Massive adjustments are coming to accounting within the UK and Republic of Eire. The Monetary Reporting Council (FRC) has issued essentially the most intensive revisions to FRS 102 since the usual’s preliminary launch in 2013. The revisions will deliver UK GAAP nearer to IFRS and embody elementary adjustments to how leases are accounted for and income is recognised.
What’s FRS 102?
FRS 102 is the Monetary Reporting Customary relevant within the UK and Republic of Eire, which offers a complete framework for the monetary reporting of entities that aren’t required or don’t select to use Worldwide Monetary Reporting Requirements (IFRS). It units out the popularity, measurement, presentation, and disclosure necessities for a variety of transactions and occasions.
Efficient date of adjustments
The revisions to FRS 102 will probably be efficient for accounting intervals starting on or after 1 January 2026.
Overhauling to align with international requirements
The first driver behind these amendments is meant to:
- Improve readability and consistency in monetary reporting.
- Enhance comparability with IFRS, benefiting companies with worldwide operations or these searching for international funding.
- Guarantee continued relevance of economic reporting within the face of evolving enterprise practices and regulatory expectations.
What this implies on your organisation
Impression and issues
These adjustments can have a wide-ranging impression on organisations reporting beneath UK GAAP, together with:
- Monetary Metrics: Impacts to key efficiency indicators like EBITDA, revenue, and internet debt might necessitate reviewing debt covenants and performance-related remuneration schemes.
- Programs and Processes: Accounting programs and processes will want updates to accommodate the brand new necessities for lease and income accounting.
- Distributable Reserves: The revised earnings assertion profile, notably with the popularity of depreciation and curiosity from leases, may impression the power to pay dividends.
Subsequent steps: Preparing for 2026
Modifications of this scale require preparation. Listed below are some key steps to take:
- Impression Evaluation: Conduct a radical evaluate of present accounting insurance policies, lease agreements, and buyer contracts to establish the potential impression of the amendments.
- System Overview: Assess whether or not present accounting software program and programs can deal with the brand new necessities. Upgrades or new options together with lease accounting software program could also be obligatory. Begin reviewing new options early to make sure adequate time for choice and implementation.
- Knowledge Gathering: Begin amassing the mandatory information for lease accounting, together with lease phrases, cost schedules, and low cost charges. Overview buyer contracts to know efficiency obligations and transaction costs.
- Coaching: Guarantee accounting and finance groups are well-trained on the brand new accounting requirements and their implications.
- Early Engagement: Have interaction with auditors and enterprise advisors early to debate the potential impression and guarantee a clean transition.
- The FRS 102 Periodic Overview 2024 introduces essentially the most far-reaching adjustments to the UK and Republic of Eire GAAP since its preliminary implementation. Particularly, the alignment of lease accounting with IFRS 16 and income recognition with IFRS 15 represents a major shift in accounting practices. By understanding the explanations behind these adjustments, being conscious of the important thing amendments to lease accounting and income recognition, and by taking proactive steps now, companies can guarantee a smoother transition.
Don’t wait till 2026 – the time to organize is now.
Meet the FinQuery group on stand A9 at Accountex Summit Manchester, happening at Manchester Central on 23 September 2025.
For additional info, please go to www.accountexmanchester.com.
