26 November 2012

Financial Reporting Matters

IFRS-based reduced disclosure regime now available

The FRC has published the first accounting standards under the new UK financial reporting regime: FRS 100, which explains the framework, and FRS 101. FRS 101 allows the individual accounts of qualifying parent and subsidiary entities (as defined) to be prepared under EU-IFRSs recognition and measurement but with reduced disclosures.  However, FRS 101 cannot be applied in any group accounts.

The standards are applicable for accounting periods starting on or after 1 January 2015 but can be adopted early with immediate effect, regardless of the accounting period.

The final part of the new regime (FRS 102), which will be the 'core' new UK GAAP, is expected in the first quarter of 2013.  The same effective date is expected although the early-adoption rules have not yet been announced.

FRS 100 sets out which framework an entity must or may apply.  It does not impose EU-IFRSs beyond existing requirements.  In a related change to the Companies Act, for financial years ending on or after 1 October 2012, some companies which previously applied EU-IFRSs in their individual accounts may be able to change framework (to EU-IFRSs with reduced disclosures, for example, or to existing UK GAAP).  Further information on this change is available in our sister publication Financial Reporting Update.

FRS 101's exemptions include cash flow statements and certain disclosure exemptions relating to financial instruments, business combinations and group share-based payment arrangements.  Some are conditional on the parent's consolidated accounts giving equivalent disclosures.  The financial instrument disclosure exemptions are not available to qualifying entities that are financial institutions (as defined).

Accounts prepared under FRS 101 must also comply with the accounting requirements of the Companies Act, requiring certain amendments to EU-IFRSs.  These include, in particular, applying the balance sheet and profit and loss account formats of the Companies Act.

FRS 102 will also include similar disclosure exemptions for the individual accounts of qualifying entities.

If you have any comments on this edition, or if you would like one of your colleagues to receive future editions, please contact me at: FinancialReportingMatters@kpmg.co.uk.


Andrew Vials
Senior Technical Partner



IFRS-based reduced disclosure regime now available