FRS 100: Application of Financial Reporting Requirements

Financial Reporting Standard 100, or FRS 100, establishes the foundational financial reporting framework for entities in the United Kingdom and Republic of Ireland. Its purpose is not to detail specific accounting treatments but to serve as a directorial guide. The standard acts as the initial point of reference, directing a business toward the specific and detailed set of accounting rules it is required to follow.

Scope and Applicability

FRS 100 applies to all financial statements that are legally required to present a “true and fair view” of an entity’s financial health and performance over a reporting period. This mandate covers a wide array of entities that must prepare statutory accounts under the UK’s Companies Act 2006 or similar legislation in the Republic of Ireland. The entities included are not just traditional companies but also Limited Liability Partnerships (LLPs) and other organizations subject to these legal requirements.

The Financial Reporting Framework

The primary function of FRS 100 is to outline the available financial reporting standards and guide an entity in selecting the correct one based on its size and nature. This tiered system is designed to ensure that reporting requirements are proportionate to the complexity of the entity.

For the smallest of entities, the framework offers Financial Reporting Standard 105 (FRS 105), which is aligned with the “Micro-entities Regime.” This is the most simplified standard, designed to reduce the compliance burden on very small businesses. To qualify as a micro-entity, a company must meet at least two of three specific criteria: its annual turnover must not exceed £1 million, its balance sheet total must be no more than £500,000, and it must have an average of 10 or fewer employees. Certain types of companies, such as charitable companies and financial institutions, are excluded from this regime regardless of their size.

The principal standard for the majority of entities is Financial Reporting Standard 102 (FRS 102), “The Financial Reporting Standard applicable in the UK and Republic of Ireland.” This is the default and most comprehensive standard for businesses that are not eligible for the micro-entity regime and do not opt to use other available standards. FRS 102 applies to a vast range of entities, from small enterprises that exceed the micro-entity thresholds to large, unlisted corporations, providing a single, coherent set of accounting rules.

A more specialized option within the framework is Financial Reporting Standard 101 (FRS 101), the “Reduced Disclosure Framework.” This standard is available to “qualifying entities,” which are typically parent or subsidiary companies within a group whose parent prepares publicly available consolidated financial statements. FRS 101 permits these entities to apply the same recognition and measurement rules as full International Financial Reporting Standards (IFRS) but with significantly fewer disclosure requirements in their individual accounts. This approach streamlines the reporting process for corporate groups, as it aligns the accounting policies across the group while reducing the disclosure burden on individual subsidiaries.

Core Requirements of FRS 100

Beyond directing entities to the appropriate standard, FRS 100 imposes several universal requirements that apply regardless of which subsequent framework is chosen. These mandates ensure a baseline level of quality and transparency in all financial statements prepared under UK and Irish GAAP.

A central pillar of FRS 100 is the overarching legal requirement that all financial statements must present a “true and fair view.” This principle obligates a company’s directors to ensure the accounts accurately reflect the entity’s financial position and performance. Compliance with the relevant standard, such as FRS 102, is presumed to result in a true and fair view. In rare cases where simply following a standard’s specific rules might be misleading, directors are required to provide additional disclosures to meet this fundamental obligation.

Another direct mandate from FRS 100 is the requirement for a clear and explicit “statement of compliance” within the notes to the financial statements. This statement must unambiguously declare which financial reporting framework was used to prepare the accounts. For instance, a company might state, “These financial statements were prepared in accordance with Financial Reporting Standard 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland.”