Overview
The Financial Reporting Standard for Smaller Entities (FRSSE) was an accounting standard issued by the Accounting Standards Board (ASB) specifically tailored for small companies. It aimed to simplify the financial reporting requirements by collating relevant parts of other accounting standards and abstracts from the Urgent Issues Task Force (UITF) into one comprehensive document.
Introduced in March 1999, the FRSSE could be adopted by entities that qualified as small companies according to company legislation and similar bodies. These entities were thus exempt from applying all other accounting standards and UITF abstracts. The standard underwent several revisions, with notable updates in January 2005, January 2007, June 2008, and June 2015 to align with other developments in accounting standards, including the adoption of the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102).
The FRSSE was officially withdrawn on January 1, 2016. Consequently, smaller entities not classified as micro-entities were required to comply with FRS 102.
Examples
Example 1: Small Retail Business
A small retail business qualifies as a small company under company legislation. Instead of adhering to complex and numerous accounting standards, the business applies FRSSE to simplify its financial reporting. This approach keeps compliance manageable and cost-effective.
Example 2: Independent Consultancy Firm
An independent consultancy firm with fewer than 50 employees opts to use FRSSE. By doing so, the firm avoids the need to apply multiple, more complex accounting standards and UITF abstracts, thus streamlining its financial reporting processes.
Frequently Asked Questions (FAQs)
What was the main purpose of the FRSSE?
The FRSSE was designed to simplify financial reporting requirements for smaller entities by consolidating relevant parts of standard accounting practices into one document.
Who could use the FRSSE?
Entities that qualified as small companies under company legislation and analogous bodies could adopt the FRSSE.
Were entities using the FRSSE exempt from other accounting standards?
Yes, entities complying with the FRSSE were exempt from applying all other accounting standards and UITF abstracts.
When was the FRSSE first issued and when was it withdrawn?
The FRSSE was first issued in March 1999 and was withdrawn on January 1, 2016.
What replaced the FRSSE?
Smaller entities that are not micro-entities now fall under FRS 102, which replaced the FRSSE.
Related Terms
Urgent Issues Task Force (UITF)
A group established by the ASB to address urgent accounting issues and provide guidance through abstracts, which were incorporated into the FRSSE where relevant.
Small Companies
Companies that meet the criteria set out in company legislation regarding turnover, balance sheet total, and number of employees, qualifying them for simplified reporting standards like FRSSE.
Financial Reporting Standard Applicable in the UK and Republic of Ireland (FRS 102)
A comprehensive financial reporting standard that applies to entities in the UK and Ireland, including the smaller entities after the withdrawal of FRSSE.
Micro-Entities
The smallest category of companies that benefit from even more simplified financial reporting requirements, separate from the broader requirements of FRS 102.
little GAAP
A colloquial term referring to simplified generally accepted accounting principles (GAAP) for smaller entities, including standards like FRSSE.
Online Resources
- UK Government - Small Company Reporting
- Financial Reporting Council (FRC)
- The Institute of Chartered Accountants in England and Wales (ICAEW)
Suggested Books for Further Studies
- “UK Accounting Standards: FRS 100-102” by Ernst & Young LLP
- “Applying GAAP 2015-16” by Anne Cowley and Andrew Mead
- “Financial Reporting and Analysis” by Lawrence Revsine, Daniel W. Collins, and W. Bruce Johnson
Accounting Basics: “Financial Reporting Standard for Smaller Entities (FRSSE)” Fundamentals Quiz
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