The Financial Reporting Council (FRC) has launched a dedicated discussion forum for small and medium-sized entities (SMEs) to share their insights from applying the UK’s principal accounting standard in the preparation of financial statements.

The forum forms part of the FRC’s ongoing work to support the proportionate application of audit and reporting standards across the SME market, following a year-long campaign around SME growth that began in January 2025.

Prime opportunity

SMEs comprise more than 99% of the 1.5m entities that report in line with FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and are vital to economic growth and job creation.

The forum will provide a prime opportunity for industry stakeholders to engage with members of the FRC policy team, responsible for setting and updating the standard. Among the stakeholders that the FRC is eager to attract are SME accounts preparers and those who provide accounting or auditing services to SMEs.

Set to meet online twice a year, the forum will discuss feedback from applying FRS 102 in practice, highlighting any topical issues, along with relevant FRC consultations on updates to UK and Ireland accounting standards. For example, discussions could focus on the implementation of the Periodic Review 2024 amendments, effective for accounting periods beginning on or after 1 January 2026, as well as starting to look ahead to the next review.

The standard-setter says that the forum will also complement existing engagement activities that it is carrying out across the broad spectrum of preparers who apply UK and Ireland accounting standards.

Extensive changes from 2026

SMEs and other applicable entities need to maintain a particularly close view on the workings of FRS 102, with extensive changes to UK GAAP effective for accounting periods beginning on or after 1 January 2026. As ICAEW Head of Corporate Reporting Strategy Sally Baker explained in a podcast last month, “They're in almost every section within FRS 102, our principal UK accounting standard, and FRS 105, the accounting standard for micro entities, has been changed to some degree”.

Regarding FRS 102, she said: “We’ve got major changes within Section 23 revenue, with a simplified version of those changes impacting section 18 of FRS 105. We also have some major changes to lease accounting within FRS 102 – that’s Section 20. But those changes do not apply to FRS 105 reporters.”

For small entities applying Section 1A, Baker pointed out, the main change affects related-party disclosures, requiring small entities to disclose all related-party transactions regardless of whether or not they are under normal market conditions. However, she added: “It is worth noting that there’s no explicit requirement for a small entity to disclose its directors’ remuneration. We’ve had that clarified.”

ICAEW’s Corporate Reporting Faculty will be hosting a virtual conference on the changes to UK GAAP, spread over two half-days in July. Specifically targeted at SMEs and their advisors, the event includes a keynote speech from the FRC’s Director of Accounting and Reporting Policy, Jenny Carter. Early bird pricing is available until 26 May.

“The FRC is always keen to hear from stakeholders in order to inform its work, and this new forum will provide a further opportunity for us to hear about reporting matters that affect smaller entities,” Carter says. “The focus will be on FRS 102, particularly current experiences and also any standard-setting work ongoing.”