Financial Reporting Standard (FRS)
Definition
The Financial Reporting Standard (FRS) refers to a series of standards issued by the UK’s Accounting Standards Board, now part of the Financial Reporting Council (FRC), designed to harmonize UK financial reporting practices with international standards. In 2013, the reorganized FRC issued FRS 102 (The Financial Reporting Standard applicable in the UK and Republic of Ireland), which from 2015 supersedes previous FRSs 1 to 30.
Examples
- FRS 1: Cash Flow Statements (issued 1991, revised 1996): Provides guidelines on the preparation and presentation of cash flow statements.
- FRS 8: Related Party Transactions (issued 1995): Establishes disclosure requirements for transactions between the entity and its related parties.
- FRS 17: Retirement Benefits (issued 2000, revised 2002): Offers a framework for accounting for pensions and other retirement benefits.
- FRS 105: The Financial Reporting Standard applicable to the Micro-entities Regime (issued 2015): Specifies the reporting requirements for micro-entities.
Frequently Asked Questions
Q: What is the main objective of FRS?
A: The main objective of FRS is to provide clear, consistent, and comparable financial reporting standards that improve the transparency and reliability of financial statements.
Q: What is FRS 102?
A: FRS 102 is a comprehensive financial reporting standard that applies in the UK and Republic of Ireland. It was issued in 2013 and replaces earlier standards to align UK practices more closely with those of the International Accounting Standards Board.
Q: Do all companies need to comply with FRS 102?
A: Not all companies are required to comply with FRS 102. Small businesses and micro-entities may be eligible to use simplified versions such as FRS 105.
Q: What happens if a company does not comply with FRS?
A: Non-compliance with FRS can lead to penalties, including fines and potential legal ramifications, and can damage a company’s reputation.
Q: Are there any exceptions to the disclosure requirements under FRS?
A: Yes, some standards allow for reduced disclosure requirements for qualifying entities, such as subsidiaries or small and medium-sized enterprises (SMEs).
Related Terms
- Accounting Standards Board (ASB): The UK body responsible for issuing Financial Reporting Standards before being replaced by the FRC.
- Financial Reporting Council (FRC): The regulatory organization overseeing financial reporting, auditing, and corporate governance in the UK.
- International Accounting Standards Board (IASB): The global organization that develops and issues International Financial Reporting Standards (IFRS).
Online Resources
Suggested Books for Further Studies
- “UK GAAP 2019: Generally Accepted Accounting Practice under UK and Irish GAAP” by Ernst & Young LLP
- “Financial Accounting and Reporting” by Barry Elliott and Jamie Elliott
- “Essentials of Financial Accounting in Business” by Mike Bendrey, Roger Hussey, and Colston West
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