Important FRS 102 Changes
Important FRS 102 Changes
On 27 March 2024, the FRC issued amendments to FRS 102 and other FRSs following the conclusion of its second periodic review of the FRSs. The amendments follow on from proposals published in Financial Reporting Exposure Draft (FRED) 82 and FRED 84 which proposed greater alignment with International Financial Reporting Standards (IFRS), especially those that had been issued in recent years.
What are the key changes?
The amendments expected to have 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.
When are the amendments effective?
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.
How can BDO NI support your business through the transition?
Navigating these changes can be complex. Our team can support your business throughout the transition by providing the following assistance:
- Impact assessment - We can support with evaluating the potential impacts of the changes to revenue and leases on your business, impacted metrics and also design appropriate transition plans for your businesses.
- Training/workshops - Tailored trainings/workshops for finance and operations teams on the new requirements and how they apply to your business.
- Accounting policies and papers - We can prepare/review your revenue accounting papers/policies and support with the key accounting judgements.
- Preparation and review of models to apply the new accounting requirements to your revenue and lease contracts.
- Assessing the impact on your systems, processes and controls.
- Disclosure requirements - We can identify the disclosure impacts for your business and assist with updating the existing disclosures to comply with the proposed changes.