FRS 100 (Application of Financial Reporting Requirements) plays a foundational role in defining how businesses in the UK and the Republic of Ireland choose the appropriate financial reporting standards for preparing their financial statements. Introduced by the Financial Reporting Council (FRC), FRS 100 is a key part of the UK’s post-2015 financial reporting framework and works alongside FRS 101, FRS 102, and FRS 105.

This article explains what FRS 100 is, its scope, and how companies determine which financial reporting standard applies to them under this framework.

What is FRS 10

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FRS 100 establishes the framework for selecting the appropriate accounting standards for preparing financial statements in the UK and Ireland. Instead of setting out detailed reporting requirements on its own, FRS 100 provides the rules for how companies should apply the right reporting standards based on their size, type, and whether they are listed or private.

Key Objectives of FRS 100

1. Application of Appropriate Standards: FRS 100 outlines which financial reporting standards a company must adopt, depending on whether it is a micro-entity, small company, medium-sized company, or large enterprise.

2. Consistency with IFRS: For certain companies, especially publicly listed ones, the standard aims to ensure financial reporting aligns with international standards, primarily International Financial Reporting Standards (IFRS), while also allowing simplified reporting for smaller entities.

3. Flexibility for Different Types of Entities: FRS 100 allows various types of entities to choose the appropriate financial reporting framework that matches their structure and reporting needs, whether that is full IFRS, reduced disclosure IFRS (FRS 101), or simplified standards like FRS 102 or FRS 105.

The Financial Reporting Options Under FRS 100

Under the FRS 100 framework, entities can choose from the following standards depending on their size and nature:

1. FRS 101 - Reduced Disclosure Framework: This is an option for subsidiaries of larger groups that prepare consolidated financial statements under IFRS. FRS 101 allows entities to adopt IFRS with reduced disclosure requirements, making it a more streamlined option.

2. FRS 102 - The Financial Reporting Standard Applicable in the UK and Ireland: This is the principal standard for medium-sized and large companies. FRS 102 provides comprehensive guidance on key accounting areas, including revenue recognition, financial instruments, and leases.

3. FRS 105 - The Financial Reporting Standard for Micro-Entities: A simplified reporting framework for very small companies, FRS 105 reduces disclosure requirements and simplifies accounting principles to make it easier for micro-entities to file their financial statements.

4. Full IFRS: Companies that are publicly listed on a regulated exchange are typically required to adopt full IFRS in preparing their financial statements. However, non-listed companies can also opt to use full IFRS if they wish.

Who Does FRS 100 Apply To?

FRS 100 applies to all companies and entities in the UK and Republic of Ireland that prepare financial statements under UK GAAP (Generally Accepted Accounting Practice). This includes:

• Private companies
• Limited liability partnerships (LLPs)
• Charities
• Public benefit entities
• Publicly listed companies (for whom IFRS is mandatory)

Choosing the Right Standard Under FRS 100

The selection of the right financial reporting standard under FRS 100 depends on several factors:

• Size of the company: Micro-entities and small companies typically apply FRS 105 or FRS 102 Section 1A, while medium and large companies use FRS 102.
• Type of company: Whether the company is part of a group, an individual entity, or operates as a public or private company, the reporting requirements vary.
• Group reporting requirements: Subsidiaries of larger groups may use FRS 101 if the group reports under full IFRS, allowing them to simplify their disclosures.
• Listed or non-listed status: Companies listed on a regulated exchange must use IFRS, while private companies have the flexibility to adopt FRS 102 or other appropriate standards.

Companies House Filing Requirements under FRS 100

Companies applying FRS 100 are required to file their financial statements with Companies House. These financial statements must be prepared according to the chosen financial reporting standard and must include:

• A balance sheet
• Profit and loss statement (income statement)
• Notes to the financial statements
• Directors’ report
• Auditor’s report (where applicable)

The filing deadlines depend on the company’s size:

• Private companies: Financial statements must be filed within nine months after the end of the financial year.
• Public companies: Financial statements must be filed within six months after the end of the financial year.

Benefits of FRS 100

1. Simplified Choice: FRS 100 simplifies the selection of the appropriate accounting standard, ensuring that companies use the most suitable framework for their size and structure.

2. Alignment with Global Standards: FRS 100 ensures consistency with global reporting standards (IFRS), especially for larger and publicly listed companies, while offering flexibility for smaller businesses.

3. Tailored Reporting: The ability to choose from different reporting standards ensures that companies do not overburden themselves with complex disclosures unless necessary, allowing small and micro-entities to simplify their reporting.

Conclusion

FRS 100 serves as the backbone of the UK and Ireland’s financial reporting framework, guiding companies on selecting the right standards for preparing their financial statements. By offering a range of options, from the full complexity of IFRS to the simplicity of FRS 105, it ensures that all types of businesses, from micro-entities to large listed corporations, can meet their reporting obligations in a way that suits their size and operations.

At StratFinance Solutions, we provide expert guidance on financial reporting under FRS 100 and help businesses determine the most appropriate standards for their reporting needs. Whether you are a small business looking to streamline your reporting process or a larger entity navigating complex requirements, we’re here to assist.