The Financial Reporting Council (FRC) has decided to push back its timetable for drafting changes to FRS102 and other financial reporting standards. Originally, it was thought that the final amendments would be ready in the first half of 2024 and be effective for periods beginning on or after 1 January 2025. However, the FRC has said any changes will not affect UK companies reporting under UK GAAP until 2026.
Which companies will the changes affect?
The changes made to the FRS102 and FRS105 accounting standards on 1 January 2026 will affect up to 3.5 million companies.
What are the changes to FRS102 and FRS105?
In a consultation earlier in the year, respondents called for greater alignment with IFRS 15, the international revenue recognition standard used by listed entities in the UK. Despite concerns raised that these requirements could be challenging for smaller businesses to handle, the FRC has confirmed that they are looking to implement a ‘five-step revenue recognition model’ for those that prepare financial reports under FRS102 and FRS105.
The FRC has said that their proposals on lease accounting will only affect companies reporting under FRS102. The FRC has said that they are currently reconsidering how to ensure that the FRS 102 accounting standard is understandable and proportionate for companies of all sizes that report under that standard.
The FRC's current proposal on low-value assets follows the IFRS16 Leases standard which currently excludes leases valued less than £5,000. It is believed that the FRC may look at increasing the exemption to as high as £10,000, but no confirmation of this has yet been issued.
Why the delay?
FRED 82 proposed a number of amendments to FRS102 and FRS105 regarding revenue recognition, lease accounting and a number of other areas. It is understood that the FRC are taking into account all of the feedback on the proposed amendments to FRS102 and FRS105, as well as waiting for further developments from the International Accounting Standards Board following the implementation reviews of IFRS15 and IFRS 16 and the updated IFRS for SMEs.
Partner, Sheffield
Free initial meeting
Related content
FRS 102 Changes From 1 January 2027: What Businesses Need to Know
cmb@hawsons.co.uk The upcoming FRS 102 changes will affect how some UK businesses present their profit and loss account from 1 January 2027. It only impacts those companies that choose to present adapted formats for their profit and loss accounts, rather than the...
Amendments to FRS 102 from January 2026
cmb@hawsons.co.uk For periods commencing on or after 1 January 2026, FRS 102, the accounting standard used by most unlisted companies in the UK, is being significantly updated. Early adoption is permitted, although we have seen very few examples of this. The two...
Increase to Company Size Thresholds
UK company size thresholds have increased with effect for periods commencing on or after 6 April 2025. This change was initially announced in 2024, and has now come into force after a delay caused by the change in government last year. The new thresholds have reduced...