Capturing the key differences in scope, presentation, measurement and disclosure requirements in table format
Financial reporting standards for small and medium-sized entities aim to balance transparency with practicality. In the UK and internationally, two widely recognised frameworks for smaller businesses are FRS 102 and IFRS for SMEs. While both standards are based on similar accounting principles and share a common conceptual foundation, they differ in structure, scope and regulatory application.
FRS 102 is the principal accounting standard used by most entities in the UK and the Republic of Ireland under UK GAAP, while IFRS for SMEs is an international standard designed for private entities that do not have public accountability.
Although FRS 102 was originally derived from IFRS for SMEs, it has been adapted to comply with UK company law and to include additional accounting options. As a result, the two frameworks share many similarities but also contain several important differences in scope, presentation, measurement and disclosure requirements.
FRS 102 is based on IFRS for SMEs but is significantly adapted for the UK and ROI, including compliance with company law and tailored disclosures. Some differences are structural and conceptual (eg, scope, fair value, leases, revenue), while others are measurement or disclosure enhancements aligning more with full IFRS.
Overall, FRS 102 typically results in more detailed reporting requirements than IFRS for SMEs, with several SME simplifications removed or modified.
Key differences between FRS 102 and IFRS for SMEs
Below is a clear comparative in tabular form showing the key differences. This is based on the FRC’s published material and focuses on the significant amendments made when FRS 102 was derived from IFRS for SMEs.
This is drawn from this FRC article: Significant differences between FRS 102 and the IFRS for SMEs Accounting Standard.
Area of Standard |
FRS 102 (UK & ROI) |
IFRS for SMEs |
Key difference/impact |
Scope |
Uses FRS 100 to define applicability and links to company law |
Self-contained scope defining SMEs with no public accountability |
FRS 102 adapts the scope to UK/ROI legal framework and allows optional regimes for group members |
Small Entities Reporting (section 1A) |
New section inserted specifically for small entity disclosures |
No equivalent section but FRS 101 includes Reduced disclosures | Adds reduced disclosure requirements for small companies |
Concepts & Pervasive Principles (section 2) |
Replaced to align with Conceptual Framework 2018; different definitions used |
Based on older IASB IFRS for SMEs framework with undue cost/effort exemptions | Concepts are updated and certain SME simplifications removed |
Fair Value Measurement (section 2A) |
Based on IFRS 13 Fair Value Measurement; fair value hierarchy not always required |
Fair value guidance is included within its own section (less detailed) |
FRS 102 adopts a more IFRS-aligned fair value model |
Presentation (section 3) |
Aligned with UK company law; additional going concern disclosures; materiality guidance added |
Format driven by the IFRS for SMEs model with different presentation emphasis |
UK legal compliance shapes presentation rules |
Cash Flows (section 7) |
Scope excludes some entities; measures cash flows with certain relaxations (eg, indirect method). |
Standard SME definitions with no exclusions for certain funds/companies. |
FRS 102 brings alignment with IAS 7 and adds disclosures like net debt reconciliation. |
Notes (section 8) |
Enhanced policy disclosure requirements added |
Standard SME disclosures |
More detailed policy disclosures under FRS 102 |
Consolidation (section 9) |
Amended to comply with company law; removes some equity method options; adds disclosures |
SME model has simpler consolidation rules and broader options |
More restrictive and detailed consolidation disclosures under FRS 102 |
Financial Instruments (section 11/12) |
Scope changed; certain instruments excluded; option introduced to apply IFRS 9 recognition/measurement |
SME guidance less detailed; includes undue cost/effort exemptions |
FRS 102 aligns more with IFRS and removes several simplified exemptions |
Inventories (section 13) |
Allows fair value less costs to sell in specified cases |
Standard cost model with fewer exceptions |
More measurement flexibility in FRS 102 |
| Investments in associates/Joint Ventures (section 14/15) | Some equity method options removed; additional IFRS-aligned choices added |
Standard SME options remain broader |
FRS 102 limits and clarifies equity accounting approaches |
Investment Property (section 16) |
Undue cost/effort exemption removed; additional accounting policy options |
SME standard retains some simpler exemptions |
More detailed measurement and classification under FRS 102 |
Property, Plant & Equipment (section 17) |
Aligns with IFRS for fair value measurement; some revaluation disclosures changed |
SME version has simpler guidance |
FRS 102 provides a more IFRS-aligned revaluation model |
Intangibles (section 18) |
Internally generated intangible assets can be recognised if criteria met; undue cost/effort exemption removed |
Some intangible accounting simplified with limited development recognition |
FRS 102 allows recognition where IFRS for SMEs often does not |
Leases (section 20) |
Entirely replaced with IFRS-like lease model (similar to IFRS 16) |
Traditional lease accounting with lessee/simplified model |
FRS 102 has a more complex lessee accounting requiring right-of-use assets |
Provisions & Contingencies (section 21) |
Financial guarantee contracts included; undue cost/effort exemptions removed |
More limited SME guidance |
Broader application in FRS 102 |
Liabilities & Equity (section 22) |
Clarified liability definitions; removes some SME presentation exemptions |
SME version includes simpler equity instrument presentation |
FRS 102 restricts some equity presentations to align with company law |
Revenue (section 23) |
Replaced with a five-step model equivalent to IFRS 15 |
Traditional revenue recognition model (distinct from IFRS 15) |
Major difference: FRS 102 adopts IFRS-aligned revenue recognition |
Government Grants (section 24) |
Added accrual model option |
Standard SME model without this option |
More flexibility in grant accounting |
| Borrowing Costs (section 25) | Allows capitalisation consistent with IAS 23 |
Simpler expensing model |
FRS 102 provides optional capitalisation |
Share-based Payments (section 26) |
Aligns more with IFRS 2 with clearer measurement bases and definitions |
SME version simpler with fewer categories |
FRS 102 aligns share-based payment accounting more closely with full IFRS |
Impairment (section 27) |
Extra guidance on fair value less costs to sell and disclosures |
More limited guidance |
Additional impairment disclosure requirements and criteria |
Employee Benefits (section 28) |
Aligns with IAS 19 on defined benefit accounting; removes simplified SME options |
Simplified SME guidance on employee benefits |
More complex actuarial and plan accounting in FRS 102 |
Income Tax (section 29) |
Entirely replaced: timing differences plus approach |
Temporary difference model |
Different deferred tax methodology |
Foreign Currency (section 30) |
Amended to reflect company law and IFRS consistency |
Traditional SME model |
Enhanced FX presentation rules in FRS 102 |
Events after Reporting Period (section 32) |
Additional guidance on going concern events |
Standard SME approach |
More detailed post–reporting period guidance |
