The Financial Reporting Council (FRC) has issued draft amendments to FRS 101 ‘Reduced Disclosure Framework’, which include proposed reduced disclosure requirements relating to new IFRS Accounting Standards IFRS 18 Presentation and Disclosure in Financial Statements and IFRS 19 Subsidiaries without Public Accountability: Disclosures. 

FRED 86 sets out the conclusions of the FRC’s annual review of amendments to IFRS Accounting Standards issued in the year to 31 August 2024 and the proposed amendments to FRS 101. No amendments are proposed to FRS 101 in respect of the two other amendments to IFRS Accounting Standards in the year, that is the amendments to the classification and measurement of financial instruments and the annual improvements to the Standards.

The amendments included in FRED 86 are open for comment until 7 March 2025.

Exemptions from IFRS 18 requirements

IFRS 18 is a new standard that replaces IAS 1 Presentation of Financial Statements for annual reporting periods beginning on or after 1 January 2027, although the UK Endorsement Board (UKEB) has not yet endorsed IFRS 18 for use in the UK.

FRED 86 includes proposals relating to IFRS 18, including exemptions from:

• some disclosure requirements related to management-defined performance measures (for most qualifying entities); and
• disclosure requirements that, in some circumstances, require an entity to disclose a disaggregation of certain expenses classified by nature.

The FRC is proposing to maintain extant exemptions that apply to requirements in IAS 1 that have been retained in IFRS 18 or moved to other IFRS Accounting Standards by IFRS 18. These include exemptions from requirements to present specified comparative information, and from producing a statement of cash flows.

Amendment preventing the application of both FRS 101 and IFRS 19

IFRS 19 is a voluntary standard that permits reduced disclosures for eligible subsidiaries applying IFRS Accounting Standards in their financial statements. The Standard is effective from 1 January 2027, although it has not yet been endorsed by the UKEB for use in the UK. 

The objective of IFRS 19 is similar to that of FRS 101, but the International Accounting Standards Board’s (IASB) approach to its development was different to the FRC’s approach to FRS 101 and therefore there are significant differences between the two. The FRC has deemed that it would not make sense for a qualifying entity to apply both IFRS 19 and FRS 101 and has therefore proposed amendments to FRS 101 that will prevent this from occurring.

ICAEW’s response to the IASB’s recent exposure draft Amendments to IFRS 19 Subsidiaries without Public Accountability: Disclosures raises concerns about the proportionality of the requirements of IFRS 19 when compared to the requirements of FRS 101. 

If IFRS 19 is endorsed for use in the UK, ICAEW anticipates that entities currently applying FRS 101 are “likely to continue to apply FRS 101 as it allows preparers to meet users’ information needs without incurring excessive costs”.

Alongside FRED 86, the FRC has published an explainer document outlining the key similarities and differences between FRS 101 and IFRS 19.

Related resources

Content from the Corporate Reporting Faculty relevant to FRED 86 includes:

• a factsheet on FRS 101; and
• an on-demand webinar recording introducing IFRS 18.

For further resources on UK GAAP, IFRS Accounting Standards and non-financial reporting including sustainability reporting, visit icaew.com/crresources.

Corporate Reporting Faculty content is accessible to all ICAEW members as part of their general subscription. All staff and ICAEW students working in an ICAEW member firm can also access content by completing a one-off registration process. Corporate Reporting Faculty membership is also available to non-ICAEW members at a charge. Find out how to join the Corporate Reporting Faculty.