FRS 101 Reduced Disclosure Framework
Financial Reporting Standard (FRS) 101 outlines financial reporting requirements and disclosure exemptions applicable to subsidiaries and ultimate parent companies in their individual financial statements. The focal point of FRS 101 is its reduced disclosure framework, allowing qualifying entities to omit specific disclosures required under full IFRS. The objective is to create more concise financial statements, concentrating on information most pertinent to users.
Disclosure Exemptions
To leverage the disclosure exemptions of FRS 101, qualifying entities must adhere to the following requirements:
1.Adopt recognition, measurement, and disclosure requirements of UK-adopted IFRS, with amendments as needed to comply with the Companies Act and company regulations.
2.Disclose
- A summary of the adopted disclosure exemptions.
- The name of the parent of the group, and where to obtain the consolidated financial statements.
Key Features of FRS 101
Scope and Applicability: FRS 101 is applicable to qualifying entities within a larger group preparing financial statements for consolidation purposes. These entities may include subsidiaries, associates, or joint ventures, providing them with the option to use a reduced disclosure framework compared to full IFRS.
Presentation of Financial Statements
FRS 101 guides the presentation of financial statements, specifying format and content. Qualifying entities are encouraged to present statements in a manner consistent with IFRS, with modifications as necessary to comply with reduced disclosure requirements.
Why FRS 101 Matters
FRS 101 is advantageous for qualifying entities, offering a simplified reporting framework. This simplification leads to significant time and cost savings in financial statement preparation, enhancing efficiency. By streamlining disclosure requirements, FRS 101 aims to improve the understandability of financial statements for stakeholders, facilitating a clearer grasp of an entity’s financial performance and position for investors, creditors, and other users of financial information.