The consultation period for FRED 82 has now closed and we await the final conclusions of the FRC. The FRC are hopeful the final amendments will be available by the end of this year. To give entities time to prepare, the FRC has committed to give entities at least 12 months from publishing the amendments to the effective date, currently expected to be 1 January 2025.
As a reminder FRED 82 proposes a number of changes resulting from the second periodic review of FRS 102 and other Financial Reporting Standards. The proposals include: a new model of revenue recognition in FRS 102 and FRS 105; a new model of lease accounting in FRS 102; and various other incremental improvements and clarifications. The proposed new model of lease accounting, which will mean right of use assets and lease liabilities are recorded on the balance sheet, will have far reaching consequences and entities will need to use the transition period to gather data to implement the new model.
We have seen with the IFRS transitions to IFRS 15 and IFRS 16 that there were a significant number of early adopters and we expect this will also be the case for FRED 82 especially where the amendments will eliminate GAAP differences with parent companies.
The intention is that as a result of the amendments set out in FRED 82, FRS 102 will reflect up-to-date IFRS-based solutions. From our extensive experience on the relevant IFRS transitions we are perfectly placed to support you on how the transition will impact you and there are some no regret actions you can take today to prepare:
Ensure that senior stakeholders are aware of the proposed amendments and that resources will be required to manage the transition.
