FRS105 – The new Financial Reporting Standard for Small Entities (in draft)

The Financial Reporting Council (FRC) has recently published FRED 58, being the Exposure Draft for FRS105, which in turn will become the new FRSSE (or replace the existing FRSSE, we believe).

Copy-spaced image of a tired businessman sitting at the office

Comments on the Exposure Draft was due by 30 April 2015, so if you missed it, we are afraid the the train has already left the station.

In a nutshell, we have some serious conceptual and philosophical concerns the FRED 58 does not address (and staff at the FRC at a recent event in London, prior to the General Election, could not provide assurances on).


Effectively FRS 105 (as it will be know), once it is ratified and adopted in parliament, will not be IFRS ‘Lite-lite‘, although it will have some of the overall principles of Fair Value Accounting contained within it.

At a fundamental level micro-entities (* as defined below) can choose to adopt either FRS 105 or FRS 102.  However, be very careful in which one you choose, as the two standards have some fundamental differences contained within them, which, later down the line (as the proverbial can is kicked up the road), might cost you additional compliance fees and time and effort, if you need to convert from FRS 105 reporting to FRS 102 (New UK GAAP).

Our concern is this:


“The overall objective of all the initiatives (driven from Brussels) is HARMONISATION.  The differences in approach between FRS 105 and FRS 102 do not underscore this fundamental principle!”

Hence, our health warning:  Think and consult carefully, before adopting either standard (FRS 102 or FRS 105) if you are a micro-entity caught in the compliance reporting net.

If you have any questions or concerns, please contact us for more details.

©2015 – Rohan Badenhorst

File 22-04-2015 16 42 57

*Definition of a micro-entity:

Micro-entities – HMRC guidance – May 2015

Micro-entities are very small companies. Your company will be a micro-entity if it has any 2 of the following:

  • a turnover of £632,000 or less
  • £316,000 or less on its balance sheet
  • 10 employees or less

If your company is a micro-entity, you can:

  • prepare simpler accounts that meet statutory minimum requirements
  • send only your balance sheet with less information to Companies House
  • benefit from the same exemptions available to small companies

End to End (Life-cycle) design for Business Process Outsourcing – Part 2


In part 1 we introduced the basic techniques of Process Mapping and Cost and Benefit Analysis as part of the tool-sets to utilise in considering outsourcing and designing the Outsourced Business Processes future state.


The next step in the process of defining and designing the appropriate Business Processes to outsource or at the very least re-engineer and run more cost-effectively and efficiently is to draw together the relevant cost information from your existing in-house data sources.  Both accounting records and other ‘data-islands’ might have to be investigated, hence the fact that any Business Process redesign effort with entail outreach activity to stakeholders in and around the function, process, team or organisations being considered for this process.

English: Business Process Reengineering Cycle

English: Business Process Reengineering Cycle (Photo credit: Wikipedia)

English: Business Rule Mining: Business Proces...

English: Business Rule Mining: Business Process Mapping to Application Objects (Photo credit: Wikipedia)

A tool to utilise in this process is something like a Stakeholder Map.


English: A graph showing the steps that can be...

English: A graph showing the steps that can be taken to ensure commitment in stakeholder management (Photo credit: Wikipedia)

The image above shows some of the engagement steps and processes in gauging stakeholder engagement.

In part 3 we will continue to explore further tools sets and Force Field Analysis in order to document the Business Process Outsourcing road map, prior to influencing decision makers on the merits and demerits of a successful Business Process Outsourcing project.

©2015 – 3resource