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FRC introduces changes in response to EU Accounting Directive

by | Aug 17, 2015 | ACCA, accountancy regulation, financial reporting

This Content Was Last Updated on February 9, 2017 by Jessica Garbett

 

UK GAAP: reporting options for micro, small and medium/large companies

The Financial Reporting Council (FRC) has issued a suite of changes that are largely in response to the implementation of the new EU Accounting Directive, and include:

  • a new standard, FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime
  • new Section 1A Small Entities of FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland
  • other changes necessary for continued compliance with company law
  • the annual review of FRS 101 Reduced Disclosure Framework.

The main changes are effective for accounting periods beginning on or after 1 January 2016, with early application permitted for accounting periods beginning on or after 1 January 2015.

The FRC has also made available an Overview of the financial reporting framework, which describes the financial reporting framework applicable for accounting periods beginning on or after 1 January 2016. It includes key differences between the FRSSE and the new requirements set out in FRS 105 and Section 1A of FRS 102.

The reporting options available are: 

Micro

The definition of a micro-entity is contained in sections 384A and 384B of the Companies Act 2006. The qualifying conditions are met by a company in a year in which it does not exceed two or more of the following criteria: (a) Turnover – £632,000 (b) Balance sheet total – £316,000 (c) Number of employees – 10.

Reporting options:

  • FRS 105
  • FRSSE 2015 (one year only)
  • Section 1A of FRS 102
  • FRS 102
  • EU-adopted IFRS

Small

The definition of a small entity is contained in sections 382 and 383 of the Companies Act 2006. The qualifying conditions are met by a company in a year in which it does not exceed two or more of the following criteria: The thresholds are: (a) Turnover – £10.2m (b) Balance sheet total – £5.1m (c) Number of employees – 50.

Reporting options:

  • FRSSE 2015 (one year only)
  • FRS 102
  • EU-adopted IFRS
  • Section 1A of FRS 102

Medium/large

Reporting options:

  • FRS 102
  • EU-adopted IFRS

For more information, visit ACCA’s technical advisory webpages.

Article contributed from ACCA InPractice