FRS 102 and FRS 105 Compared

FRS 102 and FRS 105 Compared

Below we compare the differences between FRS 102 (focusing on ‘small’ entities) and FRS 105 (‘micro’ entities) along with some other factors to consider when deciding whether to prepare accounts using the ‘small’ or ‘micro’-entities regime. The ‘small’ and ‘micro’ entities regime thresholds have changed recently. See our separate blog here about these changes.

An entity entitled to and choosing to apply the ‘micro-entities’ regime must apply FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime. The micro-entities regime is optional and therefore, when preparing their financial statements, entities may wish to consider the differences between applying FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 105 when deciding on the most suitable regime. The links given here are to the January 2022 versions of FRS 102/105.

New editions of both standards are expected to be published in the summer of 2024, effective for accounting periods commencing on/after 1 January 2026.

Users of the accounts

The most important aspect to consider is the needs of users. Different stakeholders will have different expectations. For example:

  • Suppliers/trade creditors
  • Banks and
  • Credit rating agencies may require more information than is provided by micro-entity accounts.

The level of information required by FRS 105 is very limited when compared to other standards, so be careful to advise your client about the implications for making a good impression on such stakeholders where that might be important.

Future growth plans

An entity that is entitled to either the ‘small’ or ‘micro-entities’ regime but is close to the size limits should consider carefully any decision on which regime to adopt. This is particularly relevant for a micro-entity if the business is expected to grow to the extent that it will be necessary to switch to the small entities’ regime in the near future. Transition from FRS 105 to FRS 102 Section 1A will involve significant changes to the presentation of the accounts and the accounting policies applied (see below).

Accounting Differences Between FRS 102 and FRS 105

Outlined below are eleven of the key accounting differences between FRS 102 and FRS 102:


FRS 102

FRS 105

Revenue Recognition Section 23 completely revised (in the changes published in March 2024) to include a simplified version of the IFRS 15 Five Step Model effective for accounting periods starting 1 January 2026 with early adoption allowed from 1 January 2024.


See our July 2024 webinar on these changes called ‘The Main Changes in Irish GAAP.

Section 20 revised in a similar fashion to FRS 102 (in the changes published in March 2024) with the simplified version of the IFRS 15 Five Step Model introduced effective for accounting periods starting 1 January 2026 with early adoption allowed from 1 January 2024.
Leasing Section 20 is completely revised with the introduction of rules similar to those in IFRS 16, where almost all leases will go on balance sheet, and only certain types of operating lease will remain off balance sheet.


These changes are effective for accounting periods starting 1 January 2026 with early adoption allowed from 1 January 2024.

No change to the previous regime of only capitalizing finance leases. All operating leases remain as they were before.




See our July 2024 webinar on these changes called ‘The Main Changes in Irish GAAP.

Investment properties With the exception of investment property rented to another group entity, a revaluation each year is required, with changes recognised in profit or loss. Measured at cost less depreciation and impairment.
Property plant and equipment Measured at cost less depreciation and impairment but can choose to adopt a revaluation accounting policy for fixed assets of the same class Measured at cost less depreciation and impairment.
Intangible assets Measured at cost less amortisation and impairment but can choose in limited circumstances to adopt a revaluation accounting policy for intangible assets of the same class Measured at cost less amortisation and impairment.
Development costs and borrowing costs These costs can, subject to certain conditions, be capitalised. No option to capitalise. Must be expensed to the profit and loss account in the period in which they are incurred.
Trade and asset acquisition An intangible asset purchased with a business is normally recognised as an asset when separable and arises from a contractual or other legal basis An intangible asset purchased with a business must not be recognised separately from goodwill.
Financial instruments Financial instruments are divided into ‘basic’ and ‘other’ instruments.


The former are mostly measured at amortised cost, the latter mostly at fair value with movements generally recognised in profit or loss.


Entities can instead choose to apply the recognition and measurement requirements of IAS 39 Financial Instruments: Recognition and Measurement and/or IFRS 9.


The exception is directors’ loans which may be measured initially at transaction price.

No distinction between ‘basic’ and ‘other’ with all financial instruments initially recognised at cost, which will be the transaction price. Subsequent revaluation or measurement of financial instruments at fair value not permitted.

For lending arrangements, simplifications are made in relation to the allocation of interest and transaction costs, and no requirement to calculate an effective interest rate.

Also, there is no requirement to impute a market rate of interest in arrangements conducted at non-market rates.

Equity-settled share-based payments Recognised at the fair value of the goods or services when received. For arrangements with employees, fair value is measured at the grant date and the expense recognised over the vesting period. Not recognised in the accounts until the shares are issued.


Foreign exchange forward contract Recognised on the balance sheet as a financial instrument at fair value and the associated debtor or creditor retranslated at the year-end rate. Hedge accounting can be applied in certain circumstances. When a trading transaction is covered by a related or matching forward contract, the requirement is to use the rate specified in the contract.

If not matched to a trading transaction the cost of the foreign exchange forward contract will be recognised as a financial asset, unless it is not material in which case it will be recognised immediately as an expense in profit or loss.

Defined benefit pension plans Net interest on the net defined benefit asset or liability is recognised in the profit and loss account, and is calculated with reference to high quality corporate bonds i.e., the same rate is applied to both the plan assets and liabilities. Recognition of the surplus or deficit of the plan on the balance sheet not permitted. Agreed funding of deficit must, however, be recognised as a liability. Contributions payable to the plan accounted for as an expense.
Government grants Government grants can be accounted for using either the performance model or the accruals model. Requirement to use the accruals model.


Deferred tax Based on timing differences No deferred tax


Please see our latest CPD Webinar on The Main Changes in Irish GAAP (recorded July 2024).

See our webinar entitled ‘The Main Changes in Irish GAAP’ on the latest changes to FRS 102 here.

For more on the whole ISQM process for audit firms, please see our ISQM 1 Toolkit on our website here.

Please go to our website to see our:

  • Anti-Money Laundering Policies Controls and Procedures Manual (March 2022) — View the table of contents
  • AML Webinar (December 2023) available here, which accompanies the AML Manual. It explains the latest legal AML reporting position for accountancy firms and includes a quiz. Upon completion you receive a CPD certificate for attendance in your inbox.
  • Letters of engagement and similar templates—Please visit our website here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items bought together.
  • ISQM TOOLKIT, or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please contact John McCarthy FCA by email at
  • We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. The ISQM TOOLKIT 2022 is available to purchase here.
Investment Property under FRS 105

Investment Property under FRS 105

What’s the difference in treatment of investment property between FRS 105 and FRS 102?

Too many accountants rely on the computer software to produce the correct result, which can go badly wrong.  You can’t beat reading the standards themselves. In this case, the March 2018 version (as amended) of FRS 105 and more particularly Section 12 of FRS 105 which deals with Property, plant and equipment and Investment Property.

Investment property assets are normally carried at revaluation under Irish GAAP i.e. FRS 102, but it’s dangerous to assume that FRS 105 allows the same treatment. For the purposes of this blog, I am ignoring the FRS 102 options for investment property, which allow for cost/fair value models, in certain circumstances. Instead I want to focus on the fact that FRS 105 removes most FRS 102 options.

Where the company owning the property is a ‘micro-entity’ (as defined in the Companies Act, 2014 with turnover €700k, gross assets €350k, and less than 10 employees), it is not allowed apply the alternative accounting rules/fair value accounting rules under FRS 105, because the Companies Act, 2014 does not permit the use of these options.

Therefore, investment property must be carried at cost under FRS 105.12.3 and the knock-on effect of this is that the investment property must also be depreciated under FRS 105.12.15 because that is a requirement of the cost model.

The bottom line is that if you have ‘small’ (as defined in the Companies Act, 2014) company clients who wish to report investment property assets at revaluation or at fair value, then they must adopt FRS 102 Section 1A (as amended) or else the full version of FRS 102 (March 2018) (as amended).

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FRC Rent Concession May Impact Financial Reporting

FRC Rent Concession May Impact Financial Reporting

In response to the continuing impact of Covid 19 the Financial Reporting Council (FRC) has extended the accounting requirements for special conditions for reporting rent and lease concessions/reductions under FRS 102 and 105 well into next year. The change will enable businesses to present a clearer picture of their performance in year-end accounts.

Many entities have struggled to pay rent and meet lease payment commitments for their rental properties. This has led to negotiations between tenants and landlords in the form of rent concessions (deductions in rent or waivers) or rent deferrals (an agreement to pay rent or lease payments until a later date).

According to the FRC, the prolonged duration of the pandemic has made it necessary to extend the existing reporting time for a further 12 months to 30 June 2022 to help ensure consistency and accuracy in financial reporting and in such a way that best reflects their substance.  The disclosure of the reality of rent concessions for businesses, will achieve a true and fair presentation by recognising the reduction in full for the period concerned.

The concession means that if a business doesn’t have to pay rent for a given month, no expense will be recognised for that month. Prior to the advent of Covid-19, a rent reduction would have been recognised over the life of the lease.

The main conditions of the proposals contained in FRED 78 are:

  • Entities must recognise changes that reduce lease payments in the period to 30 June 2022, and meet the other specified conditions, on a systematic basis over the periods that the change is intended to compensate, rather than spreading the impact of the change, over future lease periods.
  • The amendments are effective for accounting periods beginning on or after 1 January 2021, with earlier application permitted.

The net impact will be that if the business doesn’t have to pay rent for a given month, no expense will be recognised for that month thus allowing companies to report a more accurate picture of their cash management, performance, and rent-related support measures, reflecting the businesses’ economic reality.

There are rumours that the FRC may seek to extend the reporting period again, at least until the end of the pandemic, especially if there are further lockdowns, during winter, potentially leaving the retail sector in the same position as before.

For more blogs please visit this link and for our publications and manuals and services click here.

In excess of 100 companies registered at Dublin family home

In excess of 100 companies registered at Dublin family home

A recent article by the Independent revealed that a Rathfarnham family home address had been used in the registration of over 100 companies. See the full article here.

The article reports that two tenants resident at the address, had use the owner’s address without his knowledge.  This highlights a major weakness in the CRO’s procedures for company set up where the trust placed in the ‘self-declaration’ process has been found wanting.

The Office of the Director of Corporate Enforcement (ODCE) and An Garda Siochana were contacted by the homeowner.

A spokesperson for the Department of Enterprise Trade and Employment which oversees the CRO confirmed that the CRO does not verify the identities of directors or secretaries of companies.

This latest development calls into question the serious lack of background verification carried out by the CRO which ensures that the Office never calls into question instances where multiple addresses are listed for the same director, not to mention the increased risk that these businesses could be used for money laundering activity.

A similar problem exists at UK Companies House where a consultation has been carried out called the ‘Corporate transparency and register reform’. Proposals include making companies using the FRS 105/102 accounts frameworks in the UK, declare their turnover, among other recommendations, to help verify that they genuinely qualify for these much reduced disclosure regimes. The results of the consultation have not yet been announced, but similar moves be follow in Ireland.


For more about accountants’ AML compliance obligations, see our AML Policies, Controls & Procedures Manual for 2021.


The Manual contains all the latest requirements relevant to accountants contained in the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021 now fully in force.  Future blogs will look at various parts of the new and existing provisions of this legislation.


For more blogs please visit this link and for our publications and manuals and services click here.


New Procedures Manual to help with AML

New Procedures Manual to help with AML

We have just published an update to the AML Policies Controls & Procedures Manual last week, which is available to purchase now on our website. Our latest February 2020 edition includes the following updated items:

  1. Pronouncement by the FATF arising from their Public Consultation on FATF Draft Guidance on Digital Identity (discussed at the FATF plenary meeting in Paris from 19-21 February 2020)
  2. The latest developments on the RBO register since June 2019
  3. Further guidance on carrying out electronic searches and the validity of sourcing electronic data for client identity purposes.

This Manual contains everything you need to successfully implement the requirements of the Criminal Justice (Money Laundering and Terrorist Financing) Acts, 2010 to 2018 which became law on 26 November 2018 and the Register of Beneficial Ownership which came into effect on 22 June 2019.

This Manual comes with a, free of charge, Excel spreadsheet called the ‘AML Control Sheet’ which firms may use to give a ‘helicopter’ view of progress made with keeping client AML data up to date.

The Manual includes eleven Appendices with templates/guidance on how to implement the legislation efficiently. It retails for only €150+VAT and may be downloaded, ready to use, in Word format.