UK GAAP

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 as follows:

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:

1. turnover - £632,000
2. balance sheet total - £316,000
3. number of employees - 10

Reporting options

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

FRS 105 Section 28, Transition to this FRS, applies to first-time adoption. It contains the specific requirements for first-time adoption including that a micro-entity shall not retrospectively change the accounting that it followed under its previous financial reporting framework for any of the following transactions:

derecognition of financial assets and financial liabilities

1. Financial assets and financial liabilities derecognised under a micro-entity’s previous accounting framework before the date of transition shall not be recognised upon adoption of this FRS.
   
   Conversely, for financial assets and liabilities that would have been derecognised under this FRS in a transaction that took place before the date of transition, but that were not derecognised under a micro-entity’s previous accounting framework, a micro-entity may choose:
   
   i) to derecognise them on adoption of this FRS; or
   
   ii) to continue to recognise them until disposed of or settled.
   
   
2. accounting estimates.

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:

1. turnover - £10.2m
2. balance sheet total - £5.1m
3. number of employees - 50.

Reporting options

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

Reporting options

• FRS 102
• EU-adopted IFRS