Interpretation and Application of UK GAAP: For Accounting Periods Commencing On or After 1 January 2015

Chapter 30Reduced Disclosure Framework

1. Introduction
2. Reduced Disclosures for Subsidiaries and Ultimate Parents
3. Statement of Compliance
4. Options Available for UK Subsidiaries

Introduction

FRS 101 Reduced Disclosure Framework brings a new reduced disclosure regime for the separate financial statements of subsidiaries, which also includes intermediate parents and ultimate parents. The effect of FRS 101 is to enable such entities to use the recognition and measurement principles contained in EU-adopted IFRS and at the same time provide the advantage of exemption from a number of disclosures that are required by EU-adopted IFRSs. The advantage of applying FRS 101 in a group situation is that the individual financial statements of a subsidiary, intermediate parent and ultimate parent can be vastly reduced in terms of disclosures because the IFRS disclosure requirements are quite exhaustive.

FRS 101 brings with it certain exemptions from disclosure requirements and hence less complexity within the financial statements themselves. Many companies will welcome such a regime as financial statements are often blamed for ‘over-disclosure’, which essentially results in the dilution of the meaningfulness of the financial statements.

The reduced disclosure framework has been incorporated within FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland for those companies that are reporting under FRS 102 rather than EU-adopted IFRS and the disclosure exemptions can ...