Financial Reporting Standard (FRS)

Financial Reporting Standard FRS Accounting Standards Financial Reporting Council International Accounting Standards Board Harmonization
A comprehensive overview of the Financial Reporting Standard (FRS), a set of standards developed by the Accounting Standards Board and Financial Reporting Council to guide financial reporting practices in the UK and Republic of Ireland.
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Financial Reporting Standard (FRS)

Definition

The Financial Reporting Standard (FRS) refers to a series of standards issued by the UK’s Accounting Standards Board, now part of the Financial Reporting Council (FRC), designed to harmonize UK financial reporting practices with international standards. In 2013, the reorganized FRC issued FRS 102 (The Financial Reporting Standard applicable in the UK and Republic of Ireland), which from 2015 supersedes previous FRSs 1 to 30.

Examples

  1. FRS 1: Cash Flow Statements (issued 1991, revised 1996): Provides guidelines on the preparation and presentation of cash flow statements.
  2. FRS 8: Related Party Transactions (issued 1995): Establishes disclosure requirements for transactions between the entity and its related parties.
  3. FRS 17: Retirement Benefits (issued 2000, revised 2002): Offers a framework for accounting for pensions and other retirement benefits.
  4. FRS 105: The Financial Reporting Standard applicable to the Micro-entities Regime (issued 2015): Specifies the reporting requirements for micro-entities.

Frequently Asked Questions

Q: What is the main objective of FRS?
A: The main objective of FRS is to provide clear, consistent, and comparable financial reporting standards that improve the transparency and reliability of financial statements.

Q: What is FRS 102?
A: FRS 102 is a comprehensive financial reporting standard that applies in the UK and Republic of Ireland. It was issued in 2013 and replaces earlier standards to align UK practices more closely with those of the International Accounting Standards Board.

Q: Do all companies need to comply with FRS 102?
A: Not all companies are required to comply with FRS 102. Small businesses and micro-entities may be eligible to use simplified versions such as FRS 105.

Q: What happens if a company does not comply with FRS?
A: Non-compliance with FRS can lead to penalties, including fines and potential legal ramifications, and can damage a company’s reputation.

Q: Are there any exceptions to the disclosure requirements under FRS?
A: Yes, some standards allow for reduced disclosure requirements for qualifying entities, such as subsidiaries or small and medium-sized enterprises (SMEs).

  1. Accounting Standards Board (ASB): The UK body responsible for issuing Financial Reporting Standards before being replaced by the FRC.
  2. Financial Reporting Council (FRC): The regulatory organization overseeing financial reporting, auditing, and corporate governance in the UK.
  3. International Accounting Standards Board (IASB): The global organization that develops and issues International Financial Reporting Standards (IFRS).

Online Resources

Suggested Books for Further Studies

  1. “UK GAAP 2019: Generally Accepted Accounting Practice under UK and Irish GAAP” by Ernst & Young LLP
  2. “Financial Accounting and Reporting” by Barry Elliott and Jamie Elliott
  3. “Essentials of Financial Accounting in Business” by Mike Bendrey, Roger Hussey, and Colston West

Accounting Basics: “Financial Reporting Standard (FRS)” Fundamentals Quiz

### What is the primary purpose of Financial Reporting Standards? - [ ] To increase the complexity of financial reporting - [x] To provide consistency and comparability in financial reporting - [ ] To supersede all international standards - [ ] To create different practices for every company > **Explanation:** The primary purpose of FRS is to provide consistency and comparability in financial reporting, ensuring clear and reliable financial information. ### What does FRS 1 pertain to? - [ ] Retirement benefits - [x] Cash flow statements - [ ] Earnings per share - [ ] Related party transactions > **Explanation:** FRS 1 pertains to cash flow statements and provides guidelines on their preparation and presentation. ### Which body is responsible for issuing FRS prior to the FRC? - [ ] International Accounting Standards Board - [ ] Financial Services Authority - [x] Accounting Standards Board - [ ] European Securities and Markets Authority > **Explanation:** The Accounting Standards Board was responsible for issuing FRS before the responsibility was taken over by the Financial Reporting Council (FRC). ### What does FRS 102 aim to achieve? - [ ] To create a new set of independent UK standards - [x] To harmonize UK practices with international standards - [ ] To simplify financial reporting for all types of companies - [ ] To introduce additional regulations for large corporations > **Explanation:** FRS 102 aims to harmonize UK financial reporting practices with international standards. ### To whom does FRS 105 apply? - [x] Micro-entities - [ ] All public companies - [ ] Large corporations - [ ] Non-profit organizations > **Explanation:** FRS 105 applies specifically to micro-entities, providing simplified reporting requirements for these small entities. ### What year was FRS 102 issued? - [ ] 2012 - [x] 2013 - [ ] 2015 - [ ] 2000 > **Explanation:** FRS 102 was issued in the year 2013. ### Which organization oversees financial reporting and corporate governance in the UK? - [ ] International Accounting Standards Board - [x] Financial Reporting Council - [ ] European Securities and Markets Authority - [ ] Financial Conduct Authority > **Explanation:** The Financial Reporting Council (FRC) oversees financial reporting and corporate governance in the UK. ### What does FRS 17 cover? - [x] Retirement benefits - [ ] Related party transactions - [ ] Foreign exchange rates - [ ] Earnings per share > **Explanation:** FRS 17 covers the accounting for pensions and other retirement benefits. ### What type of disclosure does FRS 25 concern itself with? - [ ] Income tax - [ ] Acquisition accounting - [x] Financial instruments - [ ] Capital instruments > **Explanation:** FRS 25 concerns itself with the disclosure and presentation of financial instruments. ### Which entity experienced a reorganization in 2013 leading to the issuance of FRS 102? - [ ] International Accounting Standards Board - [ ] Accounting Standards Board - [x] Financial Reporting Council - [ ] Financial Services Authority > **Explanation:** The Financial Reporting Council (FRC) experienced a reorganization in 2013, after which they issued FRS 102.

Thank you for exploring our detailed overview and quiz on Financial Reporting Standards (FRS). Keep deepening your understanding to excel in the realm of financial accounting!

Tuesday, August 6, 2024
Financial Reporting Standard (FRS)
Financial Reporting Review Panel (FRRP)
Financial Reporting Exposure Draft (FRED) January 1, 1
Accounting Council January 1, 1
EU-adopted IFRS January 1, 1
Financial Reporting Council (FRC) January 1, 1
Financial Reporting Council (FRC) January 1, 1
Generally Accepted Accounting Principles (US GAAP) January 1, 1
IASB: International Accounting Standards Board January 1, 1
International Accounting Standards Board (IASB) January 1, 1
International Accounting Standards Board (IASB) January 1, 1
Standard Interpretations Committee (SIC) January 1, 1

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