Companies (Micro-entities’ Accounts) Regulations 2013 (SI 2013/3008) were made which amended The Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008 (SI 2008/409). The amendment introduced a new optional reporting framework for companies that meet the qualifying criteria of a micro-entity. FRS 105 was developed in response to this change of UK company law.
  2. 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.
  3. The application of the micro-entities regime is optional; however, a micro-entity that chooses to prepare its financial statements in accordance with the micro-entities regime is required to apply FRS 105. A company that qualifies for this regime, but chooses not to apply it, is required to apply another financial reporting standard.
  4. Further details on the development of FRS 105 are set out in the Basis for Conclusions accompanying that FRS.

Basis for Conclusions - Applicable financial reporting standards - The Financial Reporting Standard for Smaller Entities (FRSSE)

Publication date: 28 Mar 2018

  1. Consistent with earlier proposals, the FRSSE was updated and retained for an initial period following the application of FRS 102, with a view to consulting again on its future in the short to medium term.
  2. The EU Accounting Directive (Directive 2013/34/EU) was implemented in the UK in 2015 (and in the Republic of Ireland in 2017). In doing so, changes were made to company law to reflect new legal requirements and to take advantage of new options that became available.
  3. The majority of respondents supported proposals to withdraw the FRSSE and replace it with a new section (Section 1A Small Entities) in FRS 102, effective for accounting periods beginning on or after 1 January 201621, and for Section 1A to set out the presentation and disclosure requirements applicable to small entities, whilst the recognition and measurement requirements of the remainder of FRS 102 would apply.
  4. Eligibility for the small companies regime is set out in company law. Section 1A applies to companies eligible for the small companies regime, LLPs eligible for the small LLPs regime and any other entity that would have met the criteria for the small companies regime had they been companies.
  5. Further details on the development of Section 1A of FRS 102 are set out in the Basis for Conclusions accompanying that FRS.

———————————

21 For small entities in the Republic of Ireland, Section 1A was effective from 1 January 2017.

Basis for Conclusions - Statements of Recommended Practice (SORPs)

Publication date: 28 Mar 2018

  1. In earlier proposals, it was recommended that almost all SORPs be withdrawn. Respondents questioned this, with many noting that SORPs contribute to improving the quality of financial reporting in the UK. An alternative approach was proposed, and respondents supported the proposal to streamline the number of SORPs in issue resulting in SORPs being either updated for consistency with FRS 102 or withdrawn as follows:

    SORP Accounting Council’s Advice

    Accounting for insurance business

    A separate consultation was undertaken and the SORP was consequently withdrawn

    Accounting for oil & gas

    Withdrawn

    Authorised funds

    Updated for consistency with FRS 102

    Banking segments

    Withdrawn

    Charities

    Updated for consistency with FRS 102

    Financial reports of pension funds

    Updated for consistency with FRS 102 to supplement Section 34 of FRS 102

    Further and higher education

    Updated for consistency with FRS 102

    Investment companies

    Updated for consistency with FRS 102

    Leasing

    Withdrawn

    Limited liability partnerships

    Updated for consistency with FRS 102

    Registered social housing providers

    Updated for consistency with FRS 102


  2. In response to a request for clarification as to the role of the SORPs, reference to the application of SORPs is included in this FRS and in Section 10 Accounting policies, estimates and errors of FRS 102, to note that they are a source of guidance on accounting policies. In December 2017 a reference was also added to Section 1 Scope of FRS 102.

Basis for Conclusions - Reduced disclosures – clarification of equivalence

Publication date: 28 Mar 2018

  1. FRS 101 and FRS 102 permit certain exemptions from disclosures, which are in some cases subject to equivalent disclosures being included in the consolidated financial statements of the group in which the entity is consolidated. Clarification on interpreting the meaning of the term equivalence is included in the Application Guidance: The Interpretation of Equivalence to this FRS.
  2. Amendments were made to the Application Guidance in July 2015 as a result of the implementation of the EU Accounting Directive (Directive 2013/34/EU).
  3. Alongside these amendments, clarification was given relating to the meaning of equivalent disclosures included in the consolidated financial statements in relation to intra-group balances eliminated on consolidation. Provided that relevant disclosures have been made in the consolidated financial statements, the exemption is permitted when intra-group balances have been eliminated on consolidation. This is subject to any disclosures that are required by law.

Basis for Conclusions - Withdrawn publications

Publication date: 28 Mar 2018

  1. Paragraphs 14 and 15A of this FRS sets out the accounting standards which were withdrawn for accounting periods beginning on or after 1 January 2015. Paragraph 15 sets out the statements that were also withdrawn.

Basis for Conclusions - Table 1

Publication date: 28 Mar 2018

Exposure drafts and consultation documents

Feedback to the following exposure drafts and consultation documents has been considered in the development of FRS 100.

More detailed information on the early development of the new UK and Republic of Ireland accounting standards can be found on the FRC website.

Exposure draft Date of issue Finalised as Date of issue

FRED 43

Application of Financial Reporting Requirements

Oct 2010

FRS 100 Application of Financial Reporting Requirements

Nov 2012

FRED 46

Application of Financial Reporting Requirements (revised)

Jan 2012

Consultation Document

Accounting standards for small entities – Implementation of the EU Accounting Directive

Sep 2014

Amendments to FRS 100 Application of Financial Reporting Requirements

Jul 2015

FRED 60

Draft amendments to FRS 100 Application of Financial Reporting Requirements and FRS 101 Reduced Disclosure Framework

Feb 2015

Request for information

Request for comments on the implementation of FRS 102 in order to inform the future development of FRS 102

Mar 2016

Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland – Triennial review 2017 – Incremental improvements and clarifications

Dec 2017

FRED 67

Draft amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland – Triennial review 2017 – Incremental improvements and clarifications

Mar 2017

 
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