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Deloitte Update

FRC Issues Amendments to Fair Value Disclosures in FRS 102

Overview

On 8 March, the Financial Reporting Council (FRC) has issued ammendments to FRS 102 - Fair value hierarchy disclosures. The amendments aim to simplify the preparation of disclosures about financial instruments for financial institutions and retirement benefit plans.

The amendments more closely align the relevant disclosure requirements with those in IFRS 13 Fair Value Measurement and have removed the requirement to follow the hierarchy as set out in paragraph 11.27 of FRS 102. The amendments effective for accounting periods beginning on or after 1 January 2017, with early application permitted. 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.

Summary of Changes in FRS 102 - Fair value hierarchy disclosures

Paragraph 34.22 is amended as follows:

34.22 For financial instruments held at fair value in the statement of financial position, a financial institution shall disclose for each class of financial instrument, an analysis of the level in the following fair value hierarchy (̶a̶s̶ ̶s̶e̶t̶ ̶o̶u̶t̶ ̶i̶n̶ ̶p̶a̶r̶a̶g̶r̶a̶p̶h̶ ̶1̶1̶.̶2̶7̶)̶ into which the fair value measurements are categorised. A fair value measurement is categorised in its entirety on the basis of the lowest level input that is significant to the fair value measurement in its entirety.

Level 1: The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability, either directly or indirectly.
Level 3: Inputs are unobservable (ie for which market data is unavailable) for the asset or liability.

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