FRS 102 and small company accounts: what the new disclosure requirements mean for your company

For many small companies, the upcoming changes to FRS 102 may not dramatically alter how profits are calculated, but they will significantly increase what needs to be disclosed in the financial statements. As reporting requirements evolve, transparency is becoming a much greater focus, bringing small company accounts closer to the standards expected of larger organisations.

The changes are designed to provide greater clarity for users of financial statements, including lenders, investors and other stakeholders. While the accounting impact may be limited for some businesses, the additional disclosure requirements mean preparation will be essential ahead of implementation.

A shift towards greater transparency

The overall direction of travel is clear: small company reporting is becoming more detailed, with additional disclosures that provide a fuller picture of a business's financial position and activities.

Many requirements that were previously considered best practice or encouraged disclosures will now become mandatory, increasing the amount of information businesses must include in their accounts.

What disclosures are becoming mandatory?

Under the revised FRS 102 framework, small companies will need to provide a number of additional disclosures, including:

• Statements confirming compliance with FRS 102
• Enhanced going concern disclosures
• Dividend disclosures
• Additional tax-related disclosures

While these may seem straightforward, businesses will need to ensure they have appropriate processes and documentation in place to support the information being reported.

Related party transactions: a significant change

One of the most notable developments is the expansion of related party disclosure requirements.

Many transactions involving:

• Directors
• Shareholders
• Connected parties and entities

may now require disclosure, even where they are conducted on normal commercial terms.

For many owner-managed businesses, this represents a significant change from current reporting practices. Transactions that may previously have remained outside the scope of disclosure requirements could now need to be reported within the financial statements.

Businesses should begin identifying related party relationships and reviewing the nature of transactions that occur throughout the year to avoid last-minute reporting challenges.

Additional areas requiring disclosure

Alongside related party transactions, several other areas will require greater transparency, including:

• Deferred tax reconciliations
• Share-based payment arrangements
• Movements in provisions and explanations for changes
• Revenue recognition policies
• Lease liabilities and right-of-use assets

These additional disclosures reflect the wider changes taking place throughout FRS 102 and reinforce the importance of maintaining robust financial records.

Companies House reforms and the wider picture

The FRS 102 amendments do not exist in isolation. Businesses should also be aware of the ongoing reforms introduced through the Economic Crime and Corporate Transparency Act.

One area attracting particular attention is the future of filleted accounts. Current expectations are that filleted accounts will be removed from April 2028. However, indications suggest that small companies should still be able to withhold profit and loss accounts from the public register, although further guidance is expected before the changes take effect.

As the regulatory landscape continues to evolve, businesses will need to stay informed to ensure ongoing compliance.

Why early preparation matters

A consistent theme throughout our podcast series on the FRS 102 amendments has been the importance of planning ahead.

Whether businesses are assessing new revenue recognition requirements, preparing for lease accounting changes or considering expanded disclosure obligations, leaving preparations until year-end is likely to create unnecessary pressure and complexity.

Now is the time to:

• Review existing disclosure requirements
• Identify related party relationships and transactions
• Consider how new reporting obligations will affect year-end accounts
• Assess the potential impact on lenders, investors and stakeholders
• Discuss any uncertainties with your accountant or auditor

Looking Ahead

The 2026 FRS 102 amendments represent one of the most significant changes to UK GAAP in recent years. Although many small companies may see little change to their profit figures, almost all will face increased reporting and disclosure obligations.

By understanding the requirements early and putting the necessary processes in place, businesses can approach the transition with confidence and avoid unnecessary complications at year-end.

For further guidance on how the FRS 102 changes could affect your business, I recorded a recent podcast with James Nichols as part of Larking Gowen Insights – listen wherever you get your podcasts, watch on YouTube or click below to listen now.

How can we help?

Keeping up with changes to financial reporting requirements can be challenging, particularly when new standards introduce additional disclosures and reporting obligations.

If you would like to discuss how the upcoming FRS 102 changes could affect your business, please get in touch. We can help you understand the implications, prepare for implementation and ensure you remain compliant with the latest reporting requirements. Get in touch with your usual Larking Gowen contact or email enquiry@larking-gowen.co.uk

Jimmy Long | Senior Manager in our Corporate Audit & Advisory team | Norwich, Norfolk