Thursday, 9 March 2017

Factsheet: FRS 105 for Irish Companies

Factsheet: FRS 105 for Irish Companies



The title of FRS 105 is “The Financial Reporting Standard applicable to the Micro-entities Regime”. Based on the title, one can deduce that the standard is applicable to micro-entities. Whether an entity is micro or not depends on it meeting the definition of a micro-entity under Irish company law when Companies (Accounting) Bill 2016 (Bill) is transposed into it. The Bill does not specify the effective date of the application of its provision although it is hoped that they apply to accounting periods beginning on or after 1 January 2016. Check the status of the Bill here.

The entire standard is 122 pages and comprise of 28 sections or accounting topics. It is based on FRS 102 and “stripped down” to reflect the simple nature and smaller size of micro-entities.

Definition of a Micro-Entity

When the Bill is transposed into Irish company law, a micro-entity is one which does not exceed two of the following criteria for two consecutive years or for the current year if it is newly incorporated:

  Micro entities
Turnover (prorated if less or more than one year) €700k
Balance sheet total i.e. total assets €350k
Average number of employees 10

There are certain entities which are not eligible to apply FRS 105 despite meeting the above threshold requirements, for example investment entities, financial holding entities, and holding companies that prepare group accounts.


Main Features of FRS 105

Some of the key features of FRS 105 in terms of presentation and disclosure requirements are:

  • Directors’ report are not required
  • The only primary statements required are the balance sheet and the profit and loss account
  • Very limited disclosures are required in the notes presuming that the accounts still give a true and fair view by doing so. However, an entity is permitted to include additional information although it has to be consistent with the requirements of Section 1A of FRS 102.

Certain key features of FRS 105 in terms of recognition and measurement requirements are:

  • Assets are measured at cost
  • Deferred tax are not recognised
  • There are no accounting policy choices (which are available in FRS 102)



FRS 105 is a welcomed framework for most stand-alone “small” trading or service companies that meet the definition of a micro-entity. It simplifies the preparation of the year-end accounts which should ultimately reduce the compliance costs for companies.

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