FRS 101 Reduced Disclosure Framework

FRS 101 allows qualifying entities to prepare their individual financial statements using the recognition and measurement requirements of UK-adopted International Accounting Standards, while benefiting from a range of disclosure exemptions. The standard also includes certain amendments to IFRS Accounting Standards to ensure compliance with the Companies Act 2006.

Who can apply FRS 101?

A qualifying entity is a member of a group whose parent prepares publicly available consolidated financial statements intended to give a true and fair view and in which the entity is included in the consolidation.

The definition may also include the individual financial statements of a parent company that meets the qualifying entity criteria. The standard can only be applied in preparing the individual entity's financial statements rather than the consolidated financial statements.

What compliance statement is required under FRS 101?

An entity applying FRS 101 is required to include an explicit statement in the financial statements that they have been prepared in accordance with FRS 101 Reduced Disclosure Framework. Although FRS 101 applies the recognition and measurement requirements of UK-adopted International Accounting Standards, it includes certain amendments to ensure compliance with company law requirements. As a result, an entity applying FRS 101 does not make an unreserved statement of compliance with UK-adopted International Accounting Standards. 

What disclosure exemptions are available under FRS 101?

FRS 101 provides a range of disclosure exemptions, set out in paragraph 8 of the standard (FRS 101 September 2024), which are subject to periodic amendment as IFRS requirements evolve.

These include relief from preparing a statement of cash flows, reduced disclosures for share-based payment arrangements and business combinations, exemptions from certain IAS 1 presentation disclosures and, for most qualifying entities, significant reductions in the disclosures required by IFRS 7. Entities should review the exemptions carefully to determine which are available and relevant to their circumstances.

Why FRS 101 can simplify statutory reporting

For qualifying entities, FRS 101 offers the benefits of applying the recognition and measurement requirements of UK-adopted International Accounting Standards, while reducing the volume of disclosures required in the financial statements. This can improve consistency with group reporting, simplify financial statement preparation, and reduce reporting costs. In particular, the availability of disclosure exemptions, including relief from preparing a statement of cash flows and reduced disclosures in a number of areas, can significantly streamline the statutory accounts of subsidiary companies.