The FRS 101 disclosure exemptions let a qualifying UK or Irish entity apply full IFRS recognition and measurement rules in its individual accounts while leaving out specified notes across more than fifteen IFRS and IAS standards. The relief ranges from skipping the cash flow statement entirely to narrower cuts in the notes on leases, revenue, fair value, pensions, share-based payments, and related party transactions. It works because the omitted information still reaches users through the parent group’s publicly available consolidated accounts.1Financial Reporting Council. FRS 101 Reduced Disclosure Framework
Who Can Take the Exemptions
A qualifying entity is a member of a group whose parent prepares publicly available consolidated financial statements intended to give a true and fair view, with the entity included in that consolidation.1Financial Reporting Council. FRS 101 Reduced Disclosure Framework Subsidiaries are the obvious case, but ultimate parents preparing only their own individual accounts can also qualify on the same terms.
FRS 101 applies only to individual entity financial statements. If a qualifying entity has to prepare consolidated accounts, or chooses to, those consolidated accounts cannot use FRS 101. The exemptions sit beneath a set of group accounts that already carries the full disclosures.
Two groups are shut out. Any entity that is publicly accountable, meaning it has traded debt or equity, or holds assets in a fiduciary capacity for a broad group of outsiders such as a listed bank or insurer, cannot use FRS 101. Charities are also excluded from being qualifying entities.
Conditions You Have To Meet First
Qualifying is necessary but not enough. Several conditions sit between the entity and the exemptions.
Shareholders must be notified in writing of the intention to use the reduced disclosure framework. Holders of five per cent or more of the allotted shares can serve written notice objecting, and if they do, the exemptions cannot be used. For subsidiaries without share capital, the same right belongs to holders of five per cent or more of the ownership interests. Minority shareholders have a direct veto.
For many of the exemptions, equivalent disclosures must already appear in the consolidated accounts of the group in which the entity is consolidated. Those parent accounts must be publicly available and prepared under full UK-adopted IFRS or FRS 102. If the group accounts don’t carry the equivalent information, the entity can’t take the exemption.
The entity’s own accounts must then include a note stating they have been prepared in accordance with FRS 101 and identifying which exemptions have been taken.1Financial Reporting Council. FRS 101 Reduced Disclosure Framework
The Exemptions Available
Some exemptions remove a standard’s disclosures entirely; others target particular paragraphs and leave the rest in place.
Full Relief: Cash Flows and Financial Instruments
Two standards carry a complete exemption. An FRS 101 entity does not have to prepare a statement of cash flows under IAS 7 at all. It can also omit the entirety of the IFRS 7 financial instrument disclosures, provided equivalent disclosures appear in the group’s consolidated accounts.2Financial Reporting Council. FRS 101 Reduced Disclosure Framework IFRS 7 covers the significance of financial instruments to the entity’s position, the nature and extent of risks arising from them, and detailed risk management policies, so dropping it removes pages of notes.
Revenue, Leases, and Fair Value
The IFRS 15 exemptions cover the detailed disaggregation of revenue, information about performance obligations, and the reconciliation of contract balances. Revenue is still recognised under IFRS 15, but the note disclosures on contract assets, remaining performance obligations, and significant judgements in determining transaction prices can be omitted.2Financial Reporting Council. FRS 101 Reduced Disclosure Framework
For leases under IFRS 16, the entity can omit the maturity analysis of lease liabilities, certain details about variable lease payments, and other specified disclosures. Lease liabilities must still be separately identified from other liabilities in the indebtedness disclosures required by the Companies Act regulations.
Fair value measurement disclosures under IFRS 13 carry a substantial exemption covering paragraphs 91 to 99, which include the fair value hierarchy, valuation techniques, and sensitivity analyses. Equivalent disclosures must appear in the consolidated accounts.
Employee Benefits and Share-Based Payments
Targeted relief from IAS 19 lets the entity skip the detailed actuarial assumptions, sensitivity analyses, and reconciliations of plan assets and obligations that make defined benefit pension notes some of the longest in a full IFRS set of accounts.
For share-based payments under IFRS 2, the entity can omit the detailed information about the number and weighted average exercise prices of share options, the fair value measurement methodology, and the effect on profit or loss. This applies where the share-based payment concerns equity instruments of another group entity (for subsidiaries), or the entity’s own equity instruments where its individual accounts are presented alongside the group’s consolidated accounts.2Financial Reporting Council. FRS 101 Reduced Disclosure Framework
Related Party Transactions
The IAS 24 exemption lets a qualifying entity omit disclosures of transactions with other members of its group, provided any subsidiary party to those transactions is wholly owned by a group member. Transactions with joint ventures, associates, or entities with minority interests do not qualify for the relief. The exemption does not cover key management personnel compensation, which must still be disclosed.
The Remaining Standards
- IFRS 3 Business Combinations: relief from detailed acquisition disclosures, including certain fair value information and goodwill reconciliations, provided equivalent information appears in the consolidated accounts.
- IFRS 5 Non-current Assets Held for Sale: exemption from certain disclosures about discontinued operations.
- IFRS 6 Exploration for Mineral Resources: exemption from disclosing operating and investing cash flows related to exploration activities.
- IAS 1 Presentation of Financial Statements: exemption from capital management disclosures, certain comparative information requirements, and other specific presentation paragraphs.
- IAS 8 Accounting Policies: exemption from disclosing information about new IFRS standards issued but not yet effective, removing the “standards not yet adopted” note.
- IAS 16 Property, Plant and Equipment: exemption from certain comparative reconciliation information.
- IAS 36 Impairment of Assets: targeted relief from specific impairment testing disclosures, including certain value-in-use and fair-value-less-costs-of-disposal details.
- IAS 38 Intangible Assets, IAS 40 Investment Property, and IAS 41 Agriculture: exemptions from certain comparative period information for each.
What Financial Institutions Lose
A qualifying entity that is a financial institution can use FRS 101, but with narrower relief. It cannot take the IFRS 7 exemption at all, so the full suite of financial instrument disclosures still has to be given.2Financial Reporting Council. FRS 101 Reduced Disclosure Framework The IFRS 13 fair value exemption is also restricted: a financial institution can use it for assets and liabilities other than financial instruments, but not for financial instruments themselves. A qualifying bank subsidiary still has to provide fair value hierarchy and measurement disclosures for its loan book and investment portfolio, where a qualifying manufacturing subsidiary could skip the same disclosures.
Disclosures You Still Have To Give
Even with every available exemption taken, several requirements remain in place.
The accounts must state that they were prepared in accordance with FRS 101 and identify which exemptions have been taken. Without that note the reader has no signal that reduced disclosures are in use.
Material accounting policy information must be disclosed. The 2021 amendment to IAS 1 shifted the test from “significant” to “material” accounting policy information for periods beginning on or after 1 January 2023.3IFRS Foundation. IAS 1 – Presentation of Financial Statements A policy is material if changing or omitting it could influence decisions users make based on the financial statements. Boilerplate restatements of standard policies can be dropped.
Critical accounting judgements and sources of estimation uncertainty must be disclosed. These are entity-specific and cannot be replicated at group level, so no exemption covers them.
Key management personnel compensation and other related party transactions with directors and senior executives must still be disclosed, even where the broader IAS 24 group transaction exemption is used. UK company law independently requires director remuneration disclosures.
Keeping Up With Annual Changes
The FRC reviews FRS 101 each year to keep it aligned with IFRS. Amendments from the 2024/25 review cycle introduce disclosure exemptions from the new requirements of IFRS 18, which will replace IAS 1 as the standard governing presentation and disclosure.4Financial Reporting Council. FRC Concludes Annual Review of FRS 101 The FRC has also confirmed that IFRS 19, the IASB standard designed for subsidiaries without public accountability, cannot be applied alongside FRS 101. Entities have to choose one framework or the other.
Because the specific paragraph references shift as IFRS standards are amended or replaced, check the current version of FRS 101 on the FRC’s website at the start of each reporting cycle rather than relying on a list that may have been overtaken.