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FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland

FRS 102 is the principal accounting standard in the UK financial reporting regime. It sets out the financial reporting requirements for entities that are not applying EU-adopted IFRS, FRS 101 or FRS 105.

Which version of the standard?

Annual period Effective version of the standard Notes on amendments and early adoption

Starts on or after 1 January 2019

FRS 102 The Financial Reporting Standard
(March 2018)

Includes the ‘Amendments to FRS 102 – Triennial review 2017’ as well as all previous amendments to FRS 102 as listed below.

Starts 1 January 2017 – 31 December 2018

FRS 102 The Financial Reporting Standard
(September 2015)

Early FRS 102 (March 2018) is permitted.

Amendments to FRS 102 – Fair value hierarchy disclosures
(March 2016)

Amendments to FRS 101 and FRS 102 – Notification of shareholders
(December 2016)

Amendments to FRS 102 – Directors’ Loans – optional interim relief for small entities
(May 2017)

Early adoption of the ‘Amendments to FRS 102 – Triennial review 2017 – exemption from loans from directors and shareholders to small entities’ is permitted (see below). This exemption is more generous than the interim relief issued in May 2017.

Early adoption of the ‘Amendments to FRS 102 – Triennial review 2017 – gift aid’ is permitted (see below).

Starts 1 January 2016 – 31 December 2016

FRS 102 The Financial Reporting Standard
(September 2015)

Amendments to FRS 101 and FRS 102 – Notification of shareholders
(December 2016)

Amendments to FRS 102 – Directors’ Loans – optional interim relief for small entities
(May 2017)

Early adoption of the ‘Amendments to FRS 102 – Triennial review 2017 – exemption from loans from directors and shareholders to small entities’ is permitted (see below). This exemption is more generous than the interim relief issued in May 2017.

Early adoption of the Amendments to FRS 102 – Triennial review 2017 – gift aid is permitted (see below).

Starts 1 January 2015 – 31 December 2015

FRS 102 The Financial Reporting Standard
(August 2014)

Amendments to FRS 102 –Pension Obligations
(February 2015)

Amendments to FRS 102 – Small entities and other minor amendments
(July 2015)

Early adoption of FRS 102 (September 2015) is permitted but must be applied together with the Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 (SI 2015/980).

Recent amendments

1. Pension obligations

The amendment is effective from the effective date of FRS 102 - 1 January 2015.

The amendments enable sponsoring employers reporting under UK GAAP to continue with current practice in accounting for defined benefit pension schemes.

Specifically:

  • No additional liability need be recognised for a ‘schedule of contributions’ that has been agreed in order to address a plan deficit when the deficit itself has already been recognised; and
  • The effect of not recognising an irrecoverable surplus in a defined benefit plan is shown in other comprehensive income, rather than profit or loss.
2. July 2015 Amendments to FRS 102 (Small entities and other minor amendments)

Amendments to section 26 Share-based payment are effective for accounting periods beginning on or after 1 January 2015, with early adoption permitted. Other amendments including the small entities amendments are effective for accounting periods beginning on or after 1 January 2016. Early application is permitted but a company must apply the amendments together with The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 (SI 2015/980).

The amendments to section 26 Share-based payment reverse the previous default accounting treatment where an entity has a choice of settling in cash or shares. Such transactions are no longer to be treated as cash settled; instead they are treated as equity settled unless this does not reflect the substance of the transaction.

The small entities amendments introduce a new section 1A, which details presentation and disclosure requirements applicable to small entities that choose to apply the small entities regime. These entities must apply the recognition and measurement requirements of FRS 102. Other amendments include:

  • The removal of certain disclosure exemptions available to qualifying entities in respect of financial instruments
  • The prohibition of the reversal of impairment of goodwill
  • An increase in the maximum useful life of goodwill and intangible assets for which a reliable estimate of useful life cannot be made
  • The setting out of minimum requirements for entities adopting financial statement formats set out in the new Accounting Regulations.
3. Amendments to FRS 102 - Fair value hierarchy disclosures

These amendments are effective for accounting periods beginning on or after 1 January 2017. Early application is permitted.

The amendments made to paragraphs 34.22 and 34.42 revise the disclosure requirements for financial institutions and retirement benefit plans. They relate to the disclosure of financial instruments in an analysis based on the fair value hierarchy.

4. Amendments to FRS 101 and FRS 102 – Notification of shareholders

Effective for accounting periods beginning on or after 1 January 2016.

The amendment removes the requirement for a qualifying entity to notify its shareholders about the proposed use of disclosure exemptions.

5. Amendments to FRS 102 - Directors’ Loans - optional interim relief for small entities

Effective immediately with retrospective application available for accounting periods beginning on or after 1 January 2016.

FRS 102 requires that loans from directors are initially measured at present value. The optional interim measure permits small entities to measure loans from directors at transaction price in their first set of FRS 102 financial statements. The interim relief has been replaced with a more generous exemption in respect of directors’ loans as part of the Amendments to FRS 102 – Triennial Review 2017 (see below).

6. Amendments to FRS 102 – Triennial Review 2017

The principal effective date for the amendments is accounting periods beginning on or after 1 January 2019, with early application permitted as long as all amendments are applied at the same time. Exceptions to this are the amendments in respect of directors’ loans and tax effects of gift aid payments, for which early application is permitted separately.

The December 2017 amendments are the conclusion of the first triennial review of FRS 102. Many of the amendments are editorial in nature or clarify, but do not change, existing guidance. The main changes that will impact the financial statements are as follows:

(a) The removal of undue cost or effort exemptions, which are replaced by accounting policy options where relevant. An accounting policy choice is introduced for entities that rent investment property to another group entity to measure that property either using the cost model or fair value model.

(b) The introduction of a description of a basic financial instrument, which will result in additional financial instruments being classified as basic.

(c) For small entities, the option to measure a loan from a director-shareholder (or a close member of family) at transaction price rather than present value.

(d) More flexible guidance on the recognition of intangible assets separately from goodwill in a business combination. Entities may choose to recognise such intangibles if this provides useful information to the entity and users of financial statements. The policy should be applied consistently to the relevant class of intangible assets.

(e) An amendment to the definition of a financial institution to remove references to ‘generate wealth’ and ‘manage risk’. As a result fewer entities should meet the definition.

(f) The income tax effects of gift aid payments by subsidiaries to their charitable parents are taken into account at the reporting date when it is probable that the gift aid payment will be made in the following nine months.

Who is eligible?

Our FRS 102 summary and timeline tells you who may apply the standard – alongside a synopsis, current proposals and a timeline of FRC updates.

ICAEW guidance and commentary

Helpsheets and factsheets

Factsheets, FAQs and other commentary on specific topics are on our separate FRS 102 topics pages.

Brexit and financial reporting: Preparing FRS 102 accounts for 2018/19 🔒
Financial Reporting Faculty, February 2019
UK companies preparing accounts for 2018 and early 2019 will need to consider how Brexit will affect the numbers and disclosures required.

FRS 102 Triennial review 2017 amendments – What are the changes? 🔒
Financial Reporting Faculty, June 2018
In December 2017 the UK’s FRC issued amendments to UK GAAP standards arising from its Triennial review. Although many of the amendments aim to clarify rather than change accounting treatments, there are significant changes to some areas. In this Financial Reporting Faculty FRS 102 Update, we answer some of the frequently asked questions on the changes to the standards.

The UK financial reporting regime FAQ 🔒
Financial Reporting Faculty, May 2017
Financial Reporting Faculty staff comment on some of the questions raised by members on the UK financial reporting regime, looking at the requirements and options for different types of UK entities.

An introduction to FRS 102 🔒
Financial Reporting Faculty, February 2017
This factsheet provides an overview of FRS 102, the standard that forms the cornerstone of the new UK financial reporting regime that became effective from 1 January 2015.

The UK financial reporting regime🔒
Financial Reporting Faculty, January 2017
This factsheet provides an overview of the UK financial reporting regime that came into effect on 1 January 2015, with further changes for small and micro-entities for 2016.

Webinars and recordings

Webinars and podcasts on specific topics are on our separate FRS 102 topics pages.

FRS 102: Understanding the triennial review amendments
Financial Reporting Faculty, March 2018
In this short podcast, Sarah Dunn and Alison Dundjerovic, two of the Financial Reporting Faculty’s Technical Managers provide an overview of the key changes to FRS 102, resulting from the Triennial review amendments issued by the FRC in December 2017.

Annual factsheets

These exclusive factsheets, produced annually by the Financial Reporting Faculty for its members, highlight all new and modified requirements for preparers of UK GAAP accounts. Each annual edition focuses primarily on new requirements with mandatory application for preparers with periods beginning on or after 1 January of that year.

2018 UK GAAP Accounts 🔒
Financial Reporting Faculty, June 2018

2017 UK GAAP Accounts 🔒
Financial Reporting Faculty, June 2017

2016 UK GAAP Accounts 🔒
Financial Reporting Faculty, August 2017

Articles and features

Spoiled for choice 🔒
Adrian Gibbons, Audit and Beyond, June 2018
Auditors must not make decisions for clients, but they may still need to discuss some FRS 102 options.

Smoothly does it 🔒
Azhar Baig, Chartech, May/June 2017
FRS 102 has caused plenty of waves for bigger firms using accounting software lately. Now it's the turn of smaller accounting practices to take on board the changes.


eBooks

Access to eBooks is only available to ICAEW members and ACA students – please log in to view these titles.

UK GAAP 2017: Application of FRS 100–104 in the UK 🔒
EY, Wiley, 2017
This guide has been fully updated to reflect the application of the new accounting standard in practice. It focuses on each area of the financial statement in detail and explains how they are treated by FRS 102, with illustrative examples.

UK GAAP financial statement disclosures manual 🔒
Steve Collings, Wiley, 2016
A practical manual for preparing new UK GAAP-compliant disclosures. This guide collects all of the latest guidelines into one place and is designed for practical application with many real-world examples.

Interpretation and application of UK GAAP for accounting periods commencing on or after 1 January 2015 🔒
Steve Collings, Wiley, 2015
A detailed guide to applying new UK GAAP. Provides insight into the preparation of accounts under the EU-adopted IFRS, FRSs 100, 101, and 102, the FRSSE, and the Companies Act 2006, with guidance on which type of disclosure each scenario requires. The book also includes detailed analysis of the planned changes to the Small Companies' Regime scheduled to take effect in 2016.

If you have any difficulties using these eBooks, please see our Help and support advice or contact library@icaew.com.


Example accounts

Model accounts and disclosure checklists for new UK GAAP
The ICAEW Library can provide model accounts and disclosure checklists for FRS 101, FRS 102, FRS 102 Section 1A, FRS 103 and FRS 105. The examples and checklists cover a broad range of entities, including small companies, charities, groups, LLPs and micro-companies.


External resources

Some guides and comparisons that we link to may pre-date the latest amendments to this standard. While these resources contain useful information, please treat them with appropriate caution.

From the FRC

FRC issues a suite of staff factsheets on aspects of FRS 102
A suite of staff factsheets were issued by the FRC in December 2018 highlighting certain requirements of FRS 102, including amendments made by the 2017 Triennial Review.

Staff Education Notes
The FRC produced a series of guidance notes in December 2013 and October 2015 to illustrate certain requirements of FRS 102. These cover a wide range of topics.

From other sources

Accounting standards: The UK tax implications of new UK GAAP
HMRC, December 2016
A series of papers giving an overview of key accounting changes and tax considerations for companies moving from UK GAAP to FRS 102 regarding corporation tax and income tax.

A comparison of old UK GAAP, new UK GAAP (FRS 102) and EU-adopted IFRS
PwC, April 2016
Overview comparison with a full detailed guide available to registered PwC Inform users.


Further reading

Manuals and handbooks

The ICAEW Library stocks the latest UK GAAP handbooks and manuals. You can browse all our books on FRS 102 or request any of the following popular titles by contacting us on +44 (0)20 7920 8620, by web chat, or at library@icaew.com

Manual of accounting: UK GAAP
PwC, Lexis Nexis, 2019
Practical guide with worked examples explaining the requirements of FRS 100, FRS 101, FRS 102, FRS 103, FRS 104 and FRS 105. This edition has been updated for changes from the triennial review issued in December 2017.

GAAP 2018: UK reporting – FRS 102 (Volume B)
Deloitte, Croner-i, 2018
Comprehensive manual explaining how to apply FRS 102, with worked examples and extensive interpretation and guidance. This manual deals with standards as at 1 September 2017.

Preparing FRS 102 company accounts 2018-19
Anne Cowley, Croner-i, 2018
A practical guide for companies preparing accounts under FRS 102 for periods beginning on or after 1 January 2018. Each edition includes updated illustrative model accounts, examples, tables and checklists. 

Articles

The ICAEW Library subscribes to over 160 current journals and magazines, as well as offering access to 1,800 key UK and international business, management and trade titles online. You can browse articles on FRS 102 or request any of the selected articles below by contacting us on +44 (0)20 7920 8620, by web chat, or at library@icaew.com

FRS 101 v FRS 102
Anne Cowley, Accountancy, January 2018
This article examines fundamental accounting differences between FRS 101 and FRS 102 on loans, leases and revenue recognition. Contains examples.

FRS 102: Ten things you need to know
Accountancy, January 2016
This article provides essential tips and practical help on what to consider when adopting new UK GAAP. It looks at choosing the right framework in the first place; financial instruments; contents of accounts; tax; business combinations; associates and joint ventures; investment properties; impairment; intercompany transactions and balances; reporting errors and corrections.

Find out more about how you can borrow books from the ICAEW Library or get articles and documents sent to you by email, post or fax.


Ask ICAEW Technical Advisory Service

Get an opinion from the experts. Our experienced technical advisors can help you with your UK GAAP questions and offer practical advice. Call the advisory helpline on +44 (0)1908 248 250.

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