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Updating FRS 102 for changes in IFRS

17 October 2016

As part of the triennial review of FRS 102 the Financial Reporting Council (FRC) is inviting comments from stakeholders on its proposed approach to updating FRS 102 to reflect changes in IFRS.

The FRC is committed to periodically reviewing UK and Ireland accounting standards to ensure they continue to require high-quality and cost-effective financial reporting from entities within their scope. As FRS 102 is IFRS-based, part of this process involves reviewing whether, and to what extent, FRS 102 should be updated for changes in IFRS.

The latest consultation document proposes that incremental improvements and clarifications, including some arising from changes in IFRS, are made to FRS 102 to be effective for periods beginning 1 January 2019. These may include changes relating to aggregating contracts or separating performance obligations based on IFRS 15 and the incorporation of the control model of IFRS 10 Consolidated Financial Statements.

More significant amendments to FRS 102 are proposed to be effective for periods beginning 1 January 2022, giving entities more time to prepare and learn from the implementation experience of others applying the IFRS standards on which the proposed amendments are based. These potential changes include:

a)      Considering whether more extensive amendments should be made to reflect the IFRS 15 model

b)      Incorporating the expected loss model for impairment of financial assets, based on IFRS 9 Financial Instruments

c)      Updating lease accounting by lessees for consistency with IFRS 16 Leases.

There are some changes to IFRS that the FRC does not propose to include in FRS 102, for example, IFRS 3 Business Combinations (as revised in 2008). Subject to the responses to the consultation document, the next steps will be to issue a financial reporting exposure draft (FRED) in the first quarter of 2017 addressing the 2019 amendments and a second FRED in the third quarter of 2017 addressing the amendments for 2022.

The FRC has requested comments on the proposals by 31 December 2016 – read the Consultation Document.

For further information on new FRS 102 please contact Richard Matthews

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