The FRC has issued what it says are “comprehensive improvements to financial reporting standards” for the UK and Ireland, which are used by 3.4 million businesses.
The changes follow extensive stakeholder engagement and consultation on the proposals with the FRC required to undertake a periodic review of FRS 102 every five years.
The most significant changes apply to leases and revenue recognition to align with recent changes to international financial reporting standards. The changes will provide better information to users of financial statements including current and potential investors and lenders. In response to stakeholder feedback, the FRC has made improvements to the proposals for lease accounting and revised the recognition exemption for leases of low-value assets to clarify that the focus is to ensure that the most significant leases are recognised on balance sheet.
The FRC has also made a number of improvements and clarifications that are designed to make it easier for preparers to apply and understand the standards.
Whilst there will be some implementation costs, the FRC has been mindful of the need for changes to be proportionate and to remove any unnecessary reporting burdens. During the extensive stakeholder engagement period FRC said many stakeholders, including those representing preparers, generally supported the updates to the accounting model for revenue recognition.
The amendments to the standards will in most cases be effective for accounting periods beginning on or after 1 January 2026. During 2024, the FRC intends to publish new editions of the standards and updated staff factsheets with guidance on key aspects of the new requirements.
The FRC will also be hosting a webinar to discuss the new standards at 11am on 15 May 2024.
