FRS 102: The FRC proposes changes

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Steven Collings
Audit and Technical Partner
Leavitt Walmsley Associates Ltd
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Steve Collings reports on the changes proposed to accounting standard FRS 102 by the Financial Reporting Council (FRC).

The FRC issued a consultation document (condoc) in September 2016 relating to the first triennial review of UK and Ireland accounting standards, which outlines the approach to changes in IFRS that could have an impact on FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, and perhaps other standards.

My previous article gave a general overview as to the intentions of the FRC and the amendments made to IFRS, which may trigger changes to UK and Irish accounting standards. Since publication of the condoc, many practitioners have queried why the FRC is conducting a triennial review of the standard when many companies (especially small companies) have not yet implemented the new framework.

When FRS 102 was first issued in March 2013, the FRC indicated that it would review the standard at least every three years. FRS 102 became mandatory for unlisted entities that were not part of the small companies’ regime (i.e. medium-sized and large companies) for accounting periods starting on or after 1 January 2015 (i.e. 31 December 2015 year-ends).

As a result, many entities have already started to use the standard and the FRC has received feedback on implementation issues that first-time adopters have already encountered. In addition, the FRC is already aware of improvements which can be made to the standard as more entities implement it, and the FRC actively encourages these suggestions for improvement to continue.  

Also, the Companies Act 2006 was revised last year to incorporate the provisions of the EU accounting directive. The revised act increased the size thresholds which determine whether a company is a micro-entity, small, medium or large, with consequential increases to the group size limits also.

Under the revised act, small companies have a turnover limit of £10.2m (previously £6.5m) and a balance sheet total of £5.1m (previously £3.26m). SI 2015/980, which amended the companies act 2006, contained an early-adoption clause allowing a company...

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