FRC publishes changes to FRS 102 as part of its second periodic review of the standard

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Following the consultation period, the Financial Reporting Council (FRC) has now published the ‘Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and other FRSs – Periodic Review 2024’ (“the Amendments”) 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.

When will this be effective from?

The effective date of the amendments is for accounting periods beginning on or after 1 January 2026, with early application permitted provided all amendments are applied at the same time.

What are the key changes?

The amendments are largely in line with the proposed changes highlighted in our previous article (FRS102 – 2nd triennial review) and headline changes include:

  • a new model of lease accounting (for FRS 102 only) based on the on-balance sheet model from IFRS 16 Leases, with appropriate simplifications, for example a higher threshold for recognition of low-value assets on balance sheet where that exemption is taken. This is expected to result in an impact on the financial statements of most entities that are lessees under one or more operating leases.  No equivalent change has been made to FRS 105.
  • a new model of revenue recognition (for FRS 102 and FRS 105) based on the five-step model for revenue recognition from IFRS 15 Revenue from Contracts with Customers, with appropriate simplifications.

As expected, one area where the Amendments doesn’t change is the alignment of the Expected Credit Loss Model for the impairment of financial assets within IFRS 9: Financial Instruments. The FRC will consult on this in due course.

There are other incremental improvements and clarifications which can be found here: Financial reporting standards Periodic Review 2024 (

Remember this will impact on all entities that account under FRS102 including charities.

What do you need to start thinking about?


  • Collating and analysing your customer contracts


  • Ensuring your lease data is complete and accurate. Finance teams need to determine the appropriate borrowing rates attached to each lease, and the lease term (taking into account options to extend, or terminate, if these are reasonably certain to be exercised).

The key is to ensure that your business has systems set up well in advance of the transition date to capture all relevant information.

What could this impact?

Lending facilities:

  • Organisations should start talking to their lenders now if they have debt covenants involving EBITDA measures or other metrics linked to the balances impacted by these changes.

Earn out agreements:

  • These may need to be reconsidered, if they depend on certain profit targets.

How can we help you get ready for changes to FRS 102?

These changes may have significant effects for some businesses, so it is important to start preparing early so that you are ready for the 1 January 2026.

If you’re not sure how the changes affect your business, please contact our expert below who can help you understand the implications and prepare your accounts in plenty of time.

Do you need extra information?

Gary Wong - Principal at Hillier Hopkins

Gary has over 20 years of audit experience and brings a wealth of experience from his time at Grant Thornton, Deloitte and RSM, working with various industry sectors from owner managed businesses through to large international groups and AIM listed businesses.

Contact Gary at or on +44 (0)1923 634453


Alex Fuller - Principal at Hillier Hopkins

As Head of Compliance and an Audit Principal, Alex specialises in serving owner managed entities up to large multi-national groups and pension schemes.

Contact Alex at or on +44 (0)1923 634 433