In February 2026, the Financial Reporting Council (FRC) published targeted amendments to FRS 102, the main reporting standard applicable in the UK and Republic of Ireland, and FRS 105, the micro-entities standard.

The amendments are intentionally narrow. Their main purpose is to keep FRS 102 aligned with IFRS standards following the release of IFRS 18 on the presentation and disclosure of financial statements. Other changes are minimal, with only one amendment made to FRS 105.

IFRS 18 replaces International Accounting Standard (IAS) 1 “Presentation of financial statements” for accounting periods beginning on or after 1 January 2027. In December 2025, the UK Endorsement Board confirmed that IFRS 18 has been formally adopted for use in the UK.

Amendments to adapted formats

Companies and limited liability partnerships preparing their accounts under FRS 102 are permitted to use adapted balance sheet and profit and loss formats based on IFRS presentation requirements (“adapted formats”). These are typically used by entities seeking closer alignment with IFRS presentation, for example to facilitate consolidation within IFRS groups. Before the new amendments, the minimum line items required for these were based on IAS 1. With that now being replaced by IFRS 18, the FRC has issued limited updates to ensure the adapted format requirements in FRS 102 remain clear, current and internally consistent.

The amendments revise the minimum line items required when adapted formats are used and update the requirements relating to the classification of assets and liabilities as current or non-current. These definitions apply specifically for the purposes of presentation under adapted formats permitted by company law. They have been updated to align with changes previously made to IAS 1 and now incorporated into IFRS 18.

Importantly, the FRC has not sought to import IFRS 18 wholesale into FRS 102. The amendments do not introduce IFRS 18’s category-based structure for income and expenses, nor do they introduce the new disclosure requirements relating to management-defined performance measures. While some revised subtotals resemble IFRS presentation concepts, the FRC concluded that adopting IFRS 18’s full presentation model would not be proportionate for FRS 102 reporters using adapted formats.

Section by section changes

The amendments to adapted format requirements are reflected across several sections of FRS 102.

In Section 1A “Small entities”, the minimum standards for adapted balance sheet and profit and loss formats applicable to small entities have been amended to ensure consistency with the revised requirements in Sections 4 and 5 of FRS 102.

Section 4 “Statement of financial position” has been updated to require intangible assets and goodwill to be presented as separate line items when adapted formats are used. Commentary has been updated to help preparers categorise balance sheet items as either current or non-current, reflecting updated definitions for “current assets”, “current liabilities” and “non-current assets”.

Section 5 “Statement of comprehensive income and income statement” incorporates revised minimum line items for the statement of comprehensive income when adapted formats are used. This includes the introduction of a mandatory “operating expenses” line item, alongside new subtotals for “operating profit or loss” and “profit or loss before financing and taxation”. A consequential cross reference amendment has also been made to Section 29 “Income Tax”.

Further amendments have been made to the glossary, where the definitions of “current assets”, “current liabilities” and “non‑current assets” have been updated to ensure alignment with the revised adapted format presentation requirements.

Periodic Review 2024 amendments

Alongside the adapted format changes, the FRC issued limited clarifications to the Periodic Review 2024 amendments affecting both FRS 102 and FRS 105. These changes respond to stakeholder feedback and are intended to improve clarity and consistency rather than to change underlying accounting requirements.

In FRS 102, Section 9 “Consolidated and Separate Financial Statements” has been amended to clarify the circumstances in which a parent entity is exempt from preparing consolidated financial statements.

In addition, paragraph 13.14 “Cost of inventories of a service provider” has been deleted to maintain consistency with the IFRS for SMEs, which no longer includes this paragraph. An equivalent deletion has been made in FRS 105, with the removal of paragraph 10.13.

The Scope sections, Section 1, of both FRS 102 and FRS 105 have also been updated to bring all of the February 2026 amendments formally within the scope of each standard.

Effective date and practical impact

The amendments published in February 2026 are effective for accounting periods beginning on or after 1 January 2027, with early application permitted.

For most FRS 102 reporters, the practical impact is expected to be limited. However, entities that currently use, or are considering using, adapted balance sheet and profit and loss formats should review the revised presentation requirements carefully to ensure compliance when the amendments take effect.

For an in-depth examination of FRS 102, ICAS has the following courses:
FRS 102 Second Review: An Essential Half-Day Guide to 2026
Mastering the FRS 102 Second Review: Your 2026 Roadmap