UK and Ireland accounting standards are subject to periodic reviews, at least every five years. This ensures they remain up to date and continue to require high-quality and understandable reporting, proportionate to the size and complexity of the entity and users’ information needs.
Time to review
The aim is to keep FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland broadly stable between comprehensive, periodic reviews, which helps to minimise any costs associated with changes in reporting requirements. However, during a five-year period, some unforeseen issues may arise and there have been a few changes to FRS 102 since the last review to respond to urgent issues, such as interest rate benchmark reform and COVID-19-related rent concessions. These typically impact only a proportion of the entities applying the standard.
The last periodic review commenced in 2016 and resulted in Amendments to FRS 102 – Triennial review 2017 – Incremental improvements and clarifications being issued in December 2017. The main changes made were developed in response to stakeholder feedback and addressed many of the implementation issues reported to us at the Financial Reporting Council (FRC).
As it’s five years since the beginning of that review, it is now time to start the next. This will be a comprehensive review and, although FRS 102 will be a significant focus, changes could be made to the other standards as well. In particular, changes to FRS 102 will feed through into FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime when appropriate.
Seeking views
Part of the periodic review process is seeking views from stakeholders on areas that might be considered as part of the review. This might include new issues/transactions that should be addressed, or comments and suggestions in relation to the current requirements. As noted above, stakeholder feedback was key in identifying the issues addressed during the last periodic review. The feedback resulted in FRS 102 being clearer and easier to use, some accounting policies being simplified and additional choices and exemptions being introduced.
In addition to stakeholder feedback, the review will also consider other developments in financial reporting and any relevant developments in the wider reporting framework. UK and Ireland accounting standards are IFRS-based and some of the more recent major changes in IFRS have yet to be considered in detail for FRS 102.
Stakeholders have previously asked us to allow the experience of IFRS reporters to develop before making proposals for reflecting the principles of the expected loss model in IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases in FRS 102, if at all.
As all of these standards have been effective for a little while now, this periodic review will be an opportunity to consider them in the context of FRS 102. Other amendments to IFRS issued in recent years will also be within the scope of this review.
There may be other developments in the wider reporting framework that have relevance to our work in reviewing and revising standards in a timely fashion, too. For example, we may take another look at some disclosure requirements for usefulness.
Timeframe for change
All proposals for changes to the standards will be formally consulted on, with an Exposure Draft expected not before 2022. The effective date for any amendments is currently expected to be 1 January 2024.
To get involved, you can send any feedback to the faculty at frf@icaew.com, or directly to the FRC at ukfrsperiodicreview@frc.org.uk by 31 October 2021. The FRC is also expecting to hold roundtables for stakeholders to share their views, either on the standards as a whole, or perhaps on more discrete topics.
About the author
Jenny Carter, Director, Accounting and Reporting Policy, Financial Reporting Council
