The Financial Reporting Council (FRC) is to consult on proposals to simplify accounting for the UK's smallest companies, in response to new government legislation which aims to reduce the administrative burden for micro-entities.

FRC is asking for feedback on proposals to amend the Financial Reporting Standard for Smaller Entities (FRSSE) to reflect legislation introduced by BIS in November 2013.

The new rules enable micro-entities to prepare more simplified financial statements with fewer disclosure notes. To qualify, a company need to meet two of three criteria: a turnover of under £632,000; a balance sheet total of less than £316,000; and an average of under ten employees during the financial year.

Roger Marshall, FRC board member and chair of the accounting council said: 'The FRC is proposing these amendments to allow micro-entities taking advantage of the new legal provisions, which permit reduced disclosure, to continue to apply the accounting principles of the FRSSE. This will ease the burden considerably on the UK's 1.56m smallest companies, many of which offer unique, specialist services and include the types of business the government sees as critical to the UK's future economic growth.'

The proposals are set out in FRED 52 Draft Amendments to the Financial Reporting Standard for Smaller Entities (effective April 2008) - Micro-entities. To view the consultation on the FRC website, click HERE

The deadline for comments is 12 February 2014.