27 September 2016

FRC consults on approach to updating FRS 102 for changes in IFRS

The FRC is inviting comments from stakeholders on its proposed approach to updating FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland to reflect changes in IFRS.

The FRC is committed to periodically reviewing UK and Ireland accounting standards to ensure they continue to require high-quality and cost-effective financial reporting from entities within their scope.  As FRS 102 is IFRS-based part of this process is considering whether, and to what extent, FRS 102 should be updated for changes in IFRS. 

The Consultation Document proposes that incremental improvements and clarifications, including some arising from changes in IFRS, be made to FRS 102 to be effective from 1 January 2019. 
More significant amendments to FRS 102 are expected to be effective from 1 January 2022, giving entities more time to prepare and learn from the implementation experience of others. 
These are:

a.     incorporating the expected loss model for impairment of financial assets, based on IFRS 9 Financial Instruments; and

b.    updating lease accounting by lessees for consistency with IFRS 16 Leases.

There are changes in IFRS that the FRC does not propose to update FRS 102 for, such as IFRS 3 Business Combinations (as revised in 2008).  Whilst some incremental changes are proposed in response to IFRS 15 Revenue from Contracts with Customers, the standard will be considered more fully as part of a future review.

Paul George, FRC’s Executive Director, Corporate Governance and Reporting, said:
“The FRC is keen to hear stakeholders’ views on how FRS 102 should be updated.  In this consultation we are setting out our initial views on keeping FRS 102 up-to-date as financial reporting develops.  In doing so we have sought to balance improvement with stability.  As a result we are proposing changes to FRS 102 when this is expected to improve financial reporting, and are giving entities plenty of time to prepare for the more significant changes.”

Comments are requested by 31 December 2016. 

Full press release

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