UK GAAP changes - amendments to Financial Reporting Standards (FRS) 102

On 27 March 2024, the FRC issued amendments to Financial Reporting Standards (FRS) 102 and other FRSs following the conclusion of its second periodic review of the FRSs. The amendments seek to provide greater consistency and alignment to IFRSs.

The amendments expected to have the most significant impact on the financial statements are:

• Revised revenue accounting requirements in FRS 102 and FRS 105, based on the IFRS 15 five-step model for revenue recognition, with appropriate simplifications;
• Revised lease accounting requirements in FRS 102 based on the IFRS 16 'on-balance sheet' model, again with appropriate simplifications.

 

Other incremental improvements and clarifications to FRS 102 (and FRS 105 where applicable) include:

• Greater clarity for small entities in the UK applying Section 1A Small Entities regarding which disclosures need to be provided in order to give a true and fair view.
• A revised Section 2 Concepts and Pervasive Principles, updated to reflect the IASB's Conceptual Framework for Financial Reporting, issued in 2018.
• A new Section 2A Fair Value Measurement, replacing the Appendix Fair Value Measurement to Section 2 and updated to reflect the principles of IFRS 13 Fair Value Measurement.
• Removal of the option to newly adopt the recognition and measurement requirements of IAS 39 Financial Instruments: Recognition and Measurement under paragraphs 11.2(b) and 12.2(b) (unless needed to achieve consistency with group accounting policies), in preparation for the eventual removal of this option, but permitting entities already applying the option to continue to do so in the meantime.

 

The principal effective date for these amendments is accounting periods beginning on or after 1 January 2026, with early application permitted provided all amendments are applied at the same time. Transitional provisions are also included.

Earlier effective dates apply to new disclosures about supplier finance arrangements in Section 7 Statement of Cash Flows of FRS 102 (periods beginning on or after 1 January 2025, with early application permitted) and a new requirement in Section 6 Transition to this FRS of FRS 103 Insurance Contracts (periods beginning on or after 1 January 2024).

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