FRS105

Based on the legislation related to minimum disclosures and principles of FRS 102 (recognition and measurement principles) the FRC introduced FRS 105. The standard FRS 105 was introduced in 2015 for micro entities eligible under company law. There are 3 size classifications of private companiessmall, medium or large. Within the small company classification there is a sub-set called a micro-entity, which is applicable to very small companies. Micro entity category was introduced for accounts falling after 30 September 2013. Companies are classified as micro entities if they meet at least two of the following criteria: sales ≤£632,000, total assets ≤£316,000, and number of employees ≤10 (DBIS, 2013, p. 5). Although, FRS 105 generally follows the principles applied to the main accounting standard in the UK and Republic of Ireland (FRS 102), it is further simplified in terms of recognition, measurement and disclosure. The main intention of this simplified accounting is to reduce the administrative burden for the micro entities. There is also an option under the micro-entity regime to file unaudited abbreviated balance sheet. But in the literature and in practice there exists a contradictory view about loss of information related to micro entities [1,2]. This report will empirically assess the extent that the new micro company regime has been taken up in the UK by an interrogation of the Bureau van Dijk FAME (Financial Analysis Made Easy) database.