The Financial Reporting Council (FRC) in UK has published three standards which form the basis of the new UK GAAP. These standards are applicable in UK and in Ireland. This framework will be effective for the accounting periods beginning from 1st January 2015. The FRC has also permitted the usage of these new standards for accounting periods ending on or after 31st December 2012, provided that there is no conflict with the requisites of the present SORP (Statement of Recommended Practice).
The three FRS Standards are:
FRS 100 – Application of Financial Reporting Requirements
The objective of FRS 100 is to set the financial reporting framework according to the legislation, regulations or accounting standards in UK and Ireland. FRS 100 will be applicable for financial statements pertaining to assets, liabilities, financial position and profit or loss for a period which is meant to provide a true and fair view.
FRS 101 – Reduced Disclosure Framework
The FRS 101 sets the reduced disclosure framework which deals with disclosure exemptions for qualified entities (individual financial statements of subsidiaries, including intermediate parents, and ultimate parents) that usually apply the recognition, measurement and disclosure requisites of EU-adopted IFRSs.
FRS 102 – The Financial Reporting Standard applicable in the UK and Republic of Ireland
The FRS 102 replaces a major portion of the UK financial reporting standards. This is applicable for large and medium-sized UK entities which includes public benefit entities, retirement benefit plans and financial institutions. Hence, the scope of FR 102 standard would be greater than the other standards. This Standard has 350 pages compared to the existing UK GAAP which is 3000 pages. The reduction in the pages shows that the financial reporting standards are modernized and simplified. This standard is also based on the IFRS for SMEs.
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