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The FRC issues draft amendments to FRS 102 and other FRSs
Publication date: 16 Dec 2022
uk In brief 2022-77
Key points
- The FRC issued Financial Reporting Exposure Draft (FRED) 82 on 15 December 2022 which proposes amendments to FRS 102 and other FRSs. The proposals include:
- a new model of revenue recognition in FRS 102 and FRS 105 based on IFRS 15;
- a new model of lease accounting in FRS 102 based on IFRS 16; and
- various other incremental improvements and clarifications.
- The FRC is requesting comments on FRED 82 by 30 April 2023. The proposed effective date for the amendments is 1 January 2025.
What is the issue?
The FRC is conducting the second periodic review of the UK GAAP standards, which include FRS 102 and other FRSs. On 15 December 2022 the FRC issued Financial Reporting Exposure Draft (FRED) 82 which lays out proposed amendments primarily for FRS 102 and also some consequential amendments to other FRSs.
What is the impact?
The principal proposed amendments include:
- revised revenue accounting requirements in FRS 102 and FRS 105, based on the IFRS 15 five-step model for revenue recognition, with appropriate simplifications; and
- revised lease accounting requirements in FRS 102, but not FRS 105, based on the IFRS 16 ‘on-balance sheet’ model, with appropriate simplifications.
It is not proposed to bring the requirements of IFRS 9 into UK GAAP at this stage, although this might be reconsidered in later years.
Other incremental improvements and clarifications proposed to FRS 102 (and FRS 105 where applicable) include:
- greater clarity for small entities in the UK applying Section 1A regarding which disclosures need to be provided in order to give a true and fair view;
- a revised Section 2 (Concepts and Pervasive Principles), updated to reflect the IASB’s Conceptual Framework for Financial Reporting, issued in 2018;
- a new Section 2A (Fair Value Measurement), replacing the Appendix to Section 2 and updated to reflect the principles of IFRS 13; and
- removal of the option to newly adopt the recognition and measurement requirements of IAS 39 under paragraphs 11.2(b) and 12.2(b), in preparation for the eventual removal of this option, but permitting entities already applying the option to continue to do so in the meantime.
When does it apply?
The proposed effective date is 1 January 2025. The FRC is requesting comments on FRED 82 by 30 April 2023. The effective date is one of the questions on which the respondents are invited to comment.
Where do I get more details?
The FRC issued a podcast on publication of FRED 82, and it will hold a webinar on 19 January 2023 where interested stakeholders can hear more about the proposals.
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