Facts – Who does new UK GAAP apply to

Who does new UK GAAP apply to?

FRS 100 sets out the financial reporting requirements under new UK GAAP (FRSs 100, 101 and 102) for UK and ROI entities.

Is anyone excluded from using new UK GAAP?

Yes. The consolidated accounts of groups that are listed on a regulated market must apply EU-adopted IFRS (EU-IFRS). This is currently the case, so there is no change for such entities.

[[[The consolidated accounts of groups that are listed on a regulated market must apply EU-adopted IFRS (EU-IFRS).]]]

EU-IFRS remains an option for everyone else, with few exceptions. Subsidiaries who adopt EU-IFRS accounting treatment can reduce their disclosure by adopting FRS 101 (see below).

Small and micro-entities

For companies which qualify as small under company law (and equivalent non-corporate entities) a revised Financial Reporting Standard for Smaller Entities (FRSSE 2015) is currently available and it was originally expected that this will be the standard of choice. However the FRSSE will be replaced by FRS 102 for periods starting on or after 1 January 2016, albeit with reduced disclosures. A new Accounting Directive will require small company disclosures to be further simplified, and this will be implemented in the UK for the same effective date.

[[[FRS 105 will not require any further disclosures above the minimal requirements of the micro-entity regulations.]]]

Micro-entities will have their own separate accounting standard, FRS 105. As micro-entities are prohibited under law from adopting fair value or revaluation accounting, FRS 105 will not contain these treatments. In other respects FRS 105 resembles FRS 102 but with additional simplifications in areas such as deferred tax and pensions. FRS 105 will not require any further disclosures above the minimal requirements of the micro-entity regulations.

Other entities

We expect most non-small entities to apply FRS 102, though EU-IFRS (and possibly FRS 101) remain an option.

Reduced disclosure for members of groups using EU-IFRS

FRS 101 is available to reduce disclosure in individual financial statements of qualifying entities that otherwise apply the recognition, measurement and disclosure requirements of EU-IFRSs.

Qualifying entities are those entities that are members of a group that prepares consolidated financial statements:

  • that are publicly available;
  • that are intended to give a true and fair view; and
  • in which that member is consolidated.

A charity cannot be a qualifying entity for the purposes of FRS 101.

The disclosure exemptions are available irrespective of whether those publicly available consolidated financial statements are prepared under EU-adopted IFRSs, UK GAAP or any other GAAP, provided that they are intended to give a true and fair view. These exemptions may apply not only in subsidiary financial statements but also in the individual financial statements of parent companies.