New standards for turnovers under £10.2m

Changes are proposed for three financial reporting exposure drafts

The Financial Reporting Council (FRC) has launched a consultation on three financial reporting exposure drafts (FREDs) that make amendments to UK GAAP and base them on the FRS 102 framework:

  • FRED 58: Draft FRS 105, The Financial Reporting Standard applicable to the Micro-entities Regime
  • FRED 59: Draft amendments to FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland – Small entities and other minor amendments
  • FRED 60: Draft amendments to FRS 100, Application of Financial Reporting Requirements and FRS 101, Reduced Disclosure Framework.

The key changes proposed in the three FREDs include:

  • the withdrawal of the FRSSE for accounting periods beginning on or after 1 January 2016
  • a new accounting standard for micro-entities (FRS 105) based on FRS 102
  • new recognition and measurement requirements for other small entities, outlined in a new section of FRS 102, but with reduced presentation and disclosure requirements compared to the full standard
  • greater flexibility in relation to the format of the profit and loss account and balance sheet in FRS 101, allowing the use of IFRS-based presentation requirements similar to those used for group accounts.

The proposals are intended to be 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.

Companies qualifying as small under the increased Companies Act thresholds (turnover £10.2m, balance sheet total £5.1m, employees 50) will therefore be able to apply FRS 102 for small entities from 1 January 2015 rather than apply full FRS 102.

Each FRED includes a number of consultation questions relating to specific issues on which the FRC is particularly interested in receiving comments from stakeholders.

Some of the most significant questions are:

  • Should the small entities section of FRS 102 include different recognition and measurement criteria from those applicable to larger entities?
  • Should FRS 105 for micro-entities use the same language and terminology as FRS 102?
  • Is the level of simplification in FRS 105 compared with FRS 102 appropriate?
  • Is it appropriate to mandate the expensing of borrowing and development costs in FRS 105?

The consultation on the three FREDs runs up to 30 April 2015; ACCA would like its members to send in their comments to the FRC and also provide their comments to ACCA at  

To access the consultations, visit the 'Related links' section on this page.