This guide explains the FRS 102 accounting model updates effective from 1 January 2026, now supported in BrightAccountsProduction. These changes apply across Credit Union, LLP, and Charity templates, with early adoption permitted where applicable.
The amendments improve consistency with international standards and enhance transparency in financial reporting for entities in the UK and Ireland.
Credit Union – Lease Accounting Model (FRS 102)
The Financial Reporting Council (FRC) has introduced a new lease accounting model under FRS 102, aligning more closely with IFRS 16.
Overview
Under the new model, lessees are required to recognise most leases on the balance sheet.
Key principles:
• All leases are recognised on the balance sheet, except short-term and low-value leases
• A Right-of-Use (ROU) Asset represents the right to use the leased asset
• A Lease Liability represents future lease payment obligations
Additional Requirements
• Clarifications for small entities on required disclosures.
• Revisions reflecting the IASB’s updated Conceptual Framework.
• Introduction of a new section on Fair Value Measurement.
• Removal of the option to newly adopt IAS 39, except where required for consistency within group accounting policies.
These changes enhance clarity and consistency in financial reporting for entities in the UK and Ireland under FRS 102.
LLP – Revenue Accounting Model (FRS 102)
FRS 102 has been updated to strengthen and clarify revenue recognition principles, effective for accounting periods beginning on or after 1 January 2026.
Key Principles
Revenue is recognised when:
• Entitlement exists
• Receipt is probable
• The amount can be measured reliably
Additional requirements:
• Revenue must be recognised gross
• Income received in advance must be deferred
• Income is accrued when entitlement arises before receipt
Five-Step Revenue Model
The updated standard introduces a structured approach to revenue recognition:
- Identify the contract or arrangement
- Identify performance obligations
- Determine the transaction price
- Allocate the transaction price
- Recognise revenue as obligations are satisfied
These changes improve consistency and disclosure quality in LLP financial statements.
Charity – Revenue Accounting Model (FRS 102)
BrightAccountsProduction now supports the updated FRS 102 Revenue Accounting model for Charity templates, reflecting strengthened requirements effective from 1 January 2026.
Income Categories Introduced
The following income categories are now supported:
• Donations & Legacies
- General donations
- Restricted and unrestricted donations
- Monetary donations
- Legacies
- Tax refunds
- Memberships and sponsorships
• Charitable Activities
- Performance-related grants
- Time-related grants
- Other grants
- Statutory grants (treated as restricted)
• Donated services and facilities
• Gifts of assets and gifts for fundraising
• Volunteer services (not recognised as income)
• Income from trading activities
• Investment income
• Other income
• Deferred income and expenditure
Core Revenue Principles
Income is recognised when:
• Entitlement exists
• Receipt is probable
• The amount can be measured reliably
Additional rules:
• All income is recognised gross
• Income received in advance is deferred
• Income is accrued when entitlement arises before receipt
Five-Step Revenue Model
Charities must apply the following steps:
- Identify the contract or arrangement
- Identify performance obligations
- Determine the transaction price
- Allocate the transaction price
- Recognise income as obligations are satisfied
Key Changes Effective 2026
• Stronger emphasis on identifying performance obligations
• Mandatory disclosure of significant judgements
• Expanded narrative reporting for donated goods and services
• Removal of abridged reporting options, resulting in fuller disclosures
Action Checklist for Charities
• Review all income streams
• Map income sources to the five-step model
• Update accounting policies and disclosures
Further Guidance
For additional technical detail, refer to:
Financial Reporting Council (FRC) – Amendments to FRS 102 (2026)
Ensure all accounting policies and disclosures are reviewed before finalising accounts prepared under the updated standards.