The FRC’s draft amendments to UK GAAP, published in FRED 82 Draft amendments to FRS 102 The Financial Reporting Standards applicable in the UK and Republic of Ireland and Other FRSs, propose significant changes to the approach to revenue recognition and accounting for leases as well as other amendments.

The FRC needs to ensure that the suite of UK GAAP standards is up to date and reflects the latest developments in international financial reporting standards (IFRS) as appropriate for their users. In ICAEW’s view, the proposed amendments generally meet that need effectively.

ICAEW’s initial views of the proposals have now been finalised and submitted to the FRC. In its response to the FRED 82 consultation, ICAEW expresses broad support for the amendments, while highlighting areas for further consideration. This includes ways in which the FRC could further shorten and simplify the new lease accounting section and some points of detail regarding the new revenue section of FRS 102.

ICAEW also believes the FRC should reconsider all proposed changes to FRS 103 Insurance Contracts and proposals to change the revenue recognition model in FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime.

The proposed effective date for the amendments set out in FRED 82 is accounting periods beginning on or after 1 January 2025. Early adoption will be permitted provided all amendments are applied at the same time. ICAEW’s response sets out a number of factors the FRC should consider before finalising the effective date.

The deadline to submit comments on FRED 82 to the FRC has now passed. The FRC will start to consider all the consultation responses received and aims to finalise and issue the amended standards by the end of 2023. No matter what is decided regarding the effective date, entities will be given no less than 12 months between the final amendments being issued and the date of implementation.

Laura Woods, Technical Manager in ICAEW’s Corporate Reporting Faculty, says: “The FRC has done an excellent job of updating and improving the suite of UK GAAP standards in a way that balances the need for consistency with international standards, with the need for appropriate proportionality. We look forward to seeing the final standards published in due course.” 

Read ICAEW’s full response to FRED 82.