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Section 1 – Introduction
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Overview and Who Can Avail
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True & Fair & Basic FS Presentation
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Abridged, Adapted and Abrieviated FS
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Minimum Note Disclosure Requirements
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Section Downloads
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Contents
1A.1.1 Extract from FRS102: Section 1A.1-1A.4
1A.2.1 Section 1A and UK Companies.
1A.2.2.3 What remains the same?.
1A.2.2 Section 1A – As applicable to the republic of Ireland
1A.2.2.2 Which companies can avail of Section 1A/Small Company’s regime?
1A.2.2.3 What remains the same?
1A2.3 Choice to apply section 1A of FRS 102
1A.3.1 Extract from FRS102: Section 1A.5-.1A.6
1A.3.2 OmniPro comment – True and fair view
1A.4 Complete set of financial statements of a small entity
1A.4.1 Extract from FRS102: Section 1A.7-1A.11, Section 1AD.1 and Section 1A.16-1A.20
1A.4.2.1 What Section 1 means in practical terms?
1A.4.2.2 The minimum disclosure requirements and the requirements to still show a true and fair view
1A.4.2.3 Disclosure encouraged under S.1A
1A.4.2.4 Formats of Balance Sheet and profit and Loss Account
1A5 Information to be presented in the statement of financial position
1A5.1 Extract from FRS102: Section 1A.12-1A.13
1A6 Information to be presented in the income statement
1A6.1 Extract from FRS102: Section 1A.14-1A.15
1A7 Voluntary preparation of consolidated financial statements
1A7.1 Extract from FRS102: Section 1A.21-1A.22
1A8.1.1 Guidance on adapting the balance sheet formats
1A8.1.1.1 Extract from FRS102: Section 1AA.1
1A8.1.1.2.2 Required formats for entities
1A8.1.1.2.2.2 Format 1 – Balance sheet – set out in legislation – Schedule 3A
1A8.1.1.2.2.3: Format 2 – balance sheet – set out in legislation – Schedule 3A
1A8.1.1.2.2.4 Example – Format 1 – Balance sheet – practical application
1A8.1.1.2.2.5 Notes required to balance sheet
1A8.2.1 Abridged balance sheet
1A8.2.1.1 Extract from FRS102: Section 1AA.2
1A8.2.1.2.1 Example of abridged balance sheet layout
1A8.2.1.2.2 Notes required to balance sheet
1A8.3.1.1 Extract from FRS102: Section 1AA.3-1AA.6
1A8.3.1.2.2 Example adapted/IFRS layout – Balance sheet
1A9.1.1 Guidance on adapting the profit and loss account formats
1A9.1.1.1 Extract from FRS102: Section 1AB.1
1A9.1.1.2.2 Application of format 1 profit and loss account set out in legislation
1A9.1.1.2.3 Application of format 2 – profit and loss account set out in legislation
1A9.1.1.2.4 Example format 1 – profit and loss account.
1A9.1.1.2.5 Notes required to profit and loss account at a minimum
1A9.9.1.2.5.1 Consolidated profit and loss note requirements
1A9.2 Abridged Profit and Loss Account
1A9.2.1 Extract from FRS102: Section 1AB.2
1A9.2.2.1.1 Approval of the adopted layout
1A9.2.2.1.2 Example of abridged profit and loss account
1A9.3 Adapted Profit and Loss Account
1A9.3.1 Extract from FRS102: Section 1AB.3-1AB.4
1A9.3.2.2: Example adapted/IFRS layout on the profit and loss accounts
1AC10 Appendix C to Section 1A (Applicable for UK entities)
1AC10.1 Disclosure requirements for small entities
1AC10.1.1 Extract from FRS102: Section 1AC.1-1AC.2
1A10.1.2.2 What entities must comply with Appendix C
1AC10.2.1 Extract from FRS102: Section 1AC.3-1AC.
1AC10.2.2.1.1 Accounting police disclosure
1AC10.2.2.1.1.2 Basis of preparation
1AC10.2.2.1.1.4 Basis of consolidation (if applicable)
1AC10.2.2.1.4.1 Subsidiary undertakings
1AC10.2.2.1.1.4.2 Associates and joint ventures
1AC10.2.2.1.1.5 Business combinations and goodwill [if applicable]
1AC10.2.2.1.1.8 Intangible assets
1AC10.2.2.1.1.9 Contingent acquisition consideration
1AC10.2.2.1.1.10 Financial assets
1AC10.2.2.1.1.11 General turnover accounting policy notes
1AC10.2.2.1.1.11.2 Turnover accounting policy for an insurance broker Turnover – commission income
1AC10.2.2.1.1.11.4 Turnover accounting policy note where turnover is derived from investments
1AC.10.2.2.1.1.11.5 Turnover accounting policy for a software
1AC10.2.2.1.1.11.6 Turnover accounting policy for a construction company
1AC10.2.2.1.1.12 Government grants
1AC10.2.2.1.1.12.1 Accruals model
1AC10.2.2.1.1.12.2 Performance model
1AC10.2.2.1.1.13 Dividend income
1AC10.2.2.1.1.14 Dividend distribution
1AC10.2.2.1.1.16 Financial instruments
1AC10.2.2.1.1.16.1 Trade and other debtors
1AC10.2.2.1.1.16.2 Cash and cash equivalents.
1AC10.2.2.1.1.16.3 Other financial assets.
1AC10.2.2.1.1.16.4 Trade and other creditors.
1AC10.2.2.1.1.16.7 Offsetting financial instruments.
1AC10.2.2.1.1.17 Compound financial instruments.
1AC10.2.2.1.1.19 Hedge accounting
1AC10.2.2.1.1.20.1 Environmental liabilities
1AC10.2.2.1.1.20.2 Closure costs
1AC10.2.2.1.1.21 Contingencies
1AC10.2.2.1.1.22 Employee Benefits
1AC10.2.2.1.1.23 Preference share capital
1AC10.2.2.1.1.24 Share capital
1AC10.2.2.1.1.25 Related party transactions
1AC10.2.2.1.1.26 Interest income
1AC10.2.2.1.1.28 Tangible fixed assets
1AC10.2.2.1.1.30 Investment properties
1AC10.2.2.1.1.31.1 Finance leases
1AC10.2.2.1.1.31.2 Operating leases
1AC10.2.2.1.1.31.3 Lease incentives
1AC10.2.2.1.1.32 Leasing company accounting policy
1AC10.2.2.1.1.33 Intangible assets
1AC10.2.2.1.1.35 Exceptional items
1AC10.2.2.1.1.36 Share based costs
1AC10.2.2.1.1.37 Investment properties
1AC10.2.2.1.1.38 Biological assets (where fair value is used)
1AC10.2.2.1.1.39 Biological assets – Livestock (where fair value model is adopted)
1AC10.2.2.1.1.40 Biological assets – Forestry (where cost model is adopted)
1AC10.2.2.1.1.41 Biological assets – Livestock (where cost model is adopted)
1AC10.3 Changes in presentation and accounting policies and corrections of prior period errors
1AC10.3.1 Extract from FRS102: Section 1AC.7-1AC.9
1AC10.3.2.2. Prior period adjustment disclosure
1AC10.3.2.2.1 Option 1 – Analysis of prior period adjustments
1AC10.3.2.2.2 Option 2: Analysis of prior period adjustments
1AC10.3.2.2.2.3 Profit and Loss reserves note/statement of changes in equity
1AC10.3.2.2.3 Statement in changes in equity note – prior period error/change in accounting policy
1AC10.3.2.2.4 Illustration of change in accounting policy disclosure
1AC10.3.2.2.4.1 Example extract of a change in accounting policy disclosure
1AD11.3.2.5 Change in classification from prior period
1AC10.4 True and fair override
1AC10.4.1 Extract from FRS102: Section 1AC.10
1AC10.5 Notes supporting the statement of financial position
1AC10.5.1 Extract from FRS102: Section 1AC.11-1AC.19
1AC10.5.2.1 Property, plant and equipment/tangible fixed assets. Including revaluation
1AC 10.5.2.1.1 Borrowing costs
1AC10.5.2.2 Intangible assets including revaulation
1AC10.5.2.4 Illustration of the revaluation reserve disclosures.
1AC10.5.2.5 Investment properties note
1AC10.5.2.6 Alternative layout for the investments note and illustration of financial assets
1AC10.6 Details of indebtness and securities held (if any) 91
1AC10.6.2 Extract from FRS 102: Section 1AC.27
1AC10.7.1 Extract from FRS102: Section 1AC.20-1AC.21
1AC10.8 Fair value measurement
1AC10.8.1 Extract from FRS102: Section 1AC.22-Section 1AC.24 and section 1AC.26
1AC10.8.2.2 Extract from the notes to the financial statements – note on investment property
1AC10.8.2.3 Investment note with investment in subsidiary, joint ventures and other investments
1AC10.8.2.4 Extract of notes to the financial statements – Financial instruments note disclosures
1AC10.8.2.4.1 Extract of notes to the financial statements – Interest receivable and similar income
1AC 8.2.4.2 Extract of notes to the financial statements – interest payable and similar expenses
1AC10.8.2.4.3 Alternative disclosure for profit and loss
1AC10.8.2.4.4 Extract from other comprehensive income showing activity on cash flow hedges:
1AC10.8.2.4.4.1 Cash flow fair value hedge reserve disclosure requirements:
1AC10.9 Indebtedness, guarantees and financial commitments
1AC10.9.1 Extract from FRS102: Section 1AC.27-1AC.31
1AC10.9.2.2 Contingencies note
1AC10.9.2.3 Off-balance sheet arrangements note (section 1AC.31 od Appendix C of FRS 102)
1AC10.9.2.4 Commitments notes (section 1AC.31 of Appendix C of FRS 102)
1AC10.9.2.5 Indebtness note and security disclosures
1AC10.10 Notes supporting the income statement / profit and loss accounts
1AC10.10.1 Extract from FRS102: Section 1AC.32-1AC.33
1AC10.10.2.2 Extract to show required profit and loss disclosures
1AC10.10.2.2.1 Exceptional item defined and the disclosure requirements
1AC10.10.2.2.2 Exceptional item disclosure
1AC10.10.2.3 Employee numbers disclosure:
1AC10.10.2.4 Other profit and loss disclosures
1AC10.11 Related party disclosures
1AC10.11.1 Extract from FRS102: Section 1AC.34-1AC.36
1AC10.11.2.1.1 Related party defined
1AC10.11.2.2 Related party note – with related entities
1AC10.11.2.3 Loans, guarantees, credit transactions entered into the benefit of directors
1AC10.11.2.4 Directors remuneration
1AC10.11.7 Controlling Party disclosure
1AC10.12.1 Extract from FRS102: Section 1AC.37-1AC.39
1AC10.12.2.1 Disclosures required describing the entity
1AC10.12.2.2 Post balance sheet events
1AC10.13.1 Auditors remuneration, Interest income or expense from loans to and from group entities
1AC10.13.1.1 Interest income or expense from loans to and from group entities
1AC10.13.1.2 Auditors remuneration
1AC10.13.2 Debtors and Creditors Note as required by Formats
1AC10.13.3 Share capital disclosures
1AD11 Appendix D to Section 1A (applicable for Republic of Ireland entities only)
1AD11.1 Disclosure requirements for small entities in the Republic of Ireland
1AD11.1.1 Extract from FRS102: Section 1AD.1-1AD.2
1A11.1.2.1 Summary section 1A disclosure checklist
1AD11.2.1 Extract from FRS102: Section 1AD.3-1AD.6
1AD11.2.2.1.1 General information
1AD11.2.2.1.2 Basis of preparation
1AD11.2.2.1.3 Consolidation exemption
1AD11.2.2.1.4 Basis of consolidation – (If Applicable)
1AD11.2.2.1.4.1 Subsidiary undertakings
1AD11.2.2.1.4.2 Associates and joint ventures
1AD11.2.2.1.4.3 Transactions eliminated on consolidation
1AD11.2.2.1.5 Business combinations and goodwill
1AD11.2.2.1.8 Intangible assets
1AD11.2.2.1.9 Contingent acquisition consideration
1AD11.2.2.1.10 Financial assets
1AD11.2.2.1.11.1 General turnover accounting policy notes
1AD11.2.2.11.2 Turnover accounting policy for an insurance broker
1AD11.2.2.11.4 Turnover accounting policy note where turnover is derived from investments Turnover
1AD11.2.2.11.5 Turnover accounting policy for a software company
1AD11.2.2.11.6 Turnover accounting policy for a construction company
1AD11.2.2.12 Government grants
1AD11.2.2.12.2 Performance model
1AD11.2.2.14 Dividend distribution
1AD11.2.2.16 Financial instruments
1AD11.2.2.16.1 Trade and other debtors
1AD11.2.2.16.2 Cash and cash equivalents.
1AD11.2.2.16.3 Other financial assets.
1AD11.2.2.16.4 Trade and other creditors.
1AD11.2.2.16.7 Offsetting financial instruments.
1AD11.2.2.17 Compound financial instruments.
1AD11.2.2.20.1 Environmental liabilities
1AD11.2.2.22 Employee Benefits
1AD11.2.2.23 Preference share capital
1AD11.2.2.25 Related party transactions
1AD11.2.2.28 Tangible fixed assets
1AD11.2.2.30 Investment properties
1AC10.2.2.1.1.31.1 Finance leases
1AD11.2.2.31.2 Operating leases
1AD11.2.2.31.3 Lease incentives
1AC10.2.2.1.1.32 Leasing company accounting policy
1AD11.2.2.33 Intangible assets
1AD11.2.2.35 Exceptional items
1AD11.2.2.36 Share based costs
1AD11.2.2.37 Investment properties
1AD11.2.2.38 Biological assets (where fair value is used)
1AD11.2.2.39 Biological assets – Livestock (where fair value model is adopted)
1AD11.2.2.40 Biological assets – Forestry (where cost model is adopted)
1AD11.2.2.41 Biological assets – Livestock (where cost model is adopted)
1AD11.2.2.1.42 Prior period adjustment – Change in accounting policy
1AD11.2.2.43 Change in accounting estimate
1AD11.3 Changes in presentation and accounting policies and corrections of prior period errors
1AD11.3.2 Extract from Section 1AD.8 to 1AD.10 of S1A of FRS 102
1AD11.3.2.2 Prior year adjustment disclosure
1AD11.3.2.2.1 Option 1: Analysis of prior year adjustments
1AD11.3.2.2.2 Option 2 – Analysis of prior year adjustments
AD11.3.2.2.3 Movement in profit and loss reserves note or statement of changes in equity
1AD11.3.2.4 Example extract of a change in accounting policy disclosure
1AD11.3.2.5 Change in classification from prior period
1AD11.4 True and fair view override
1AD11.4.1 Extracts from FRS 102: Section 1AD.11
1AD11.5 Notes to the statement of financial position – fixed assets
1AD11.5.1 Extract from FRS 102: Section 1AD.13 – 1AD.18
1AD11.5.2.1.3 Intangible assets
1AD11.5.2.1.5 Example disclosure for a revaluation reserve
1AD11.5.2.1.6 Investment properties
1AD11.5.2.1.7 Financial assets note
1AD11.6.1 Extracts from FRS 102: Section 1AD.20 – 1AD.21
1AD11.7 Borrowing/creditors details
1AD11.7.1 Extracts from FRS 102: Sction 1AD.26 – 1AD.28
1AD11.8 Appropriation of profit or loss/profit and loss reserve movements
1AD11.8.1 Extract from FRS 102: Section 1AD.35
1AD11.9 Fair value measurement
1AD11.9.1 Extract from FRS 102; Section 1AC.22 to 1AC.25
1AD11.9.2.1 Analysis – fair value disclosure requirements
1AD11.9.2.2 Extract from the notes to the financial statements
1AD11.9.2.2.1 Investment property
1AD11.9.2.2.3 Financial instrument note disclosures
1AD11.9.2.2.4 Fair value reserve disclosures
1AD11.10 Notes to the income statements/profit and loss account
1AD11.10.1 Extract from FRS 102: Sections 1AD.36 to 1AD .37
1AD11.10.2.2 Extract to show required profit and loss disclosures
1AD11.10.2.2.1 Exceptional item defined and the disclosure requirements
1AD11.10.2.2.1.1 Exceptional item disclosure
1AD11.10.2.2.2 Employee note disclosure
1AD11.10.2.2.3 other profit and loss disclosures
1AD11.11 Related party disclosures – director’s remuneration
1AD11.11.1 Extract from FRS 102: sections 1AD.38 to 1AD.40
1AD11.11.2.1 Related parties defined
1AD11.11.2.1.1 Connected person defined
1AD11.11.2.2 Directors remuneration disclosure
1AD11.11.2.2.1 Make up of director’s remuneration
1AD11.12.1 Extracts from FRS 102: 1AD.41 to 1AD.47
1AD11.12.2.1.1 Application to non-companies
1AD11.12.2.1.2 Get out from disclosure if below a specified value.
1AD11.12.2.2 Disclosures of loans and guarantees for the benefit of directors.
1AD11.13 Related party transactions material transactions with directors
1AD11.13.1 Extracts from FRS 102: Secton 1AD.48
1AD11.13.2.2 Is there exemptions from the disclosure?
1AD11.14 Other related party transactions (other than transactions with director)
1AD11.14.1 Extracts from FRS 102: Section 1AD.51
1AD11.15 Ultimate controlling party
1AD11.15.1 Extract from FRS 102: Section 1A.50
1AD11.16 Post balance sheet events
1AD11.16.1 Extracts from FRS 102: Sections 1A.54
1AD.11.17 Guarantees, financial commitments and contingencies
1AD.11.17.1 Extract from FRS 102: Sections 1AD.28 to 1AD.34
1AD11.17.2.2 Contingencies (1AD.31 and 1AD.34 of Appendix D of FRS 102)
1AD11.18 Holding of own shares
1AD11.18.1 Extract form FRS 102; Section 1AD.49
1AD11.19.1 Extract from FRS 102; Sections 1AD.52 – 1AD.53 and 1AD.55
1AD11.19.2.1 Disclosing legal form, registered office, basis of preparation
1AD11.20 Other items required by the formats under Companies Act
1AD11.20.4 Creditors: amounts falling due within one-year note
1AD11.20.5 Creditors: Amounts falling due after more than one-year note
1AD11.20.6 provision for liabilities
1AE.13.1 Additional disclosures encouraged for small entities
1AE.13.1.1 Extract from FRS102: Section 1AE.1
1AE.13.1.2.2 Statement of compliance
1AE.13.1.2.3.1 Transition note adjustments example
1A11.2.2.1 Transition to FRS 102 – first time exemption – Section 1A
[/et_pb_tab][et_pb_tab title=”Quick Guide” tab_font_select=”default” body_font_select=”default” tab_font=”||||” tab_line_height=”2em” tab_line_height_tablet=”2em” tab_line_height_phone=”2em” body_font=”||||” body_line_height=”2em” body_line_height_tablet=”2em” body_line_height_phone=”2em” _builder_version=”3.0.106″ use_background_color_gradient=”off” background_color_gradient_start=”#2b87da” background_color_gradient_end=”#29c4a9″ background_color_gradient_type=”linear” background_color_gradient_direction=”180deg” background_color_gradient_direction_radial=”center” background_color_gradient_start_position=”0%” background_color_gradient_end_position=”100%” background_color_gradient_overlays_image=”off” parallax=”off” parallax_method=”on” background_size=”cover” background_position=”center” background_repeat=”no-repeat” background_blend=”normal” allow_player_pause=”off” background_video_pause_outside_viewport=”on” tab_text_shadow_style=”none” body_text_shadow_style=”none”]
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Quick Guide: Preparing financial statements under Section 1A of FRS 102 and the Small Companies Regime
Overview
Sections 382-384 of the Companies Act 2006 as amended by Statutory Instrument 2015/980 allows companies to prepare financial statements under Section 1A of FRS 102 by applying the requirements of the small companies regime in the Companies Act. This new Small Companies Regime introduced small differences from the previous Small Companies Regime. In addition what differs from what existed previously is that not only had an entity to apply the disclosure requirements of the small companies regime but it also had to the apply the requirements of the financial reporting framework (be that an entity applying FRSSE or FRS 102 in full) which usually went well beyond that of the Companies Act. Section 1A (i.e. the financial reporting framework) mirrors the requirements of the new small companies regime so therefore once the company law requirements are met no further disclosures are required (subject to the caveat the minimum requirements allow the entities financial statements to show a true and fair view).
Which companies can avail of Section 1A/Small Company’s regime?
A company qualifies for the small company’s regime if it fulfils at least two of the three qualifying conditions listed below:
- In relation to its first financial year; or
- In relation to its current financial year and the preceding financial year; or
- In relation to its current financial year and it qualified as a small company in the preceding financial year; or
- In relation to the preceding financial year and it qualified as a small company in the preceding financial year
|
|
Small Co (note 1) |
Holding company for Small Group (note 1 & 2) |
|
Turnover |
≤£10.2 million |
≤£10.2 million-net ≤£12.2 million-gross |
|
Balance Sheet Total |
≤£5.1 million |
≤£5.1 million net ≤£6.1 million-gross |
|
Employees |
≤50 |
≤50 |
Note 1: Exception even where the above thresholds are met:
S.384 of Companies Act 2006 excludes the following companies from applying the SCR and hence Section 1A:
- an authorised insurance company; or
- a banking company; or
- an e-money issuer; or
- a MiFID investment firm; or
- a UCITS management company; or
- an entity that carries on insurance market activity, or
- a public company (traded company); or
- a holding company of a small group even where the group meets the thresholds where any of the entities in the group come within points 1, 2, 3, 4, 5, 6 and 7 above (this only effects the holding company and not the other companies within the group (other than a company that comes within the remit of points 1-7 above)).
Note 2: In relation to a holding company, a company is a small company if it qualified as small in relation to its last financial year ending on or before the end of the financial year to which the accounts relate.
What is new and common to all entities applying Section 1A for the first time?
Ability to prepare an abridged profit and loss account (start with the gross profit line) and balance sheet as the actual full set of financial statements subject to the approval of all members (see further details in the table below).
When filing the financial statements with the Companies House there is no longer such a thing as abbreviated financial statements. Instead the entity must file the actual set of full financial statements. However there is an option to claim exemption from filing the profit and loss account. Where this exemption is availed of, any profit and loss notes do not need to be included but every other note must be. Where the entity is audited, a note is also required to be included in the notes detailing whether a qualified or unqualified auditors report was issued and if qualified provide specific disclosures as stated in the Act.
New requirement to disclose the average number of employees.
What is new if moving from FRSSE/old UK & Irish GAAP to Section 1A?
Companies will have to apply all the measurement and recognition criteria under FRS 102 Sections 2 to 35 of FRS 102. Section 1A only provides disclosure exemptions. As this is a new accounting framework, there are significant differences between the recognition and measurement criteria under FRS 102 when compared to old GAAP. The differences on transition is beyond the scope of this article.
The disclosure requirements in Section 1A are the minimum required. Directors are still required to consider if additional disclosures are required in order to show a true and fair view (Section 393 CA 2006).
For companies transitioning to FRS 102 for periods beginning before 1 January 2017 and applying Section 1A, there is an ability to claim;
- the exemption in Section 35.10(v) to recognise debt instruments with related parties (e.g. intercompany loans, directors loans etc.) where a financing arrangement exists (i.e. interest free/favourable interest and not repayable on demand) at the amortised cost at the opening of the current year (and to determine the rate of interest at that time) – no need to restate comparative year etc.; and
- the exemption in Section 35.10(u) not to apply the fair value requirements of Section 11 and 12 until the start of the current year (i.e. no need to restate the comparative year etc.)
Reduced related party transaction disclosures as discussed below.
On transition to FRS 102 for the first time:
- where there are no adjustments, there is no requirement to state that fact (required if full FRS 102 financial statements are prepared)
- where adjustments arise, Section 1A encourages details of the adjustments to be disclosed so as to allow the financial statements to show a true and fair view.
What is new if moving from full FRS 102 to Section 1A?
Provide exemptions from disclosures within each of the 35 Sections of FRS 102. Instead disclosures follow the requirements of Section 1A of FRS 102 which replicate the requirements of the disclosures for small company’s regime in the Companies Act 2006 as amended by Statutory Instrument 2015/980.
The disclosure requirements in Section 1A are the minimum required. Directors are still required to consider if additional disclosures are required in order to show a true and fair view (Section 393 CA 2006).
Reduced related party transaction disclosures as discussed below.
No requirement to prepare a cash flow statement.
What is different when compared to FRSSE/FRS 102 & old Small Companies Regime pre SI 980/2015?
Companies will be able to prepare consolidated financial statements in line with Section 1A; the small company’s regime and Schedule 1 and 6 to the Small Companies Accounts Regulations as amended by Statutory Instrument 2015/980. There are small changes to the Formats as discussed below.
New requirement to disclose the average number of employees.
Significantly reduced disclosures. For example there is no requirement to include:
- the turnover note
- the tax note
- the interest payable/receivable note
- rights attaching to shares
- note splitting out stocks by type
- details of interests in shares which give more than a 20% interest in a class of shares (or the profit/loss or net assets for the entity in which the shares are held)
- numerous more where full FRS 102 was previously applied
If transitioning directly from FRSSE, additional disclosures required; examples of additional disclosures are:
- increased number of accounting policies and expansion of wording on existing policies;
- for assets held at fair value required to disclose fair value movements recognised in the profit and loss;
- valuation methodology adopted for derivatives recognised on the balance sheet etc.
Additional items to be included within the accounting policies note (e.g. change in accounting policy; details of prior period errors).
Reduced related party disclosure requirements compared to FRSSE/FRS 102 due to:
- the requirement to only disclose transactions which have not been concluded under normal market conditions (Note the usual exemption for transactions between companies within a group which are 100% owned still applies regardless of the fact that the transactions have not been concluded under normal conditions).
As the specific requirement to disclose directors’ remuneration has been deleted judgement will be required when determining whether directors remuneration is required to be disclosed (i.e. judgement in determining if it has been concluded under normal market conditions).
- the definition of related parties being narrowly defined (a related party is defined as: owners holding a participating interest; companies in which the entity has a participating interest; and the entities directors).
What remains the same if the entity previously applied FRS 102 in full?
Companies will have to apply all the measurement and recognition criteria under FRS 102 Sections 2 to 35 of FRS 102. Section 1A only provides disclosure exemptions.
Companies will be able to prepare Section 1A consolidated financial statements for a small group.
What remains the same if the entity previously applied FRSSE?
No requirement to prepare a cash flow statement.
What are the principal disclosures under Section 1A?
|
Details |
Required |
Encouraged in S1A of FRS 102 |
|
Directors report – as previously for a company applying the older version of the small companies regime under old GAAP. These requirements being: – the names of persons who were directors at any time during the year (S.416 CA 2006) – the registered number of the company (S.1068 Registrar rules 2009) – Statement of relevant audit information as applicable (S.418(2) CA 2006) – Disclosure of the fact the small company exemptions have been availed of (S.419 CA 2006) – Disclosure of political and charitable donations if over £2,000 if applicable (EC Reg 2012) – Disclosure of approval of the directors report by at least one director or secretary of the company. – Disclosure of fact that a qualifying indemnity provision is in place if applicable (S.236 (1) CA2006) – Where at any time during the year shares are held, acquired or disposed the directors report shall state the number and nominal value of shares held and a reconciliation of changes and movements in the period including the amount paid/received. (SI2008/409 5 Sch 6 CA2006) – Independent auditors willingness to continue in office or not as applicable (S.489 CA 2006) – Payment of creditors – (Disclose if the company or suppliers purport to trade under the terms of the EC (Late Payment in Commercial Transactions) Regulations 2012 – Signature by one director or secretary confirming approval (S.419 CA 2006) – Directors responsibility statement |
N/a Yes by the CA Yes by the CA Yes by the CA Yes by the CA Yes by the CA Yes by the CA Yes by the CA Yes by the CA Yes by the CA Yes by the CA |
N/a |
|
Entities that previously applied old GAAP Auditors report – as previously except now referring to FRS 102 and possibly referring to the statement of changes in equity if the entity chooses to prepare this Entities that previously applied full FRS 102 Auditors report – as previously except reference to cash flow statement to be deleted and possibly the ‘statement of changes in equity’ if not presented
Applicable for both New requirement to detail, if auditor has not identified any material misstatements in the Directors’ Report in light of the knowledge and understanding of the company and its environment obtained in the course of our audit (S.496 CA 2006) |
Yes |
S.1A encourages a SOCE to be presented if there are transactions with shareholders |
|
Primary statements |
|
|
|
Profit and loss account/Income statement – laid out in accordance with Schedule 1 Part 1 – Format 1 & 2 (similar to existing Sch 1 Part 1 however the words ‘ordinary activities’ is removed and word ‘charges’ changed to ‘expenses’ – formats 3 and 4 are no longer permitted) IFRS layout can be utilised Include movement on profit and loss reserve including details of dividends and transactions with directors if not disclosed in the SOCE (if presented) or in the notes. Ability to use the abridged profit and loss account layout (i.e. start at the gross profit line (as permitted by Paragraph 1A of Schedule 1 as inserted by SI 980/2015). If used consent of all members required |
Yes No – however if dividend is not at arms length then it must be disclosed Choice |
N/a Yes – encouraged to present either SOCE or statement of income and retained earnings if transactions with shareholders |
|
Other comprehensive income – Statement of Comprehensive income Co Law requires details of movement in revaluation reserve, fair value reserve and profit and loss reserves to be disclosed (as discussed below) therefore the presentation of this would meet the requirements. |
Yes if movement not presented elsewhere – can be presented in notes |
Yes (under Section 1A.9 of FRS 102) |
|
Balance sheet – laid out in accordance with Schedule 1 Part 1 Formats 1 or 2 (similar to existing Schedule 1 Part 1) IFRS layout can be utilised Ability to use the abridged balance sheet option/layout where in the format 1 or 2, the items with numbers in the formats do not have to be shown i.e. split of debtors, creditors etc. (however the disclosures below are required in any event). If adopted the consent of all members is required • Requirement to detail the fact that the small companies regime has been followed and this be included above the directors signature (as already required where the small entities exemptions were being complied with). |
Yes Choice Choice |
N/a Choice |
|
Statement of changes in equity (SOCE) – not specifically required however Companies Act requires: – movement on revaluation reserve to be disclosed including details of transfers etc. – movement on fair value reserves to be disclosed – transactions with shareholders to be disclosed (e.g. dividends paid/payable; shares issued etc.) In order to cover off the above requirements it would make sense to include a SOCE |
Yes if movement not presented elsewhere. Yes if not given under normal market conditions |
Yes Yes Yes Yes |
|
Notes to the financial statements |
|
|
|
Disclosure of accounting policies (Schedule 1 Para 4 & S1AC.3-1AC.10) as before (however significantly more than old GAAP/FRSSE) – include within this any true and fair override invoked) New requirement: – to disclose a change in accounting policy, correction of period errors and changes in presentation to be detailed in the accounting policy section (Sch 1 para 2(2)) – include details of the change & the reasons for the change |
Yes |
N/a |
|
Include a statement of compliance with Section 1A of FRS 102 |
No |
Yes (S1AD.1(a) of FRS 102) |
|
Include a statement that the entity is a public benefit entity if applicable |
No |
Yes (S1AD.1 FRS 102) |
|
Going concern disclosure with regard to uncertainties CA requires disclose of the fact that a company is being wound up, if applicable (S.396 CA 2006) |
No Yes |
Yes (S1AD.1 FRS 102) |
|
Details of dividend paid/payable/declared |
Yes where it is to an individual which is considered a related party and has not been concluded under normal market conditions (Sch 1 (66) SI 409/2008) |
Yes (S1AD.1(d) FRS 102 and 1AC.9 FRS 102) |
|
Disclose principal place of business, registered office, legal form and company registration number and disclose the fact that he company is being wound up if that is the case (S.396 CA 2006) |
Yes |
N/a |
|
Departure from the requirements of Companies Act and FRS 102 to be disclosed (Sch 1(10)(2))-S1AC.10 FRS 102 |
Yes |
N/a |
|
Where transition adjustments arise include a note in line with full FRS 102 (i.e. disclose: – equity at date of transition, and end of comparative year under old GAAP reconciling to equity at each period under FRS 102 with notes on the reasons for adjustments; and – profit/loss for comparative period as report under old GAAP, reconciling to profit/loss under FRS 102 with notes on the reasons for adjustments. |
No however would be considered necessary to show true and fair view as required under S.393 CA 2006) |
Yes (S1Ad.1(e) FRS 102) |
|
The specific requirement for Directors remuneration has been removed. However Schedule 1 (66) and Section 1AC.35 requires all particulars to be disclosed of transactions entered into with the directors which have not been concluded under normal market conditions which would specifically include remuneration paid/payable to directors (this is specifically referred to in Section 1AC.35 of FRS 102). Judgement will be required here as to whether the remuneration is on an arm’s length basis (i.e. if the remuneration is what would be paid to the directors if someone else who is not a shareholder was to be employed to do the job). Views differ as to what normal market conditions refer to. Therefore if the directors/accountant/auditor believe it is not disclosable, the reasoning for the decision must be kept on file. |
Yes however judgement required as to whether they are at an arm’s length basis |
N/a |
|
Loans/quasi loans/ given to directors (inc. de facto & shadow) and any guarantees/credit transactions entered into for benefit of directors (Section 413 CA 2006/S1AC.36 FRS 102); • Usual disclosures required with regard to movement inc write offs/provisions, terms of arrangements (e.g. interest rates if any, on demand etc.), names of directors, the maximum amount in the year; any costs incurred in fulfilling a guarantee. |
Yes |
N/a |
|
Other transactions entered into in which director has a material interest which has not been concluded under normal market conditions (Sch 1(66) SI409/2008 & S1AC.35). As before if disclosure applies provide details of the arrangements, the names of the directors, terms of the arrangements, amounts, the nature of the relationship etc. |
Yes |
N/a |
|
Disclose the amount of interest income recognised on loans to group companies in the P&L (Sch 1(9) P&L Formats note 12 – Small Companies & Group Regulations) |
Yes |
N/a |
|
Disclose the amount of interest expense recognised on loans from group companies in the P&L (Sch 1(9) P&L Formats note 13 – Small Companies & Group Regulations) |
Yes |
N/a |
|
Disclosure of average number of employees in year (Section 411(1) CA 2006 as amended by SI980/2015) S1AC.33 FRS 102. |
Yes |
N/a |
|
Approval by directors on financial statements noting that they show a true and fair view (Section 414 CA 2006). |
Yes |
N/a |
|
Exceptional item disclosures (Sch 1(61)(2) SI2008/409) – S1AC.32 FRS 102. |
Yes |
N/a |
|
Disclosure of dividends paid/declared. Encouraged under FRS 102; only required under CA if they are paid under not-normal conditions ((Sch 1(66) SI2008/409) – S1A.35 FRS 102. |
No unless at under abnormal market condition |
Yes S1AD FRS 102 |
|
Investment properties and biological asset movements including disclosure of valuation method and amount recognised in P&L and fair value reserve (Sch 1(51)(2) SI2008/409) – S1AC.22 FRS 102. |
Yes |
N/a |
|
Accruals for pension liabilities ((Sch 1(57)(3) SI2008/409) – S1AC.29 FRS 102). |
Yes |
N/a |
|
Particulars of retirement commitment benefits included in the balance sheet and significant assumptions in the valuations (e.g. defined benefit scheme) |
Yes |
N/a |
|
Impairment/reversal of impairment on financial assets ((Sch 1(48)(3) SI2008/409) – S1AC.13 FRS 102). |
Yes |
N/a |
|
Prior period errors resulting in change in prior year presentation (Sch 1(2)(2) & (7)(2) SI2008/409) – S1A.7-1AC.10 FRS 102. |
Yes |
N/a |
|
Change in presentation from the prior year (Sch 1(2)(2) & (7)(2) SI2008/409) – S1AC.7-1AC.10 FRS 102 inc. reasons for change |
Yes |
N/a |
|
When the reporting entity is controlled by another party, there should be disclosure of the: – related party relationship and the name of that party and, if different, that of the ultimate controlling party. If the controlling party or ultimate controlling party of the reporting entity is not known, that fact should be disclosed. – registered office address or place of business if unincorporated – where consolidated accounts can be obtained from if applicable. ((Sch 1(65) SI2008/409) – S1AC.34 FRS 102) |
Yes |
N/a |
|
Details of indebtedness ((Sch 1(55)(1) SI2008/409) – S1AC.27 FRS 102.) – disclose: – amounts which are repayable after 5 yrs of period end – amount in total included in creditors where security is held – type and nature of securities held |
Yes |
N/a |
|
Detail useful life on development expenditure capitalised and goodwill and the reason for capitalisation and selecting useful life ((Sch 1(21)(2) SI2008/409) – S1AC.4 FRS 102) |
Yes |
N/a |
|
Disclose impairment/reversal of impairments on all fixed assets ((Sch 1 (19)(3)/(20(2)/(48)(3) SI2008/409) – S1AC.20/ S1AC.21/S1AC.13 FRS 102). |
Yes |
N/a |
|
Details of guarantees and other financial commitments inc. contingencies ((Sch 1(57)(1)(2) SI2008/409) – S1AC.29/30 FRS 102). Include the nature and form of security provided for these commitments etc. as applicable For guarantees/commitments entered into for the benefit of subsidiaries, parent or fellow group companies disclose this separately from all other guarantees/commitments (S1AC.29 FRS 102). For guarantees/commitments entered into for the benefit of entities where a participating interest is held disclose this separately from all other guarantees/commitments (S1AC.29 FRS 102). Examples include disclosure of commitment in total under non-cancellable operating leases (no need to split out) and total amounts payable under finance leases where security is held(no need to split out). |
Yes |
N/a |
|
Details of events after year end ((Sch 1(64) SI2008/409) – S1AC.29/30 FRS 102) |
Yes |
N/a |
|
Related party transactions ((Sch 1(66) SI2008/409) – S1AC.35 FRS 102).-Note disclosures less than what is required currently. Disclose: – transactions to extent entered into with the below parties under terms which is not under normal market conditions with the exception of transactions with 100% owned companies: – holders of associate interest or more in Company.; and – Companies etc. in which Co. holds participating interest or more; and – Directors of the company or of a holding company of that company Note this includes directors remuneration and payments of dividends to members. This has been discussed further above. Disclose the amount of such transactions, the nature of the relationship & other relevant information. |
Yes |
N/a |
|
Movement in revaluation reserve and fair value reserve to be shown in tabular form |
Yes |
N/a |
|
All notes for items included in fixed asset section of balance sheet where held at cost/revalued amount – (including investment property, fixed asset investments, intangibles, heritage and biological assets) incorporating details of movement (i.e. additions, disposals, transfers, depreciation, impairments, revaluations, fair value adjustments etc.) on same for year ((Sch 1(48) SI2008/409) – S1AC.12 FRS 102). |
Yes |
N/a |
|
For fixed assets detailing impairments netted against cost where assets held at cost less impairment ((Sch 1(48) SI2008/409) – S1AC.13 FRS 102) |
Yes |
N/a |
|
Where fixed assets revaluation policy is in place((Sch 1(34)/(49)/(54)/(35) SI2008/409) – S1AC.15-18 FRS 102): – provide basis of valuation. – the year the asset was revalued – if revalued in year the name of person that valued it and that persons qualification. – movements in and out of revaluation reserve including tax effect – ideally shown in tabular form; – state NBV if it was carried at historical cost splitting out cost and accumulated depreciation/amortisation (this is also applicable for assets held at fair value with movement through P&L with the exception of the revaluation reserve movements requirements i.e. investment property etc.) |
Yes |
N/a |
|
Any interest costs capitalised must be disclosed in a note ((Sch 1(27)(3) SI2008/409) – S1AC.19 FRS 102) |
||
|
For financial instruments measured under Section 11 and 12 disclose for each instrument ((Sch 1(51)(2)(c)(3)/(52) SI2008/409) – S1AC.22-1AC.25 FRS 102): – Significant assumptions underlying valuation models and techniques where fair value determined otherwise than by the market price in an active market – The fair value movement recognised in the financial statements – The amount credit or debited to a fair value reserve and the balance at beginning and end of year on this reserve – The tax impact recognised in fair value reserve – For derivative financial instruments (e.g. foreign exchange contracts, interest swaps) detail: 1. extent and nature of the instruments including significant terms and conditions that affect amount, 2. timing and certainty of cash flows |
Yes |
N/a |
|
Disclose of auditors remuneration for the audit of the financial statements only if applicable (S.414 CA 2006) |
Yes |
N/a |
|
Disclose off balance sheet arrangements e.g. debt factoring; consignment stock, take and pay arrangements etc. ((Sec 410A – S1AC.31 FRS 102). |
Yes |
N/a |
|
Include note disclosing the fact the ES PASE was applied if that is the case |
ES PASE |
N/a |
|
Disclose movement on fair value of investments in associates, subsidiaries or joint ventures where held at fair value and movement posted to P&L. Fair value movement to be split by amount attributable to movement on credit risk ((Sch 1(36)(4) SI2008/409) – S1AC.26 FRS 102) |
Yes |
N/a |
|
Any other disclosures required in order to allow the financial statements to show a true and fair view – S.393 CA 2006. |
Yes |
N/a |
What do accountants need to do?
Review their client listing to assess which companies can apply Section 1A of FRS 102.
Advise clients of the additional choices available with regard to accounting standards (Section 1A FRS 102/full FRS 102) and the benefits this will provide with regard to the reduced disclosure requirements.
Advise the directors of the decisions that will be required to be made by them in assessing whether additional disclosures are required on top of the Company law requirements in order to show a true and fair view.
Advise companies who are transitioning to FRS 102 for the first time of the exemptions available in Section 35.10(u)(v) if Section 1A is applied.
No concept of abbreviated financial statements for filing financial statements with the Companies House. Instead full accounts are filed with the option not to file the profit and loss account and the related profit and loss notes. Advise clients of the possibility of additional notes being visible to the public as a result.
Advise clients of the abridgement option when preparing full financial statements.
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Examples
Example 2: Statement of compliance with FRS 102
Example 3: Transition note adjustment
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Downloads
Download “Section 1A Detailed Guide”
Section-1A-Scope-of-FRS-102-Detailed-Guide-UK.pdf – Downloaded 75 times – 1.41 MB
Website Links
Appendix A to Section 1A – Guidance on Adapting Balance Sheet Formats
Appendix B to Section 1A – Guidance on Adapting the Profit and Loss Format
Appendix C to Section 1A – Minimum Disclosure Requirements for Small Entities
Appendix D to Section 1A – Additional Disclosures Encouraged for Small Entities
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Downloads
Download “FRSSE to FRS102 S1.A - Simple Case Study”
80.07.03-FRSSE-to-FRS102-S1.A-Simple-Case-Study.pdf – Downloaded 41 times – 2.64 MB
Download “FRSSE to FRS 102 S1A Case Study”
80.07.04FRSSE-to-FRS-102-S1A-Case-Study.pdf – Downloaded 37 times – 1.98 MB
Download “Complex Transition from FRSSE old GAAP - S1A FRS 102”
80.07.07-Complex-Transition-from-FRSSE-old-GAAP-S1A-FRS-102.pdf – Downloaded 43 times – 3.66 MB
Download “Simple Transition from FRSSE old GAAP - S1A FRS 102”
80.07.08-Simple-Transation-from-FRSSE-old-GAAP-S1A-FRS102.pdf – Downloaded 37 times – 2.22 MB
Download “Transition Case Study - Full FRS 102 (not applying small companies regime) to Section 1A”
80.07.11-Transition-Case-Study-from-Full%20FRS-102-to-S1A.pdf – Downloaded 27 times – 800.93 KB
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Downloads
Download “FRS 102 and Companies Act 2006 Detailed Disclosures Checklist for Small Companies applying the Small Companies Regime”
75.06.08-FRS-102-and-Companies-Act-2006-Detailed-Disclosures-Checklist-for-Small-Companies-applying-the-Small-Companies-Regime.pdf – Downloaded 76 times – 477.02 KB
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Section 1A – Financial Statements
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