Since 2005 listed groups in the UK have been required to prepare their consolidated financial statements in accordance with International Financial Reporting Standards (IFRSs). Almost all other groups and companies have a choice. They can choose to follow IFRSs or UK GAAP. Small companies (as defined by the Companies Act 2006) have an additional option of following the Financial Reporting Standard for Smaller Entities (FRSSE). But, for periods beginning on or after 1 January 2015, three new Financial Reporting Standards (FRS 100, 101 and 102) will be in force, bringing with them a number of new options for all UK entities and groups.
The three new FRSs have been developed by the Accounting Standards Board (‘ASB', the predecessor of what is now the Accounting Council of the FRC) to replace Old UK GAAP (other than the FRSSE, which will be retained) and introduce an IFRS-based reduced disclosure framework for certain entities.
In addition to the above three standards, the Financial Reporting Council (FRC) expect to issue another standard, FRS 103 applicable to those entities that have insurance contracts and are applying FRS 102. An Exposure Draft (FRED) 49: ‘Draft FRS 103 Insurance Contracts’ has recently been published by the FRC which will be applicable for accounting periods beginning on or after 1 January 2015.
Companies who operate within specialised industries or sectors will also apply the requirements of their specific Statement of Recommended Practice (SORP) in conjunction with the Financial Reporting Standards.