Sam Rouse FCCA DChA
- Audit and Assurance Partner and Head of Charities and Not for Profit
- +44 (0)330 124 1399
- Email Sam
Suggested:Result oneResult 2Result 3
Sorry, there are no results for this search.
Sorry, there are no results for this search.
View all peoplePublished by Sam Rouse on 3 May 2023
Share this article
The Financial Reporting Council (FRC) has recently published its long-awaited exposure draft, FRED 82, proposing significant changes to FRS 102, and other financial reporting standards. This results from its second periodic review of the standard, with said changes proposed to apply to accounting periods beginning on or after 1 January 2025.
The changes are quite extensive and come as the FRC seeks closer alignment with International Financial Reporting Standards (IFRS), albeit with a number of simplifications.
In brief the proposals include: a new model of revenue recognition in FRS 102 and FRS 105; a new model of accounting for leases in FRS 102; and numerous other incremental clarifications and improvements.
The changes proposed are to affect all businesses reporting under FRS 102 (including small companies reporting under FRS 102 section 1A), with some of the proposals also impacting the smallest (micro) entities reporting under FRS 105.
A new model for revenue recognition is put forward. This model is based on the five-step model for revenue recognition, originating from IFRS 15, with a few simplifications applied, where possible. Recognition will largely be based upon promises included in contracts with customers, and whether these are satisfied over time or at a point in time.
A ‘promise’ is defined as an obligation to transfer a goods or services, from which the customer can benefit seemingly on its own, with the obligation to transfer these goods or services separate from any other obligations set out in the contract.
Perhaps more controversially, based on the IFRS 16 leasing requirements (with some simplifications), a new on-Balance Sheet leasing model is being proposed. All leases will be recognised as assets and liabilities, with exemptions available for leases of low value assets and for short-term leases (i.e., those with a lease term of 12 months or less at the commencement date).
The consultation on the proposed changes closed on 30 April 2023. The FRC will now consider the feedback it receives with a view to publishing final amendments towards the end of 2023.
These changes will need be taken into consideration and discussed by the Charities SORP Committee, but at this stage it’s far from clear what impacts they will have on the SORP, i.e. whether they will override the existing SORP, whether the existing SORP will override them, or whether some kind of amendment will be required to incorporate them fully.
If you would like further information or guidance on the proposed changes to FRS 102 and other financial reporting standards, contact us today.
Share this article
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Related people
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Our complimentary newsletters and event invitations are designed to provide you with regular updates, insight and guidance.
You can unsubscribe from our email communications at any time by emailing [email protected] or by clicking the 'unsubscribe' link found on all our email newsletters and event invitations.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.