THE FRC has issued a brace of Exposure Drafts (FRED 63 and FRED 64) proposing limited amendments to two UK and Ireland accounting standards.
FRED 63 arises as a result of the annual review of FRS 101 Reduced Disclosure Framework. The annual review aims to ensure that FRS 101 continues to be cost-effective as IFRS, on which it is based, changes. FRED 63 principally proposes disclosure exemptions in relation to IFRS 15 Revenue from Contracts with Customers.
FRED 64 proposes amendments to FRS 103 Insurance Contracts to reflect changes in the regulatory framework, with the introduction of Solvency II, including updating some of the terminology used. Yet established accounting policies can continue to be applied if an entity so chooses.
Melanie McLaren, the accounting and audit watchdog’s executive director of codes and standards, said: “FRED 63 proposes additional disclosure exemptions for entities applying FRS 101, and should reduce the cost of compliance for entities choosing to use this Standard. We are also asking stakeholders to reflect, with us, on the principles for determining disclosure exemptions and whether there are opportunities to further increase the cost effectiveness of FRS 101.
“The changes proposed in FRED 64 are necessary given the changes in the regulatory framework for insurance business, but do not require entities to change their accounting policies and therefore should not result in additional costs for entities.”
The proposals in FRED 64 are intended to be effective for accounting periods ending on or after 1 January 2016.
The key proposals in FRED 63 are expected to be available from when an entity applying FRS 101 first applies IFRS 15.
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