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In 2012 and 2013 the FRC revised financial reporting standards in the United Kingdom and Republic of Ireland. The revisions fundamentally reformed financial reporting, replacing almost all extant standards with three Financial Reporting Standards:
The revisions made by the FRC followed a sustained and detailed period of consultation. The FRC made these fundamental changes recognising that the introduction of IFRS for listed groups in 2002 (with application from 2005) called into question the need for two sets of financial reporting standards. Evidence from consultation supported a move towards an international-based framework for financial reporting, but one that was proportionate to the needs of preparers and users.
The FRC’s overriding objective in setting accounting standards is to enable users of accounts to receive high-quality understandable financial reporting proportionate to the size and complexity of the entity and users’ information needs.
In meeting this objective, the FRC aims to provide succinct financial reporting standards that:
(a) have consistency with international accounting standards through the application of an IFRS-based solution unless an alternative clearly better meets the overriding objective;
(b) reflect up-to-date thinking and developments in the way entities operate and the transactions they undertake;
(c) balance consistent principles for accounting by all UK and Republic of Ireland entities with practical solutions, based on size, complexity, public interest and users’ information needs;
(d) promote efficiency within groups; and
(e) are cost-effective to apply.
The requirements in this FRS take into consideration the findings from the previous consultations on the future of financial reporting in the UK and Republic of Ireland that took place between 2002 and 2012.
Roger Marshall, FRC Board member and Chairman of its Accounting Council said: “FRS 102 modernises and simplifies financial reporting for unlisted companies and subsidiaries of listed companies as well as public benefit entities such as charities. The standard updates UK accounting to take account of evolving business practices. It is succinct, easy to digest and use. Developed with considerable consultation, FRS 102 brings a distinctly British flavour to the international standard for small and medium sized businesses. At around 350 pages the standard replaces close to 3000 pages of UK GAAP.”
The FRSs will be effective from 1 January 2015, but may be adopted early for accounting periods ending on or after 31 December 2012.