There are major changes coming to FRS 102 and with just under three months until the new regulations take effect, it’s important that businesses are prepared.
Cited as the biggest set of changes in over a decade, any business preparing their accounts under UK GAAP can expect to see their procedures change in January 2026 which means preparation is key.
What FRS 102 changes will take effect?
The way certain elements of financial information are presented is changing under the FRS 102. The major change is in how revenue is recognised by businesses.
Section 23 of FRS 102 is being rewritten to move the focus from recognising revenue when risk and rewards are passed to the customer to a transfer of control of goods or services to the customer.
Under the new laws, businesses will need to follow the new five-step model that will be introduced. The new model will mean businesses handling accounts will need to ensure all contract details are accounted for.
The five-step model you will need to follow from January 2026:
You also need to track deliveries, whether you are supplying goods or services to ensure you meet the regulations in place.
As well as changes in revenue recognition, leases are also changing, with leases now needing to be included on the balance sheet as an asset and a liability.
The aim of this change is to provide a clearer overview of both your obligations and reported liabilities.
There are also updates to Sections 2 and 2A to align. These updates align with international regulations and explain how fair value is measured.
What you can do to stay FRS 102 compliant
With less than three months until the changes become law, it’s essential that you assess and review your current processes and procedures and implement change where necessary.
With the changes designed to improve transparency and reduce the risk of errors, failing to prepare has consequences like fines.
We can help you review your accounting processes and ensure you meet the new regulations ahead of time.
Contact our team to start preparing for the FRS 102 changes.
