Navigating FRS 102 – what you need to know

If you work in accounting or finance, you will already be aware of the major updates to FRS 102.

These are the most significant revisions since the standard was introduced, and if you prepare accounts under UK GAAP they are now directly relevant to your business.

At Monahans, we’ve distilled the changes into a clear, practical summary so you don’t have to wade through technical guidance. If you’d rather talk it through and get tailored advice, our experts are ready to help.

Revenue: new rules, new approach

Section 23 has been overhauled.

The previous risk-and-reward model has been replaced by a five-step control model based on IFRS 15.

Under the updated approach, businesses must:

• Identify the contract with the customer
• Identify the performance obligations
• Determine the transaction price
• Allocate that price to each obligation
• Recognise revenue as those obligations are satisfied

This has changed the timing and manner in which revenue appears in accounts.

If your contracts are complex, involve staged delivery, or include bundled offerings, it is important to ensure systems and data are capable of supporting the revised requirements.

These changes apply for accounting periods beginning on or after 1 January 2026, with early adoption permitted.

Leases: most now appear on the balance sheet

Section 20 has been rewritten to introduce a single lease accounting model inspired by IFRS 16.

As a result, most leases, including those previously treated as operating leases, must now be recognised on the balance sheet.

This commonly results in increases in right-of-use assets and lease liabilities, with knock-on effects for gearing, EBITDA, and borrowing arrangements.

If you lease property, vehicles, or equipment, you should review your lease portfolio and financing arrangements in light of the updated requirements.

The revised lease rules apply from 1 January 2026, with early adoption allowed.

Fair value and concepts: clarified and aligned

Sections 2 and 2A have been updated to reflect the IFRS 2018 Conceptual Framework and to provide clearer guidance on fair value measurement.

These changes have been consolidated into a new section, offering greater structure and closer alignment with IFRS.

If your accounts use fair value, for example for investment properties, financial instruments, or assets recognised on acquisition, valuation policies and disclosures should be reviewed to ensure compliance.

These updates apply from 1 January 2026, with early adoption permitted.

Presentation formats: what’s next?

In July 2025, the FRC published FRED 87, consulting on refreshed “adapted format” presentation options for the profit and loss account and balance sheet.

For businesses that currently use adapted formats under company law, this may provide additional flexibility in future reporting.

The consultation closed on 10 September 2025. If the proposals are progressed, the changes are expected to come into force on 1 January 2027.

What has already changed?

Supplier finance disclosures

New disclosure requirements for supplier finance arrangements are now in effect.

Businesses using supplier finance must disclose the nature, terms, and liquidity risks associated with these arrangements. This transparency measure means relevant data should be captured accurately and presented clearly in the notes to the accounts.

These requirements apply from 1 January 2025.

Company size thresholds

Amendments to UK and Irish law have changed the financial thresholds used to determine company size (micro, small, medium, and large).

As a result, some businesses may have moved into a different size category, affecting filing obligations, audit requirements, and the format of their accounts.

These changes took effect in Ireland on 1 January 2024 and in the UK on 6 April 2025.

Seek professional support

Keeping pace with the FRS 102 changes requires time, careful review and informed judgement.

At Monahans, we can help you understand how the updated standard affects your organisation and ensure your financial reporting remains compliant.

If you would like a confidential discussion about what these changes mean for your business, contact our team today.

Kevin Mortimer