The UK Financial Reporting Standards for Smaller Entities (FRSSE) sets out which entities are eligible to use the standard. Its use is restricted to small companies or small groups, as defined by the Companies Act 2006, which are not ‘ineligible’ and to entities that would meet that definition had they been incorporated under companies legislation (excluding building societies).
If you use the FRSSE now you should consider whether you’ll want to move to Financial Reporting Standard (FRS 102) in the future. In this video Iain Selfridge discusses what the introduction of a new UK accounting framework from 1 January 2015 – new UK GAAP - means for small companies.
If you use the FRSSE – that’s the Financial Reporting Standard for Small Entities – you might be wondering what 102 means to you. And the short answer is there is no real change. Yes, we are removing all of existing UK GAAP and replacing it with FRS 102 but the FRSSE has only had some minor amendments. But the FRC has been thinking about what they are going to do with the FRSSE, given that its foundation of old UK GAAP is being removed. And what they have said so far is that the FRSSE is here to stay for at least the medium term and they are also looking to see what the EU’s discussions on micro entities will produce, to see whether or not the FRSSE will survive.
One thing to think about is that you may not previously have moved your companies from the FRSSE up to UK GAAP, because there is quite a big difference between the two. But new 102 is a lot more compact and concise compared to old UK GAAP and you might find there are relatively few differences if you wish to move up from the FRSSE to FRS 102. And there are a lot less disclosure requirements than old UK GAAP as well.
A company qualifies as small (and eligible to use the FRSSE) if, during a financial year, it satisfies any two of:
A company is ineligible from being a small company if it is a plc, a financial services or insurance company, or part of a group containing any of these or containing an European Economic Area (EEA) listed company