Background

In December 2022 the Financial Reporting Council (FRC) issued Financial Reporting Exposure Draft (FRED) 82 Draft amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and other FRSs – Periodic Review which proposed changes to FRS 102 and other UK and Republic of Ireland financial reporting standards as a result of the second triennial review of the standard.

The proposed amendments focused on updating UK GAAP accounting requirements to reflect changes in IFRS Accounting Standards and making other incremental improvements and clarifications.

FRED 82 proposed the following principal amendments:

• The accounting requirements for revenue in FRS 102 and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime would be based on the five-step model for revenue recognition from IFRS 15 Revenue from Contracts with Customers, with appropriate simplifications. 
• The lease accounting requirements in FRS 102 for lessees would be based on the on-balance sheet model from IFRS 16 Leases, with appropriate simplifications. 

In addition, the following incremental improvements and clarifications were proposed:

• 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), in preparation for the eventual removal of this option, but permitting entities already applying the option to continue to do so in the meantime.

When applicable, similar incremental improvements and clarifications were proposed for FRS 105.

The proposed effective date of the amendments was accounting periods beginning on or after 1 January 2025 with early application permitted provided all amendments were applied at the same time.  Transitional provisions were also proposed. 

Status of the project

In March 2024, the FRC published Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and other FRSs – Periodic Review 2024’ which contains the changes to FRS 102 and other UK and Republic of Ireland financial reporting standards as a result of the second periodic review of the standard.