FRC issues 2024 editions of UK and Ireland accounting standards

On 10 September 2024, the Financial Reporting Council (FRC) issued a revised suite of financial reporting standards applicable in the UK and Republic of Ireland. This followed on from the 2024 periodic review and also incorporated a number of other proposed amendments.

As a refresher, these standards consist of:

• FRS 100 Application of Financial Reporting Requirements
• FRS 101 Reduced Disclosure Framework
• FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland
• FRS 103 Insurance Contracts
• FRS 104 Interim Reporting
• FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime

What are the changes?

We have previously written about the significant changes which will be introduced by the revised standards (our previous blog on the topic can be read here) and so we will not cover those in detail again here. However, the key changes are to be found within FRS 102 and 105 and relate to the recognition of revenue, which is now largely aligned with the IFRS approach, and within FRS 102 in relation to leases, which, again, is closely aligned with the approach adopted by IFRS users.

From this, the change that will likely be the most obvious to users of financial statements prepared under UK GAAP will be the new approach to leases. This will see most leases brought on-balance sheet, with some limited exceptions, similar to the way finance leases are currently accounted for. Aside from the additional work required on initial application to account for this change, this could also have knock-on effects on profit or loss - including on EBITDA, if used - companies’ compliance with loan covenants and also company size, with some companies suddenly finding the gross assets thresholds creeping closer.

Timescales

There are, of course, transitional provisions in place where appropriate which will need to be considered on initial application, which will in most cases be for accounting periods commencing on or after 1 January 2026, although early application is permitted if all amendments are applied at the same time.

How Mercia can help

As usual, our range of A&A update courses will continue to consider the changes in detail and walk through practical examples. Our relevant disclosure checklists housed within our various products such as the audit methodology will also be updated and made available in a timely manner.

Although January 2026 may feel like a long way off, it is important to think about the impact the revised standards will have on your clients and to discuss this with them in advance, in order to avoid any surprises as filing deadlines loom. We will be releasing a series of courses over the coming period to support firms as they transition their clients – watch this space!

If you do have detailed technical queries regarding the revisions, then, as ever, please contact us through our technical query request form.