FRS 102: Disclosure Changes

The Financial Reporting Council (FRC) has introduced major updates to FRS 102 Section 1A, effective for accounting periods beginning on or after 1 January 2026. These changes will affect small entities that prepare financial statements under the reduced disclosure regime, and they’re designed to improve clarity, consistency, and transparency.

Previously, small entities had flexibility in applying disclosure requirements, relying heavily on professional judgment. These changes strengthen disclosure rules, making them clearer and more prescriptive.

Summary of Key Changes:

Dividends

Small entities must now disclose dividend amounts and related transition details, reducing reliance on preparer judgement.

SOCI/SOCIE

Entities must assess whether presenting a Statement of Comprehensive Income or Statement of Changes in Equity is necessary for a true and fair view – especially when OCI or equity movements are material.

Going Concern

Entities must explicitly state that financial statements are prepared on a going concern basis and disclose significant judgements made in reaching that conclusion.

The exemption allowing small entities to omit disclosures for transactions under normal market conditions is removed. All related party transactions must now be disclosed, except those within wholly owned groups.

Deferred Tax

Enhanced disclosures are required, including assumptions behind recognition of deferred tax assets and uncertain tax treatments.

Revenue Recognition

Entities must explain contract terms, performance obligations, and timing of revenue recognition – especially for bundled services or long-term contracts. This disclosure should align with the new five-step model for recognising revenue.

Supplier Finance Arrangements

Entities must disclose the terms and conditions of supplier finance, as well as the amounts outstanding and payment timing.

Impact of changes:

Updated disclosure requirements for periods commencing 1^st January 2026 will result in more transparency for readers of financial statements.

These changes will for the most part coincide with the requirement to file the profit and loss with companies house (from 1^st April 2027 onwards) and so small entities will no longer be able to file abridged or filleted accounts. This means more detailed financial information will be publicly available, increasing scrutiny from lenders, suppliers and customers.

So what should you do?

Review your current disclosures to identify gaps against the new requirements/

Update your accounting systems and templates to capture the data needed.

Engage with your accountant early to assess the impact on your accounts and ensure a smooth transition

If you have any questions or would like help assessing the impact on your business, please get in touch. Our team is ready to support you through the transition.