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Updated: Oct 3, 2023

Major changes have been made to UK Generally Accepted Accounting Practice (GAAP) with the introduction of FRS 102. This means your accounts will look different, profits could change, along with your remuneration packages and bonus schemes.

Are you ready to tackle this?

To answer this question confidently, and know how it could affect your business, we’ve put together a guide to help you understand what FRS 102 is, and how we can help you with it.

Ready to learn more? In this guide, we’ll take you through:


Revenue recognition is an accounting principle that identifies the specific conditions under which a business can record a sale transaction as revenue. Only when revenue is earned, can it then be ‘recognized’. Revenue is typically recognized when a critical event occurs, such as the product being delivered to a customer, and the sterling amount is measured easily by the company.


The Financial Reporting Standard (FRS 102) is the most notable of the more recent UK GAAP (Generally Accepted Accounting Standards) that apply in the UK and the Republic of Ireland. The measures included in this standard came into place on 1st January 2015.

Reading this from across the pond? Read our detailed guide on ASC 606, part of the US accounting standards, and see how this will affect you.

FRS 102 follows a rigorous development process and has had a very significant impact on the financial statements of any organization that prepares accounts under UK GAAP. The result is a major change in accounting for most British companies.

FRS 102 not only deals with the changes to the format of financial statements and the necessary disclosures, but it also paves the way for changes to the numbers when compared with old UK GAAP, such as:

  • Criteria for recognizing certain assets and liabilities

  • Measurement basis of items

  • How some gains and losses are dealt with

Changes to the numbers will likely have many implications beyond the accounts. For example, there are a number of resourcing issues that must be considered, especially when there are long-term arrangements in place such as bank loans which could be impacted.


A change in accounting standards spells changes for how your business operates. Set out below are the key implications that you need to be aware of when it comes to FRS 102.

Changes to Reported Profits

FRS 102 could bring about a number of changes that will affect your reported profits that will need to be communicated effectively to stakeholders:

  • Changes in the timing of specific gains and losses, such as forward exchange contracts

  • Changes in the way in which some items are recorded in profit or loss, such as holiday pay accruals

  • Changes in how some fair value movements, such as investment properties, are recognized

Balance sheet position may be impacted

FRS 102 somewhat changes the way we define some tangible and intangible assets, as well as the way assets and liabilities are measured. Another point worth noting is that specific definitions for and treatment of your organization’s financial assets and liabilities are identified and defined for the first time.

With FRS 102, deferred tax must be recognized on certain assets such as the revaluation of investment properties. As a result, balance sheets of those businesses affected could see negative impacts through the required recognition of new deferred tax liabilities.

Differences in how accounts look

In principle, the formats of your company’s financial statements will be similar, but there are some important but subtle differences.

There will first be differences in the notes to the account. In certain areas there are new or additional disclosures required, while in others less needs to be disclosed. There is a wide variation in the requirements for notes disclosures so all organizations must be aware of the need to keep comparative information in mind.

As a result, you will need to gather more information than before, for the transition period as well as on a day to day basis going forward, to ensure thorough preparation of your accounts. There also needs to be consideration on whether your current systems and software will be enough to prepare accounts under FRS 102.


We’re here to help all businesses with FRS 102, as it can often be a confusing or daunting prospect. With Precursive’s smart revenue recognition software, we can help you to:

  • Customize revenue recognition tracking to your business needs

  • Recognize revenue based on project tasks, timesheets or milestone completion

  • Import or export revenue transactions into your financial system

  • Forecast and recognize revenue on both fixed price and T&M projects

Precursive Revenue Dashboard
Precursive Revenue Dashboard

With Precursive, you can be sure you’re getting valuable insight into how you are spending your money and making revenue, and give you the tools to ensure you are managing recurring billing, reducing revenue leakage, and keeping your cash flow healthy.



If you’ve made it this far, you should have a much better understanding of FRS 102 and how this accounting standard will affect your organization, its accounts and balance sheets.

Find out how PSA solutions and revenue recognition features compliment each other by booking a Precursive demo today!

Want to learn more about revenue recognition? You can do this by looking at our revenue recognition field guide, the one-stop shop for you to master this topic.

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