The amendments have been finalised following a consultation set out in FRED 62 Draft amendments to FRS 102 – Fair value hierarchy disclosures.

In the feedback from stakeholders, there was a strong call for simplification of the over-complex rules on disclosure. They wanted to see simplification of the preparation of the disclosures to provide more meaningful information for users of the financial statements.

The FRC has responded by improving the consistency with the disclosures required by EU-adopted International Financial Reporting Standards (IFRS).

The amendments more closely align the relevant disclosure requirements set out in IFRS 13 Fair Value Measurement and are effective for accounting periods beginning on or after 1 January 2017, with early application permitted.  This will mean that entities can apply the changes in financial statements for accounting periods that ended on 31 December 2015, if those financial statements have yet to be approved.

The amendments only apply to financial institutions and retirement benefit plans; other entities applying FRS 102 are unaffected by these amendments.

It is worth stressing that the FRC only plans to review the complete FRS 102 accounting standard every three to four years, although there may still be minor amendments to improve the application of the overall standard. The next significant review is scheduled for 2019.

An entity can apply these amendments for accounting periods beginning on or after 1 January 2017. Early application is permitted. If an entity applies these amendments to an accounting period beginning before 1 January 2017 it will have to disclose that fact.

Melanie McLaren, the FRC’s executive director of codes and standards said: ‘We are responding to issues raised by stakeholders, who have confirmed the benefits they will bring, including reducing the potential costs of compliance with FRS 102 and improving the information available to users.’

The FRS 102 Fair value heirarchy amendments are available here