FRS 102 – The new UK GAAP

The biggest change in UK accounting for 20 years came into force for medium and large companies in 2015 and for small and Micro companies in 2016.

FRS 102 – The biggest change in UK accounting for 20 years

Help and Advice

To find out more about FRS102 and how it impacts your business contact Andy Bewick our Corporate Services Partner


FRS 102 is the third of three new standards which will form the bulk of UK GAAP. FRS 102 is expected to be the standard of choice for most unquoted large and medium sized companies. The rules for determining a company’s size are quite complicated but typically it will be those which exceed more than one of the following criteria: turnover £6.5m per annum, total assets of £3.26m and 50 employees.

Whilst the new standard can be adopted early, it is mandatory for accounting periods commencing on or after 1 January 2015. However, since accounts must include comparative information, companies really need to be ready for the new standards from the year ended 31 December 2014. Early consideration of the impact of FRS 102 is vital.

Dafferns Guide to FRS 102

Our PDF guide to FRS 102 and how it impacts your business

PDF Download

What are the other implications?

  • Banking covenants – increased profit volatility as well as changes to balance sheet valuations may all have an impact on bank covenant criteria. We recommend discussing the potential impact with your bank at an early stage to manage expectations.
  • Distributable reserves – substantial changes (for example in relation to pensions) may significantly alter distributable profits. Consider the impact on future dividend policy or re-structuring plans.
  • Timing of tax payments – some companies may find that they fall in or out of the quarterly instalment payment regime, so the timing of their corporation tax may change. Given that taxable profits may also be subject to greater volatility, this could put a strain on cashflow.
  • Employee benefits, earnouts & key performance indicators – where these are linked to company results, the impact on existing plans and future proposals may need to be addressed.
  • Small companies – whilst this accounting standard does not apply to small companies, it is important for small growing companies especially, to be aware of the thresholds to become a medium sized company.

Dafferns can help in your transition process by:

Identifying differences between FRS 102 and your current GAAP and assessing the impact on your primary statements, distributable reserves and your tax cash flows.

  • Identifying any additional information needed for the transition process and any potential system changes.
  • Assisting in the preparation of journals and drafting of accounting policies.
  • Assisting in the drafting and preparation of your FRS 102 financial statements, including comparative financial information.