The Statutory Instrument sets out the new threshold limits
Entities qualifying as large or medium-sized under the Companies Act 2006 will need to transition to FRS 102, The Financial Reporting Standard Applicable in the UK and the Republic of Ireland, for periods beginning on or after 1 January 2015, unless they opt for application of the EU-adopted IFRS.
The thresholds are:
The thresholds apply for reporting requirements and are not audit thresholds. The audit thresholds are unchanged.
The new thresholds will apply for financial years beginning on or after 1 January 2016; however, the Department for Business, Innovation & Skills (BIS) has also confirmed that companies meeting the thresholds will have the option of accessing the small company accounting regime ahead of that date.
Medium-sized entities qualifying as small under the increased thresholds, estimated to be 11,000 by BIS, will be able to avoid transition to the full FRS 102 from 1 January 2015 as they will be able to apply the small entity provisions in FRS 102, effectively avoiding having to produce a cashflow statement, a statement of changes in equity and a statement of total comprehensive income and consolidated accounts, as well as having to produce a total of only 13 disclosures.
Such entities may alternatively apply full FRS 102 from 1 January 2015 and then have the option of using the small entity provisions in FRS 102 for periods from 1 January 2016.
Small companies will need to transition to FRSSE 2015 for periods beginning on or after 1 January 2015 if they do not choose to adopt FRS 102 or EU-adopted IFRS.
The FRSSE 2015 is still almost totally based on old UK GAAP and features a limited number of differences from FRSSE 2008; FRSSE 2015 will be replaced by the small entity provisions within FRS 102 for periods beginning on or after 1 January 2016.
Moreover, small entities may wish to avoid adopting FRSSE 2015 from 1 January 2015 as they will be able to apply the small entity provisions in FRS 102 when these are available in summer 2015.
The main differences between FRSSE 2015 and the small entity provisions in FRS 102 will be in respect of the recognition and measurement of various items in the financial statements, while presentation and disclosures will be broadly consistent.
Small entities should consider whether adopting the small entity provisions in FRS 102 as soon as they are available, rather than transitioning to the FRSSE 2015 first, would be a better option in terms of costs and consistency of financial information produced.
The reporting options available to organisations are:
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