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Contents
Section 1: Scope of financial reporting standard 102
1.1.1 Extract from FRS102: Section 1.1-1.2A.
1.2 Basis of preparation of financial statements.
1.2.1 Extract from FRS102: Section 1.3-1.7.
1.2.2.1 The choices available to entities when deciding what paperwork to use.
1.2.2.2 Where entities must apply a particular standard.
1.3 Reduced disclosures for subsidiaries (and ultimate parents)
1.3.1 Extract from FRS102: Section 1.8-1.13.
1.3.2.1 Qualifying entity defined.
1.3.2.1.1 What entities are not qualifying entities in practical terms?
1.3.2.2 What are the disclosure exemptions for qualifying entities?
1.3.2.3 What needs to be put in place in order for the disclosure exemption to be claimed?
1.4 Date from which effective and transitional arrangements.
1.4.1 Extract from FRS102: Section 1.14-1.15.
1.4.2.2 July 2015 amendments – where applicable.
1.4.2.3 Amendments to FRS 102 – Triennial review – adaption requirements.
1.4.2.4 Small entity get out for some non-market loans.
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1.2 Basis of preparation of financial statements
1.2.1 Extract from FRS102: Section 1.3-1.7
1.3 As stated in FRS 100, an entity that is required by the IAS Regulation (or other legislation or regulation) to prepare consolidated financial statements in accordance with EU-adopted IFRS must do so. The individual financial statements of such an entity, or the individual financial statements or consolidated financial statements of any other entity within the scope of FRS 100, must be prepared in accordance with the following requirements:
(a) If the financial statements are the individual financial statements of an entity that is eligible to apply FRS 105, they may be prepared in accordance with that
(b) If the financial statements are those of an entity that is not eligible to apply FRS 105, or of an entity that is eligible to apply FRS 105 but chooses not to do so, they must be prepared in accordance with this FRS, EU-adopted IFRS or FRS 101
1.4 An entity whose ordinary shares or potential ordinary shares are publicly traded, or that files, or is in the process of filing, financial statements with a securities commission or other regulatory organisation for the purpose of issuing ordinary shares in a public market, or an entity that chooses to disclose earnings per share, shall apply IAS 33 Earnings per Share (as adopted in the EU).
1.5 An entity whose debt or equity instruments are publicly traded, or that files, or is in the process of filing, its financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market, or an entity that chooses to provide information described as segment information, shall apply IFRS 8 Operating Segments (as adopted in the EU). If an entity discloses disaggregated information,
but the information does not comply with the requirements of IFRS 8, it shall not describe the information as segment information.
1.6 An entity shall apply FRS 103 to:
(a) insurance contracts (including reinsurance contracts) that it issues and reinsurance contracts that it holds; and
(b) financial instruments with a discretionary participation feature that it issues.
1.7 When applying IAS 33, IFRS 8 and IFRS 6 Exploration for and Evaluation of Mineral Resources (see paragraphs 34.11 to 34.11C), references made to other IFRSs within those standards shall be taken to be references to the relevant section or paragraph in this FRS
Application of Statements of Recommended Practice (SORPs)
1.7A Statements of Recommended Practice (SORPs) set out the circumstances in which they apply. When a SORP applies, an entity shall provide the disclosures required by paragraph 6 of FRS 100.
1.2.2 OmniPro comment
1.2.2.1 The choices available to entities when deciding what paperwork to use
As per section 1.3 to 1.7A of FRS 102 entities have a choice to either:
- Apply FRS 102
- Where the size criteria, and other conditions are met, entities as detailed at 1A 2.1 for the Republic of Ireland and 1A.2.2 for UK entities may apply FRS 102-Section 1A ‘Small entities’. Section 1A has been discussed further in Section 1A of this manual. The thresholds for small entities in the UK and ROI are as follows:
Entities must meet two of the three below threshold’s (for an entity that is not a holding entity):
UK Republic of Ireland
Turnover-not more than £10.2 million €12 Million
Balance sheet total – not more than £5.1 million €6 Million
Average number of employees- not more than 50 50
- Where the size criteria and other conditions are met, entities may apply FRS 105-Micro Entities. The threshold for micro entities in the UK and ROI are as follows:
Entities must meet two of the three below threshold’s:
| UK | Republic of Ireland | |
| Turnover-not more than | £632,000 | €700,000 |
| Balance sheet total – not more than | £316,000 | €350,000 |
| Average number of employees – not more than | 10 | 10 |
Note there are other requirements which also need to be met, in order to avail of FRS 105. See section 1 of the FRS 105 of the website for further details).
- Apply EU adopted IFRS
- Apply FRS 101 (IFRS with reduced disclosures)
- Apply FRS 102 statement of recommended practice if the conditions for use are met (section 1.7A of FRS 102)
1.2.2.2 Where entities must apply a particular standard
As per section 1.6 of FRS 102 FRS 102 must be utilised where an entity engages in insurance contracts, or where there are financial instruments with a discretionary feature
1.2.2.3 Identify the entities tat must refer to the guidance in IFRS for accounting which is referenced in FRS 102.
As per sections 1.4 to 1.7 of FRS 102, the following entities must follow the guidance in IFRS where FRS 102 applies:
Where shares are due to be publicly traded then the rules in 1AS33 earnings per share and IFRS8 – operating segment must be utilised. References made within FRS 102 to the IFRS and to IFRS 6. Exploration of mineral resources shall be read as being part of FRS 102.
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Examples
Example 1: Disclosure example for a qualifying entity applying reduced disclosure exemptions.
Example 2: Disclosure detailing application of July 2015 amendments.
Example 3: Disclosure detailing application of July 2015 amendments.
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