Big changes to FRS 102

FRS 102 has undergone its most significant revision in a decade, with the changes introduced on 1 January 2026. Businesses now need to ensure they are fully compliant to avoid getting caught out.

If your business prepares accounts under UK GAAP, these changes have a major impact on how financial information is recorded and processed.

At Monahans, we’re here to explain what has changed and how you can ensure your business remains compliant.

What has changed with FRS 102?

Previously, many businesses recognised revenue when the risks and rewards passed to a customer.

Under the updated FRS 102, the focus has shifted to control.

A new five-step model, inspired by international standards, now requires businesses to examine the details of their contracts more closely.

Whether you supply goods, services, or a combination of both, you need to track exactly what is delivered and when. This may have changed the timing of when revenue appears in your accounts.

Leases are also now treated differently

Most leases must be recognised on the balance sheet as both an asset and a liability. While this provides a clearer view of a business’s obligations, it may also increase reported liabilities.

Sections 2 and 2A have been updated to align more closely with international standards.

A new section now explains how fair value is measured, alongside updates to the overall concepts used across the standard. If your business relies on valuations for assets, investments, or financial instruments, these updates provide more structure and may result in additional disclosure requirements.

How can you stay compliant with FRS 102?

Now is the time to review your financial processes to ensure they are operating in line with the revised standard.

The changes are designed to improve transparency and reduce the risk of errors or misstatements. As a result, any breaches of compliance are likely to be treated seriously, as they undermine the aim of improving the quality of financial reporting.

Seeking professional guidance can help you identify exactly what has changed and what needs updating to keep your business running smoothly.

Our expert team are on hand to review your accounts and highlight potential risk areas, helping you remain compliant following the January 2026 changes.

Although the changes are now mandatory, many businesses may already have adopted some of them voluntarily. If not, addressing any remaining gaps as early as possible can help resolve issues promptly and reduce the risk of penalties or unnecessary stress.

To stay up to date with FRS 102, speak to our team today.

Kevin Mortimer