This helpsheet has been issued by ICAEW’s Technical Advisory Service to help ICAEW members understand the reporting requirements applicable to small entities in the UK reporting under FRS 102 Section 1A. Small entities choosing to prepare accounts in accordance with the small entities regime will apply the recognition and measurement requirements of FRS 102, but apply the presentation and disclosure requirements of Section 1A.

Members may also wish to refer to the following related guidance and helpsheet:

• FRS 100 Application of Financial Reporting Requirements – summary and timeline

FRS 102 Section 1A details the presentation and disclosure requirements that are specific to small entities choosing to apply the small entities regime (see FRS 102 summary and timeline for further details regarding an entities eligibility to apply section 1A).

The main body of Section 1A sets out the general requirements that apply to small entities. In particular, the financial statements of a small entity:

• Are required to give a true and fair view; and
• Must contain a balance sheet, a profit and loss account and notes to the financial statements (and are encouraged to contain a statement of total comprehensive income and a statement of changes in equity, or a statement of income and retained earnings, where necessary to give a true and fair view).

The balance sheet and profit and loss account may be prepared in accordance with the Regulations (including the option to prepare abridged accounts) or the formats may be adapted to suit the circumstances of the small entity. Appendices A and B to Section 1A provide details on how the formats may be adapted. Further guidance on abridged accounts can be found in the helpsheet Abridged accounts for small companies.

Appendix C of FRS 102 (March 2018) sets out the mandatory minimum disclosure requirements for small entities in the UK (see below for further details). Appendix D of FRS 102 (March 2018) sets out the mandatory minimum disclosure requirements for small entities in the Republic of Ireland – these disclosure requirements are not considered any further in this helpsheet.

Appendix E to Section 1A in FRS 102 (March 2018) contains the additional disclosures encouraged for small entities (see below for further details).

Mandatory disclosures required for UK small entities

As mentioned above, Appendix C to Section 1A of FRS 102 sets out the specific disclosures required to be given by way of note for small entities in the UK and is based on company law.

In summary, the notes must include:

• The accounting policies adopted (including changes therein and correction of prior period errors);
• An explanation of any use of the true and fair override;
• A fixed assets note, including a reconciliation and revaluation table and details of any impairments to such assets;
• Fair value disclosures;
• Disclosure of amounts due or payable after more than 5 years and debts covered by valuable security;
• Disclosure of financial commitments, guarantees or contingencies not included in the balance sheet;
• The nature and business purpose of arrangements not included in the balance sheet;
• The amount and nature of individual income or expense items that are exceptional in size or incidence;
• The average number of employees during the financial year;
• The name and registered office of the undertaking drawing up the consolidated financial statements of the smallest body of undertakings of which the undertaking forms part (only applicable where the small entity is a subsidiary and is included in consolidated accounts);
• Details of certain related party transactions;
• The amount of advances and credits granted to directors and guarantees of any kind entered into by the small entity on behalf of its directors; and
• The nature and effect of post balance sheet events.

The accounts must also state:

• The part of the UK where the entity is registered;
• Its registered number;
• Whether it is a public or private company and whether it is limited by shares or guarantee;
• The address of its registered office; and
• If appropriate, the fact that the entity is being wound up.

In addition, where items to which Arabic numbers are given in any of the formats have been combined (e.g. if abridged accounts are prepared), unless they are not material, the individual amounts of any items which have been combined must be disclosed in a note to the financial statements.

Encouraged disclosures

Where relevant to its transactions, other events and conditions, a small entity is encouraged to provide the disclosures set out in Appendix E to Section 1A of FRS 102 (March 2018). Such disclosures may be necessary to give a true and fair view.

The encouraged disclosures are (where relevant):

• A statement of compliance with FRS 102, adapted to refer to Section 1A;
• A statement that the entity in question is a public benefit entity;
• A disclosure relating to material uncertainties related to going concern;
• A dividends declared and paid or payable during the relevant accounting period; and
• On first time adoption of FRS 102, an explanation of how the transition has affected the financial position and performance of the entity.

Additional disclosures

FRS 102 paragraph 1A.5 explicitly repeats the requirement from s393 of the Companies Act 2006 that the financial statements of a small entity ‘shall give a true and fair view of the assets, liabilities, financial position and profit or loss of the small entity for the reporting period’ and paragraph 1A.16 confirms a small entity shall present sufficient information in the notes to achieve this.

The extent of the disclosures to be included in a small entity set of accounts is ultimately a decision for the directors and professional judgement should be applied in determining which disclosures are necessary in order to give a true and fair view.

If the prescribed disclosures of Section 1A are not considered to be sufficient in this regard, the broader disclosure requirements of other sections of FRS 102 may merit consideration.

ICAEW members, affiliates, ICAEW students and staff in eligible firms with member firm access can discuss their specific situation with the Technical Advisory Service on +44 (0)1908 248 250 or via webchat.