Adapted formats

The Financial Reporting Council (FRC) has issued amendments to FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland, relating to the adapted formats of the balance sheet and statement of profit or loss.

Only entities that choose to adapt their financial statement formats under FRS 102 will be affected by these particular amendments.

While the Companies Act sets out required formats for the balance sheet and profit and loss account, company law permits certain entities to adapt the format of the financial statements. This allows entities the flexibility to use terminology and presentation more in line with IFRS® Accounting Standards, which can help facilitate consolidation of financial statements.

Where entities choose to adapt the format of the financial statements, FRS 102 sets out the minimum line items required. These are currently based on the requirements of IAS 1 Presentation of Financial Statements.

Ahead of the replacement of IAS 1 with IFRS 18, Presentation and Disclosure in Financial Statements, the FRC has updated FRS 102’s requirements for the adapted formats to enable consistency in the presentation of financial statements between UK GAAP preparers and preparers applying IFRS Accounting Standards.

These amendments take effect for accounting periods beginning on or after 1 January 2027, the same effective date as IFRS 18, with early application permitted.

When choosing to adapt one of the balance sheet formats, the requirements for classifying assets and liabilities as current or non-current have been amended. The FRC has also included additional guidance to support preparers when applying updated requirements on current and non-current liabilities.

When adapting the profit and loss account, preparers will now be required to present “operating expenses” as a line item. However, the amendments stop short of bringing IFRS 18’s category-based requirements for the classification of income and expenses into FRS 102.

Furthermore, no amendments have been made to reflect the management-defined performance measure-disclosure requirements of IFRS 18, or its principles of aggregation and disaggregation.

Other amendments

The FRC has also made limited clarifications to the Periodic Review 2024 amendments, which are relevant to all preparers applying either FRS 102 or FRS 105, The Financial Reporting Standard applicable to the Micro-entities Regime.

Section 9 of FRS 102, covering consolidated and separate financial statements, has been amended to clarify when a parent entity is exempt from preparing consolidated financial statements.

Additionally, a paragraph on costs of inventories of a service provider has been deleted from the relevant sections of FRS 102 and FRS 105. The paragraph was no longer considered necessary following the Periodic Review 2024 amendments to accounting requirements for revenue.

These amendments are effective for accounting periods beginning on or after 1 January 2026,   with early application permitted provided that all the Periodic Review amendments are applied at the same time.