When FRS 102 was first released, applying for 2015 year ends onwards, small entities could ignore it and carry on using the FRSSE, albeit in its adapted 2015 incarnation. But from 2016 the FRSSE is withdrawn, and entities too big to use the new micro entities standard have no choice but to dive into FRS 102. Fortunately small entities now have the new section 1A of FRS 102 available, effective from 1 January 2016 although it can also be early-adopted. Here are five of the key features to be aware of:

The small entities regime isn’t just for companies

More precisely, its scope is companies meeting the Companies Act definition of small (based on size conditions and not being ineligible); LLPs qualifying as small and not excluded by the LLP regulations; and other entities that would be classified as small if they were incorporated under company law.

The new small size limits can be adopted early too

A company too big to count as small under the old limits would, by default, apply full FRS 102 in its December 2015 accounts, but as an alternative it can look to the new small company size limits and, if it fits them, adopt them early to let it access the small entities regime right from its first year under new UK GAAP, rather than using full FRS 102 in 2015 then the small entities version in 2016.

The main effect is to remove most disclosure requirements…

This is the key headline effect – section 1A of FRS 102 allows small entities to set aside all of the disclosure requirements in the body of the standard. It also excuses preparers from presenting a cash flow statement, and allows the combination of the main performance statements, in some circumstances, into a statement of income and retained earnings. Instead, a fairly brief list of disclosure requirements is given in section 1A itself, along with a further set of recommended disclosures.

…but there is a sting in the tail

While preparers may have sighed with relief at the idea of only having to look at one section of the standard for all their disclosure requirements in one place, there is a second requirement that effectively prevails, which is that the accounts of small entities must give a true and fair view, and that disclosures outside those in section 1A “may” be needed in order to comply with this. So in practice preparers will need to review the full standard and consider whether their significant balances and transactions need the fuller disclosures set out in the individual sections, even where these are not included in section 1A.

The accounting is the same as for larger entities

There are no accounting adjustments or relaxed requirements in the small entities regime – it only deals with reduced disclosures and streamlined primary statements. So even though small entity accounts may be no longer than old FRSSE accounts, there still may well be accounting differences, for instance with the new financial instruments requirements, and share based payments.