From complexity to clarity: Tackling FRS 102 (2024) disclosure challenges
The clock is ticking for the implementation of the revised FRS 102 (2024). The updated standard is effective for periods beginning on or after 1 January 2026, leaving entities a limited time to assess the impact of changes and address the associated disclosure challenges.
In this article, Julia Penny, BFP FCA outlines how to identify the major challenges, use disclosure checklists and things to watch out for when preparing FRS 102 (2024) disclosures.
Further guidance on the periodic review amendments is available in Navigate UK GAAP Accounting and the Navigate Learning course on Tackling disclosure changes in FRS 102 2024 picks up disclosure considerations in more detail. See the Q&A What tools and resources are available covering the UK GAAP periodic review amendments? for a comprehensive overview of the Navigate platform tools and guidance available.
Overview
In 2024, the FRC issued the latest Periodic Review Amendments, which were then consolidated into the 2024 version of FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (2024) (FRS 102 2024) and, as relevant, 2024 versions of the other standards in the suite of UK GAAP FRSs.
The new standard implements, in a simplified form, changes to the method for recognising revenue from contracts with customers, per IFRS 15 Revenue from Contracts with Customers (IFRS 15) and leasing for lessees, per IFRS 16 Leases (IFRS 16).
These are the changes that will require the most consideration in terms of the impact on the accounts of an FRS 102 reporter, but there are other changes included within the standard. Some of these are relatively minor points, or further alignment with IFRS. For instance, a new Section 2A Fair Value Measurement (Section 2A), has been added which contains fair value guidance much more closely aligned with IFRS 13 Fair Value Measurement. The new definition of fair value is included in the Glossary for the standard. However, care should be taken with this because it excludes fair values in Section 26 Share-based payment, and Section 20 Leases (Section 20) and also applies any more specific section requirements that are given in the standard.
Identifying major issues
As well as considering the general requirements on policies, judgements and estimates, it is helpful to concentrate on areas where major changes are likely. These will likely include revenue recognition for contracts with customers and, for many, will also include leases, where they were formerly recognised as operating leases from the lessee perspective.
For a small entity, new disclosures regarding leases and revenue recognition are still likely to be needed, although the detail of what is required is a lighter touch than for non-small.
Start by identifying the changes that impact the company. Consider the impact on the recognition and measurement of items that are changing under the new standard, and note the areas where new or different disclosures will be required.
Depending on the software the company is using, it might be able to use a software-generated draft set of accounts and focus on the more detailed changes that require more information. It may also be helpful to refer to model accounts and/or to use a checklist to highlight the detailed disclosures required.
Croner-i have recently launched new model accounts prepared under FRS 102 (2024), FRS 102 1A (2024) and FRS 105 (2024) which reflect the periodic review amendments, along with accompanying guidance notes.
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Use a disclosure checklist
Whilst it may not be necessary to complete a disclosure checklist every year, using one in a year of significant change will have significant benefits. As well as the checklist identifying the new disclosures that are needed, it also provides a good opportunity to double check whether irrelevant disclosures are still being given or whether something has previously been missed, even though not a new requirement. The FRC have removed several disclosure requirements over the years but often these continue to be included, as no-one noticed and deleted them.
Whilst using a disclosure checklist is very helpful, do not forget to carefully read the disclosures, particularly the accounting policies. This is an opportunity to make sure that the accounts give a clear picture of how things are accounted for and whether the policies and notes are understandable. The FRC frequently cites that mistakes are made in various disclosures and using a checklist together with careful consideration of the figures and narrative might identify areas where errors have been made. If there are more complex accounts to review, the FRC’s thematic review of reporting by the UK’s largest private companies provides particularly useful information on common mistakes. This review considers both the strategic report and the financial accounts.
See the disclosure checklist for periodic review amendments available for Private Company, Small Company and Micro entity on Navigate platform.
Things to watch out for
Common areas where mistakes can occur, as referenced in FRC’s thematic review, include:
- the statement of cash flows – for instance, including non-cash balances such as assets acquired using lease arrangements;
- items included in cash and cash equivalents when they don’t meet the definition or vice-versa;
- untailored, duplicative or irrelevant accounting policies;
- insufficient rounding creating additional clutter;
- judgements missing;
- estimates not clear whether they are just those with a significant risk of causing material adjustments to assets and liabilities within a year (as required) or lacking information to properly understand the estimate; and
- insufficient information on fair values.
Document downloaded on 24-03-2026 from Croner-i Navigate, the UK’s leading online research service for tax, audit and accounting professionals. Find out more at www.croneri.co.uk or call 0800 231 5199.
