As year-end 2026 approaches, many financial services entities reporting under FRS 102 will be preparing financial statements for the first time since the 2024 periodic review amendments became effective from 1 January 2026. These include entities operating in aviation finance, banking, insurance, wealth and asset management, and structured finance.

Introduction

The first reporting period under the revised FRS 102 requirements is now well underway. For many financial statement preparers, the focus must now shift from understanding the standard to demonstrating readiness for year-end reporting. The amendments introduce significant new requirements in areas including revenue recognition and lease accounting, alongside broader changes to disclosures, fair value measurement and other aspects of financial reporting. The significance of these changes will vary across financial services entities, depending on factors such as the nature of their products, transactions and contractual arrangements.

With limited time remaining before year-end, organisations should focus on finalising transition decisions, validating data, drafting disclosures and embedding appropriate controls. These actions will help preparers deliver robust, transparent and compliant financial statements.

Key changes: a reminder

Leases

  • Recognise leases on the balance sheet as a right of use asset and lease liability.
  • Present lease expenses as depreciation and interest, affecting EBITDA and key metrics.

Revenue

  • Entities will need to review contracts and apply the five-step model, which may affect the timing of revenue recognition.
  • In particular, the treatment of contracts involving bundles of goods or services, variable consideration, warranties, customer options or significant financing components may change.

Other key changes

  • Section 1A Small Entities: provides greater clarity on which disclosures are expected to be necessary to give a true and fair view, as required by law.
  • Section 2 Concepts and Pervasive Principles and Section 2A Fair value measurement: updated to align with the latest international framework and provide additional guidance.
  • Section 7 Statement of Cashflows: introduces new disclosure requirements for supplier finance arrangements (effective 1 January 2025).
  • Section 26 Share-based Payment: provides additional guidance to support the application of the principles in certain situations.
  • Section 29 Income Tax: introduces guidance on accounting for uncertain tax positions.
  • Section 34 Specialised Activities: includes various improvements and clarifications to existing requirements.

Priorities for financial services preparers ahead of year-end

Preparers should prioritise the following actions before year-end reporting timelines become constrained.

  • Prepare draft disclosures, accounting policies and transition notes.
  • Test key calculations and reporting outputs.
  • Identify and resolve issues.
  • Brief Audit Committees, Boards and management teams on the expected impact.
  • Engage auditors early on significant judgements, transition decisions and methodology.

Conclusion

As year-end approaches, preparers should ensure they are positioned to deliver high-quality, compliant financial statements. Those that delay implementation risk facing complex accounting, operational and governance challenges when reporting timelines become most constrained.

How EY can help

  • Analyse your current accounting policies and assess how the amendments affect them.
  • Assist you in drafting accounting policies.
  • Support you in drafting relevant financial statement disclosures.
  • Assist in determining key judgements, such as the discount rate for lease accounting.
  • Provide support with revised controls and processes.
  • Support updates to the chart of accounts.