12 Jan 26
The Financial Reporting Council’s Periodic Review introduces a number of important changes to FRS 102 (UK and Ireland GAAP), effective for accounting periods beginning on or after 1 January 2026. The scale of the amendments means businesses should begin considering the potential impact now to avoid disruption later.
FRS 102 is the most widely used accounting standard in the UK and Ireland. The periodic review aims to improve clarity, consistency and alignment with international reporting standards, while responding to developments in business practices.
This latest review represents one of the most significant updates in recent years and may affect how entities recognise revenue, account for leases and present information in their financial statements.
While revenue recognition and lease accounting are the headline areas, The Periodic Review also amends a wide range of other sections and introduces updated guidance, meaning businesses should complete a structured impact assessment.
Revenue recognition
The FRS 102 introduces a new, more structured approach to revenue recognition broadly aligned with IFRS principles. For some businesses, this may change the timing and presentation of revenue, particularly for contracts with multiple performance obligations or variable consideration.
In practice, the technical conclusion often hinges on judgement. What auditors and stakeholders will expect, however, is clear documentation of how the entity has worked through the model and why the chosen treatment is appropriate.
Lease accounting
Under the revised standard, lessees will be required to bring most leases onto the balance sheet. This will result in the recognition of a right-of-use asset and a corresponding lease liability, increasing both assets and liabilities and potentially affecting gearing ratios and covenants.
Expanded disclosure requirements
The updated standard includes enhanced disclosure requirements designed to provide greater transparency. Businesses should expect to provide more detailed information in their financial statements, which may require changes to data collection and reporting processes.
A smooth transition usually comes down to early ownership and good information gathering. Businesses should begin assessing how the changes may affect their:
Financial results and balance sheet position
Key performance indicators and banking covenants
Accounting systems and data availability
Internal processes and controls
Our audit and accounting teams are helping clients assess the impact of the revised FRS 102 requirements and build an implementation plan that is proportionate to the size and complexity of the business.
If you would like to understand how these changes may affect your business or would like support in preparing for the transition, please get in touch with Stef Boschat, Tanya Scholtz or Phillip Callow.
