• FRS102 The Financial Reporting Standard applicable in the UK and the Republic of Ireland

FRS102 The Financial Reporting Standard applicable in the UK and the Republic of Ireland

22 March 2016

Belgian companies having subsidiaries/investments in companies located overseas in the United Kingdom or in the Republic of Ireland or Belgian companies having a parent from these countries need to know the implications of the financial reporting requirements presently applicable overseas.

Differences with Belgian GAAP

Knowing these requirements and their implication will help you understand the financial statements you received from the subsidiary and identify how these statements would differ from a reporting based on the Belgian GAAP.

In the same way, when you are the reporting subsidiary to a British or Irish parent company, this will help you disclose adequately the main differences between your local Belgian GAAP accounts and the parent company’s reporting framework – when you are not already requested to fully convert your local accounts for reporting purposes.

FRS 102

With effect from 1 January 2015 the Financial Reporting Council (FRC) revised financial reporting standards in the United Kingdom and Republic of Ireland. The revisions fundamentally reformed financial reporting, replacing the existent standards with five Financial Reporting Standards:

  1. FRS 100 Application of Financial Reporting Requirements;
  2. FRS 101 Reduced Disclosure Framework ;
  3. FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland;
  4. FRS 103 Insurance Contracts; and
  5. FRS 104 Interim Financial Reporting.

As a recap, FRS 101 allows qualifying entities to adopt the recognition and measurement requirements of EU-adopted IFRS, with:

  • Certain amendments to standards’ requirements in order to comply with the Companies Act, and
  • A reduction in the required level of disclosures.

FRS 101 may be applied to the individual financial statements of a qualifying entity that are intended to give a true and fair view. A qualifying entity is a member of a group where the parent of that group prepares publicly available consolidated financial statements which are intended to give a true and fair view and that member is included in the consolidation

The FRC has also issued FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime to support the implementation of the new micro-entities regime.

Micro-entities are entities that qualify as such due to their size and are not excluded from the regime due to their nature (charities, LLP’s, investment undertakings, financial holding and insurance undertakings, credit institutions...) or because they are subsidiary included in consolidated group accounts by the method of full consolidation. The thresholds are depending on the magnitude of the turnover (GBP 632,000 max), the balance sheet total (GBP 316,000 max) and the average number of employees (10 max). The entity may apply for the micro-entity regime as long as two of three thresholds are met and is not excluded for any other reason as mentioned here-above. 

Application scope

Our present purpose is to draw your attention to the FRS 102 that has been updated in September 2015 and that may affect you either as a parent company of a British or Irish subsidiary, or as a reporting entity to a British or Irish group of companies.

The FRS 102 is a single financial reporting standard that applies to the financial statements of entities that are not applying EU-adopted IFRS, FRS 101 or FRS 105. While the basis of his FRS 102 is the IFRS for Small and Medium-Sized Entities issued in 2009, the standard amended the IFRS for SME’s both in terms of the scope of entities eligible to apply it and in terms of accounting treatments provided.

At BDO, we have the experts qualified to assist you in understanding and quantifying what the implications of this FRS 102 are whether:

  • you are requested to report to the UK or Ireland based parent company accordingly or to disclose the adjustments that would be required to your local accounts in order to comply with the group accounting policy;
  • you are willing to consolidate the accounts of your British or Irish subsidiary in your Belgian GAAP group accounts.

The differences between the Belgian GAAP and this FRS 102 reporting framework are numerous and will have a huge impact not only in terms of presentation, but also in terms of recognition/valuation of assets and liabilities or on the timing of the revenue recognition.

It would be too far reaching to list all these variances in the present article, but if IFRS standards are even vaguely familiar to you, no doubt you will immediately perceive how far reaching the consequences may be on the net asset value of your overseas’ investment or on the net book value of your company as seen from the perspective of the overseas’ parent.

For instance, the retirement benefit obligation, financial instruments, property investments, deferred taxation, share based-payments, statement of comprehensive income, cost versus revaluation model, borrowing costs, hedge accounting... just to name a few concepts that are not known or not specifically treated under the Belgian GAAP framework. 


For more information, please do not hesitate to address your questions to your regular BDO contact or to the BDO UK desk in Belgium ([email protected]).