Overview

The Financial Reporting Council (FRC) has introduced significant amendments to FRS 102, incorporating a new Lease Accounting model which increases transparency and comparability in financial reporting for lease arrangements.

BrightAccountsProduction has now implemented full support for this updated lease accounting model across Charity templates for Ireland, the United Kingdom, and Northern Ireland.

This new model applies to accounting periods beginning on or after 1 January 2026, with early adoption permitted.

The amendments align with IFRS 16 and introduce a single on-balance-sheet model for lessees. Under this approach:

• Lessees must recognise a Right-of-Use (ROU) Asset and a Lease Liability for all leases (except short-term and low-value leases).
• Lease liabilities represent future lease payments.
• ROU assets represent the lessee’s right to use the leased asset.

Prerequisites

Before using the new lease accounting features, ensure:

• Country of Incorporation is set to Ireland, United Kingdom, or Northern Ireland.
• Financial Reporting Standard is set to FRS 102 or FRS 102 Section 1A.
• Lease-related transactions are posted to Nominal 922 – Long Term Lease Obligations.

Step-by-Step Instructions

Step 1 – Verify Your Business Setup

1. Open your Charity client dataset.
2. Confirm the accounting period start date is on or after 1 January 2026.
3. Open Business Settings → verify the correct Country of Incorporation.

Step 2 – Confirm Your Reporting Standard

1. Go to Compliance Database.
2. Ensure your Financial Reporting Standard is set to FRS 102 or FRS 102 Section 1A.

Step 3 – Enable the New Lease Accounting Option

1. Navigate to:
   Compliance Database → Legislation, Compliance and Disclosure → Accounting Options
2. Enable:
   Follow FRS 102 Lease Accounting Standard for Accounting Periods Commencing on or After 1 January

Note:
This option appears only when lease postings exist under Nominal 922.

Step 4 – Optional: Display ROU Assets Separately

To show Right-of-Use Assets as a separate balance sheet line item:

1. Navigate to:
   Compliance Database → Legislation, Compliance and Disclosure → Accounting Options
2. Enable:
   Show Right-of-Use Assets separately on face of Balance Sheet

Step 5 – Ensure the Correct Trial Balance Nominals

Your trial balance must include the following:

Step 6 – Configure Tangible Assets in Compliance Database

1. Navigate to:
   Compliance Database → Intangible and Tangible Fixed Assets → Tangible Assets
2. Use the dedicated Right-of-Use Assets section to configure related disclosures.

Step 7 – Produce the Accounts

When the accounts are generated, the system will automatically:

• Insert the Lease Accounting Policy into Accounting Policies.
• Add two new notes for:
  • Right-of-Use Assets
  • Other Tangible Assets
• Update the Balance Sheet to show lease-related assets and liabilities, based on enabled options.

What Changes Will You See in the Accounts?

Balance Sheet Updates

When the option is enabled:

• Right-of-Use Assets appear as a separate Balance Sheet line item.
• Current Liabilities will show:
  Creditors: amounts falling due within one year including lease liabilities
• Non-Current Liabilities will show:
  Creditors: amounts falling due after more than one year including lease liabilities

The total lease liabilities reconcile automatically to the GL postings.

Notes to the Accounts

The system automatically generates:

• The Lease Accounting Policy
• Two dedicated notes:
  • Right-of-Use Assets
  • Other Assets

Related External Resources

• Financial Reporting Council (FRC) – Amendments to FRS 102
  https://www.frc.org.uk

FRS 102 Lease Accounting – Creditor Impact for Charity Templates

Overview

The Financial Reporting Council (FRC) has introduced significant amendments to FRS 102 and FRS 105, effective for accounting periods beginning on or after 1 January 2026, with early adoption permitted.

BrightAccountsProduction now supports the creditor presentation changes resulting from the revised FRS 102 Lease Accounting model for Charity UK templates.

This update ensures that creditor balances correctly reflect the recognition of right-of-use assets and corresponding lease liabilities, improving clarity and transparency within the financial statements.

New Lease Accounting Model

The revised lease accounting model aligns more closely with IFRS 16.

Under the updated rules:

• Most leases must be recognised on the balance sheet

• Lessees recognise:

  • a Right-of-Use (ROU) Asset representing the right to use the leased asset

  • a Lease Liability representing future lease payment obligations

Exceptions remain for:

• Short-term leases

• Low-value asset leases

Creditor Effects Under FRS 102 (Charities)

Following adoption of the new lease accounting model, lease liabilities are now included within the creditors section of the balance sheet.

Lease liabilities are presented as:

• Amounts falling due within one year

  • Short-term lease liabilities

• Amounts falling due after more than one year

  • Long-term lease liabilities

Previously, many operating lease commitments were disclosed off-balance-sheet.
Under the revised model, these obligations are now recognised directly within creditor balances.

Impact on Financial Statements

The revised treatment may result in:

• Higher reported liabilities

• Increased leverage ratios

• Greater visibility of future payment obligations

This provides stakeholders with a more complete and transparent view of a charity’s financial commitments, even where underlying cash reserves remain unchanged.

Statutory Disclosure Requirements

Under the updated FRS 102 lease accounting rules, charities must disclose the following information.

Finance Lease Obligations

Lease liabilities included within creditors must be analysed by maturity:

• Amounts falling due within 1–5 years

• Amounts falling due after 5 years

• Total lease obligations

Finance Charge Adjustments

• Finance charges relating to future periods must be deducted to present the net liability position.

Cash Flow Statement Disclosures

The following must also be disclosed:

• Interest payments on lease obligations

• Principal repayments of lease liabilities

System Support in BrightAccountsProduction

BrightAccountsProduction now supports these requirements within the Charity UK template, enabling:

• Correct creditor presentation of lease liabilities

• Automated disclosure note generation

• Improved compliance with FRS 102 (2026) requirements

Users should review lease arrangements to ensure balances are classified and disclosed correctly under the new accounting model.