Periodic Review of financial reporting standards proposes revised revenue and lease accounting amongst other improvements
News types: Consultation Announcement, Guidance
Published: 15 December 2022
The FRC has today issued FRED 82 Draft amendments to FRS 102 The Financial reporting Standard applicable in the UK and Republic of Ireland and other FRSs – Periodic Review.
FRED 82 proposes a number of changes resulting from the second periodic review of FRS 102 and other Financial Reporting Standards. The proposals include: a new model of revenue recognition in FRS 102 and FRS 105; a new model of lease accounting in FRS 102; and various other incremental improvements and clarifications. The FRED is accompanied by a consultation stage impact assessment.
In developing FRED 82, the FRC has considered changes to IFRS Accounting Standards, the IASB’s proposed changes in developing the third edition of the IFRS for SMEs Accounting Standard, stakeholder feedback in response to the FRC’s 2021 request for views, and other developments in corporate reporting.
As a result of the amendments set out in FRED 82, FRS 102 will reflect up-to-date IFRS-based solutions, providing high-quality and clear financial reporting to users. This will include more transparent reporting of lease obligations, as well as a clear five-step model for determining the recognition of revenue from all contracts with customers. The proposals have been designed to be proportionate to the size and complexity of the entities applying the standards.
The proposed effective date of the amendments set out in the FRED is 1 January 2025. Comments on FRED 82, including the consultation stage impact assessment, are requested by 30 April 2023.
The FRC will be holding a webinar on 19 January 2023 from 3 to 4pm to provide an overview of the proposals and we hosted a podcast.
The FRC’s Executive Director of Regulatory Standards, Mark Babington said:
“High-quality financial reporting standards are vital to enable users of financial statements to receive decision-ready, reliable and understandable financial reporting, whilst ensuring that accounting requirements remain proportionate to the size and complexity of the reporting entity.
The FRC estimates that approximately 3.5 million reporting entities in the UK and Republic of Ireland prepare financial statements under either FRS 102 or FRS 105. As the accounting standard-setter for both the UK and Republic of Ireland, the FRC is responsible for ensuring its standards are up-to-date, taking into account the latest international best practice as well as the information needs of users and the overall burden on business.
The publication of FRED 82 is a significant milestone in the continuing evolution of UK and Ireland financial reporting standards, and we look forward to receiving stakeholders’ responses to the proposed amendments.”