Financial Reporting Standards (FRS) set the framework for preparing and presenting financial statements in the UK and the Republic of Ireland. These standards ensure consistency, transparency, and accountability in financial reporting, allowing businesses to comply with legal and regulatory requirements while providing useful financial information to stakeholders.

This article outlines the key FRS standards that companies in the UK must follow, depending on their size, structure, and reporting needs.

1. FRS 100: Application of Financial Reporting Requirements

FRS 100 is the cornerstone of the financial reporting framework in the UK and Ireland. It does not provide specific reporting rules but instead acts as a guide to help companies determine which financial reporting standard they should apply. FRS 100 directs entities to adopt the appropriate standard based on their size and the complexity of their operations.

• Who It Applies To: All entities in the UK and Ireland that prepare financial statements under UK GAAP.
• Key Feature: FRS 100 allows entities to choose between FRS 101, FRS 102, or FRS 105, depending on their eligibility, ensuring that the financial reporting burden matches the company’s scale and complexity.

2. FRS 101: Reduced Disclosure Framework

FRS 101 provides a simplified reporting framework for subsidiaries and parent companies that are part of a group reporting under International Financial Reporting Standards (IFRS). It allows these entities to prepare individual financial statements with reduced disclosures, making the reporting process less burdensome while maintaining alignment with IFRS.

• Who It Applies To: Subsidiaries and parent companies that are part of a larger group using IFRS for consolidated accounts.
• Key Feature: FRS 101 allows companies to reduce disclosure requirements while still using IFRS for financial reporting, making it ideal for entities that do not need to provide full IFRS disclosures in their individual financial statements.

3. FRS 102: The Financial Reporting Standard Applicable in the UK and Ireland

FRS 102 is the most commonly used standard for medium and large-sized entities. It provides comprehensive guidance on accounting and financial reporting for entities that do not fall under IFRS but require a more robust framework than FRS 105. FRS 102 covers areas such as revenue recognition, leases, financial instruments, employee benefits, and business combinations.

• Who It Applies To: Medium and large entities that are not required to use IFRS or eligible for FRS 105.
• Key Feature: FRS 102 offers detailed guidance on various accounting areas and allows companies to prepare financial statements that meet UK GAAP requirements.

4. FRS 102 Section 1A: Small Entities

A section of FRS 102, known as Section 1A, provides a simplified version of FRS 102 for small entities. It reduces the disclosure requirements for small businesses, making it easier to prepare financial statements without sacrificing compliance with UK GAAP.

• Who It Applies To: Small companies with turnover up to £10.2 million, a balance sheet total of up to £5.1 million, and fewer than 50 employees.
• Key Feature: Reduced disclosure requirements, making financial reporting less complex and more manageable for small businesses.

5. FRS 105: The Financial Reporting Standard for Micro-Entities

FRS 105 is designed specifically for micro-entities, which are the smallest businesses in the UK. It simplifies the financial reporting process by removing some of the more complex accounting principles and offering the most basic financial disclosures.

• Who It Applies To: Micro-entities with turnover up to £632,000, a balance sheet total of up to £316,000, and no more than 10 employees.
• Key Feature: FRS 105 allows for a highly simplified financial reporting process with minimal disclosures, making it easier for micro-entities to comply with accounting requirements.

6. FRS 103: Insurance Contracts

FRS 103 is relevant to entities involved in insurance contracts and sets out the accounting rules for recognition, measurement, and disclosure of insurance contracts. It provides guidance on how to handle insurance-related financial reporting under UK GAAP.

• Who It Applies To: Entities that issue insurance contracts, including insurance companies and other businesses with insurance-related activities.
• Key Feature: FRS 103 aligns the financial reporting of insurance contracts with global best practices while maintaining compliance with UK GAAP.

Companies House Requirements

Entities applying the FRS standards must submit their financial statements annually to Companies House. The specific filing requirements depend on the size and structure of the business. For most entities, this includes:

• Balance sheet
• Profit and loss account (income statement)
• Notes to the financial statements
• Directors’ report (for medium and large entities)
• Auditor’s report (if applicable)

Filing deadlines vary by entity type:

• Private companies: Must file accounts within nine months of the end of the financial year.
• Public companies: Must file accounts within six months of the end of the financial year.

Failure to meet these deadlines can result in penalties, ranging from £150 for late submissions of up to one month, to £1,500 or more for delays over six months.

Conclusion

The FRS framework in the UK provides tailored financial reporting standards for entities of all sizes, from micro-entities using FRS 105 to large companies adopting FRS 102 or full IFRS. By selecting the appropriate FRS standard, businesses can ensure that their financial reporting is both compliant and efficient, minimizing the administrative burden while meeting regulatory obligations.

At StratFinance Solutions, we can help your business navigate the complexities of financial reporting, ensuring you apply the right FRS standard and meet all Companies House filing requirements. Contact us today for expert advice on financial reporting standards.