ICAEW warns of "worrying degree of confusion" over FRS 101
THERE is confusion over when, how and how often companies need to tell their shareholders about plans to apply a new and important framework for reduced disclosures in annual accounts, ICAEW has warned.
In its response to the FRC’s call for comments on the UK standard FRS 101, the institute said there is uncertainty surrounding the requirement for qualifying entities to notify shareholders before they apply the reduced disclosure regime.
FRS 101 is based very closely on international accounting standards, but allowing qualifying entities to exclude certain disclosures required by IFRS from their individual financial statements.
Under FRS 101, those planning to apply its reduced disclosure framework are required to notify shareholders in writing, and those shareholders must not have objected.
FRS 101 is reviewed by the FRC on an annual basis to ensure consistency with changes to international standards.
Head ICAEW’s financial reporting faculty Nigel Sleigh-Johnson said: “Our outreach to members over FRS 101 has identified a worrying degree of confusion about how and when companies need to notify shareholders of plans to use FRS 101. Questions include whether the notification is required once, or every year, or in the second and subsequent years only when there is a change in shareholders?”