IFRS updates to FRS 102 delayed

The Financial Reporting Council (FRC) has published a feedback statement on the proposed updates to FRS 102 being considered to align with changes to IFRS.

Respondents, including RSM UK, broadly supported the ‘long term aim of broad consistency with IFRS’ but felt that more IFRS implementation experience was needed before the timetable and approach are determined. The FRC has agreed that further work needs to be undertaken before any proposals should be made. The FRC will therefore not be issuing a triennial review phase 2 exposure draft this year.

Summary of the FRC’s response to feedback and actions

  • There will be no changes to the requirements in relation to business combinations.
  • In relation to the impairment of financial assets, the FRC will gather further evidence before taking a decision on the timetable and approach for reflecting the principles of IFRS 9, including the incorporation of an expected loss model, in FRS 102.
  • The FRC is not proposing to introduce the control model of IFRS 10 Consolidated Financial Statements but is planning to introduce an additional requirement derived from IFRS 12 to disclose the nature and extent of interest in unconsolidated special purpose entities and the risks associated with those interests. This proposal is incorporated in FRED 67.
  • The definition of fair value will not be revised for consistency with IFRS 13 Fair Value Measurement at this time.
  • The FRC has proposed strengthening the requirements relating to separating single transactions into component parts in FRED 67, as it believes this is a clarification of existing requirements. Aside from this proposal it will gather further evidence before a decision is made on whether to reflect the principles of IFRS 15 Revenue from Contracts with Customers in FRS 102.
  • The FRC has not proposed to enhance lease disclosures. Further work needs to be done before deciding on the approach to reflecting the principles of IFRS 16 Leases in FRS 102.
  • The FRC will retain the option to apply IAS 39 for accounting policy choices in relation to financial instruments until the FRS 102 requirements for the impairment on financial assets have been amended to reflect IFRS 9, or it is decided to not amend FRS 102 further in relation to IFRS 9.
  • The requirements for share-based payments will not be revised at this stage. The FRC will revisit this if there are legislative changes such that additional disclosures can be mandated for small entities.
  • In FRED 67 the FRC aims to adopt revised principles aimed at developing succinct financial reporting standards. The FRC will present a clear assessment against the revised principles for any future proposals.
  • The FRC will continue to assess emerging issues as they arise to determine what action needs to be taken. This could occur outside regular review cycles.
  • Proposals to reflect the major new International Financial Reporting Standards will be considered separately from the triennial review cycle.

For further information please speak to Danielle Stewart.