The UK Financial Reporting Council (FRC) issued improvements to financial reporting standards applicable in the UK and Ireland that are designed to enhance the quality of financial reporting and help support access to capital and growth of the businesses applying them.
The amendments follow extensive stakeholder engagement and consultation on the proposals with the FRC required to undertake a periodic review of FRS 102 every five years. In most cases, they will be effective for accounting periods beginning on or after 1 January 2026.
The most significant changes, according to the FRC, apply to leases and revenue recognition to align with recent changes to international financial reporting standards, providing better information to users of financial statements, including current and potential investors and lenders.
The FRC said it also made improvements to the proposals for lease accounting and revised the recognition exemption for leases of low-value assets to clarify that the focus is to ensure that the most significant leases are recognised on balance sheets.
Also, the FRC made improvements and clarifications designed to make it easier for preparers to apply and understand the standards. These amendments, the FRC said, are expected to result in a net benefit to UK businesses and contribute to high-quality financial reports that are easier to understand.
Mark Babington, the FRC’s executive director–Regulatory Standards, said in a news release: “Overall, the new amendments, alongside the removal of unnecessary reporting burdens, are expected to provide a net benefit to the UK and support better access to capital by UK corporates necessary to realise growth opportunities.”
The FRC said it intends to publish new editions of the standards and updated staff fact sheets with guidance on key aspects of the new requirements this year.
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