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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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1.4 Date from which effective and transitional arrangements
1.4.1 Extract from FRS102: Section 1.14-1.15
1.14 An entity shall apply this FRS for accounting periods beginning on or after 1 January 2015. Early application is permitted for accounting periods ending on or after 31 December 2012. For entities that are within the scope of a SORP, early application is permitted for accounting periods ending on or after 31 December 2012 providing it does not conflict with the requirements of a current SORP or legal requirements for the preparation of financial statements. If an entity applies this FRS before 1 January 2015 it shall disclose that
1.15 In July 2015 amendments were made to this FRS to incorporate the new small entities regime and make other amendments necessary to maintain consistency with company law. An entity shall apply the amendments set out in Amendments to FRS 102 – Small entities and other minor amendments (the July 2015 amendments) other than the replacement of paragraph 26.15 with new paragraphs 26.15 to 26.15B for accounting periods beginning on or after 1 January 2016. Early application is:
(a) permitted for accounting periods beginning on or after 1 January 2015 provided that The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 (SI 2015/980) are applied from the same date; and
(b) required if an entity applies The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 (SI 2015/980) to a reporting period beginning before 1 January 2016.
For entities not subject to company law, early application is permitted from 1 January 2015.
If an entity applies the July 2015 amendments before 1 January 2016 it shall disclose that fact, unless it is a small entity, in which case it is encouraged to disclose that fact.
1.18 In December 2017 amendments were made to this FRS as a result of the triennial review 2017. An entity shall apply the amendments to this FRS as set out in the Triennial review 2017 amendments, other than the amendments for small entities in the Republic of Ireland, for accounting periods beginning on or after 1 January 2019. The amendments to Section 1A for small entities in the Republic of Ireland are effective for accounting periods beginning on or after 1 January 2017.
Early application is permitted provided that all the amendments to this FRS are applied at the same time, except that early application of each, or any, of the following amendments is permitted:
(a) paragraphs 11.13A(a), 11.13B, 11.13C and 11.14(a)(i);
(b) paragraphs 29.14A and 29.22A; and
(c) the amendments to Section 1A for small entities in the Republic of Ireland, provided the Companies (Accounting) Act 2017 is applied from the same date.
If an entity applies the Triennial review 2017 amendments, other than the amendments for small entities in the Republic of Ireland, before 1 January 2019 it shall disclose that fact, unless it is a small entity applying Section 1A Small Entities, in which case it is encouraged to disclose that fact.
If a small entity in the Republic of Ireland applies the amendments to Section 1A before 1 January 2017, in addition to the disclosure required by paragraph 1AD.3, it is encouraged to disclose that fact.
1.4.2 OmniPro comment
1.4.2.1 Overview
As per section 1.14 of FRS 102 is effective for periods beginning on or after 1 January 2015 with early adoption permitted for accounting periods ending on or after 31 December 2012. Hence for an entity with a 31 December year end the first set of FRS 102 financial statements will have to be prepared for 31 December 2015 assuming the FRSSE cannot be applied. The FRSSE can be applied for all periods beginning before 1 January 2016. Therefore, the opening balances under old GAAP at 1 January 2014 would have to be restated to FRS 102 compliant numbers and the 31 December 2014 comparatives adjusted so as to comply with FRS 102.
1.4.2.2 July 2015 amendments – where applicable
In relation to the amendments made in July 2015 as per section 1.15 of FRS 102. Early adoption of the July 2015 amendments is permitted, but where early adoption has been applied it must be disclosed. (unless it is an entity they can apply section 1.5 of FRS 102 in which case it is encouraged) Note the July 2015 amendment must be applied for period beginning on or after 1 January 2016.
See example disclosure below for a qualifying entity claiming disclosure exemptions.
1.4.2.3 Amendments to FRS 102 – Triennial review – adaption requirements
As per section 1.18 of FRS 102 in December 2017 amendments were made to FRS 102 as part of a triennial review and are immediately effective for periods beginning on or after 1 January 2019 (except for the amendments to 1A of FRS 102). However, early adaption is permitted. The amendments made to section 1A of FRS 102 for the Republic of Ireland are effective from 1 January 2017. Where early application of the Triennial review amendments is applied then all of the changes made must be applied (i.e. you cannot pick and choose which changes to apply – it is an all or nothing) with the exceptions for:
- the changes to section 1 which permits a loan from a director or his close family members where either the director or one of his close family members are shareholder in the reporting entity which is given at non-market terms and not repayable on demand (but includes on demand loans also) to be carried at transaction price less repayments, plus/minus interest charged if any (i.e. there is no requirement to discount at a market rate of interest). Where this option is taken and in the prior period it was present valued then this is a change in accounting policy and should be adjusted retrospectively (see 10.7.2). Note this option was available for entities from May 2017 as section 1.15a was inserted. See discussion below.
- The changes to section 29 of FRS 102 with regard to gift aid rules for 100% subsidiaries of charities where a close carrying surcharge does not have to be provided if it will be paid out within 9 months of year end.
- For tax impact of dividends – these can be shown in profit and loss.
- The amendments to section 1A of FRS 102 for small entities in ROI as discussed above
- As before if early adoption is applied and it does not come within the exceptions mentioned above, the entity, must disclose that fact unless it is an entity applying. Section 1A of FRS 102 for periods beginning on or after January 2017, in which case it is encouraged as stated in section 1.18 of FRS 102. If a Republic of Ireland entity applies section 1A of FRs 102 then the entity is encouraged to state this fact in the financial statements. Note section 1A of FRs 102 can only be applied for periods beginning on or after 1 January 2015
Example 2: Disclosure detailing application of July 2015 amendments
‘The FRC issued amendments to FRS 102 called ‘Amendments to FRS 102-Small entities and other minor adjustments’ which must be applied for accounting periods beginning on or after 1 January 2016 with early adoption permitted. The company has adopted these amendments in these financial statements.’
Example 3: Disclosure detailing application of July 2015 amendments
‘The FRC issued amendments to FRS 102 called ‘Amendments to FRS 102- Triennial review incremental improvements and classifications adjustments’ which can be applied for accounting periods beginning on or after 1 January 2019 with early adoption permitted. The company has adopted these amendments in these financial statements.’
1.4.2.4 Small entity get out for some non-market loans.
Section 1.15A of FRS 102 provides an exemption for small entities where it receives a loan from a director or its close family members who is a natural person AND a shareholder and the terms of the loan are at non-market rates and not repayable on demand to carry these at a transaction price (i.e the amount of the loan advanced) less repayments plus/minus interest if any. This ensures a small entity does not have to present value these loans in line with the standard requirements of Section 11 of FRS 102. See further discussions at 11.6.2.4.5.1.
Note in December 2017 the FRC issued amendments to FRS 102 as a result of the triennial review as discussed at 1.4.2.3. This in effect deleted section 1.15A of FRS 102 and replaced it with section 11.13A(a), 11.13B, 11.13C and 11.14(a) (i). The change has no impact as the substance is the same instead the exemption is included in section 11 as opposed to section 1.
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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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