Amendments to FRS 102: How will this impact the Construction Sector?
InsightDiscover how FRS 102 updates impact leases in Construction, revenue, and reporting. Learn key challenges and steps to stay compliant and ahead.
Are you viewing the amendments to FRS 102 as a compliance headache – or a springboard for lasting improvements across your finance function? Pinkesh Patel, Head of Financial Reporting, shares how to develop a robust conversion plan that delivers both control and strategic value.
Debt covenants based on EBITDA or interest cover
Earn-out calculations due to be paid post 1 January 2026
Employee incentive schemes based on EBITDA
Delivery and pricing structure of long-term revenue contracts
Budgeting and forecasting systems and approach
Intercompany trading balances and transfer pricing
The second step is completing a conversion impact assessment. Taking the time to prepare for your conversion will give you and your auditors comfort that all the amendments have been considered and help you identify any outstanding actions in your project.
Your FRS 102 conversion impact assessment
This checklist will help you understand where you are in the process.
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Confirm if additional resources are required, and agree roles and responsibilities
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Identify and engage with key stakeholders
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Understand training needs of finance team and wider stakeholders
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Identify all leases in scope and gather relevant data
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Understand revenue streams and contract population for each
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Engage with external auditor to confirm requirements and additional audit work required
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Confirm system requirements and areas of improvement
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Prepare conversion technical papers (including quantification, disclosures and policies)
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Consider wider business impact through discussions with stakeholders
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Update financial reporting processes and controls based on conversion work performed
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Update budget and forecasts, and amend processes for business-as-usual
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In this video I share a framework for managing the transition, and discuss the challenges you could experience during the process.
A robust project plan is the foundation for a successful transition, providing clarity, direction, and the flexibility needed to navigate change. By actively engaging all stakeholders (eg, sales teams, procurement and the external auditor) throughout the journey, you build alignment, foster transparency, and minimise the risk of unwelcome surprises at the finish line. While no plan can predict every twist and turn, a well-structured approach ensures you have the space to adapt, respond proactively, and keep your objectives on track, even when the unexpected arises.
For more insight and guidance, get in touch with Pinkesh Patel.
Related content
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9 min read
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07 Jan 2026
FRS 102 countdown: From roundtable to roadmap
ArticlePressure points and action plans from our South and Midlands finance leader discussions to help you navigate FRS 102 updates in 2026.
Amendments to FRS 102: Impacts for the TMT industry
ArticleThe Amendments to FRS 102 bring in significant changes to the reporting standard for both revenue recognition and lease accounting (amongst other incremental changes), which will broadly align these accounting requirements to those of IFRS 15 ‘Revenue from contracts with customers’ and IFRS 16 ‘Leases’.
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