Implementation of new accounting standards

Navigating the complexities of new accounting standards can be a challenge for any organisation. Our Financial Accounting Advisory Services team is here to provide the expertise and support you need to ensure a smooth transition and compliance with the latest standards. We specialise in helping businesses like yours adapt to new accounting requirements, optimise financial reporting and enhance operational efficiency.

Adoption of UK GAAP amendments

The FRC published periodic changes to FRS 102 in March 2024, which includes a new model of revenue recognition based on IFRS 15, a new model of lease accounting based on IFRS 16, an alignment with IFRS 13 Fair Value Measurement and various other incremental improvements and clarifications. The amendments are applicable for accounting periods beginning on or after 1 January 2026. Early adoption of these changes is permitted. These changes could impact how you report and will affect any related debt covenant obligations. We recommend that you assess the impact of these changes as soon as possible given the need to also ensure compliance for your 2025 comparative numbers in your 2026 financial statements.

Our team can help you with impact assessment, implementation and transition to the amended FRS 102 standards. We have a team of experienced accounting specialists who have previously worked on IFRS 15 and IFRS 16 transition and understand the challenges these changes can pose. Examples of how we can support you include:

• Reviewing customer contracts
• Unbundling contracts between performance obligations and identifying variable payments and providing guidance on the impact and accounting for those arrangements in areas most likely to be impacted, such as recognition of variable and/or contingent consideration
• Reviewing contracts for inclusion of clauses that could impact upon recognition and advising on the accounting for those contracts
• Providing guidance on the impacts of the changes on key performance metrics, such as EBITDA
• Providing advice on the impacts of the amendments on debt covenants and remuneration schemes, so that changes can be considered on a timely basis
• Reviewing accounting papers, accounting policies and financial statement disclosures for compliance with the requirements of FRS 102.

GAAP conversions

Transitioning between accounting frameworks (eg, UK GAAP to/from IFRS) is more than just an accounting exercise. It involves a comprehensive understanding of the implications on your financial statements and the broader business impact. Our team will collaborate with you to help understand how the conversion will affect your financial reporting and provide clear steps to implement the necessary changes.

In particular, where accounting policy choices, exemptions and practical expedients exist on transition, or alignment with the accounting policies of your broader group is required, we will ensure that you are made fully aware of those and are able to select the policies that make most sense for your business.

In addition to performing impact assessments, we can review accounting policies and disclosures for compliance with the requirements of FRS 102, FRS 101 or IFRS to make the transition as effective and efficient as possible.

IFRS 18 ‘Presentation and Disclosure in Financial Statements’ implementation

Subject to UK Endorsement Board approval, IFRS 18 will apply for reporting periods beginning on or after 1 January 2027, including interim periods. Retrospective application is required, so comparative information needs to be prepared under IFRS 18. All entities reporting under IFRS Accounting Standards will be impacted. The same requirements apply for both public and private entities, including the identification and disclosures of management-defined performance measures (MPMs).

IFRS 18 replaces IAS 1, and whilst some of the existing IAS 1 principles are retained and will not impact the measurement of financial statement line items, an entity might find the ‘operating profit or loss’ will change due to the introduction of key new concepts relating to:

• The structure of the profit or loss statement
• Required disclosures in the financial statements for certain profit or loss performance measures that are reported outside an entity’s financial statements (MPMs)
• Enhanced principles on aggregation and disaggregation for the primary financial statements and notes.

Our team can help with impact assessments, development of implementation plans, implementation and transition to the new standard.