Last week the Scottish Finance Secretary, Shona Robison, delivered the draft Scottish Budget 2025/26. Chapter 2 of this Budget publication sets out the Scottish Government’s tax policy and strategy. Scotland’s Tax Strategy: Building on our Tax Principles was also published last week. The key tax devolved to Scotland is income tax. The draft Budget announced that for 2025/26, the starter rate band will increase by 22.6 percent and the basic rate band will increase by 6.6 percent meaning that the thresholds for paying both the basic and intermediate rates of tax will increase by 3.5 percent, both of which are above inflation. The higher, advanced, and top rate thresholds will be frozen to the end of the current parliamentary term in Spring 2026. Our fellow Professional Body ICAS has been looking at these measures in more detail. The Scottish Fiscal Commission has also published its report Scotland’s Economic and Fiscal Forecasts – December 2024 along with a one page graphic of key figures and a summary document. Background information is also available including spreadsheets with data for tables and charts. The following documents were also published: Scottish tax ready reckoners, Scottish Income Tax 2025/2026: factsheet, Scottish Budget 2025/26: pre-budget engagement summary, and Climate Xchange: International evidence on fiscal levers to deliver reductions in greenhouse gas emissions.

The Irish Corporate Governance Code represents a progressive approach to ensuring best practice among companies listed on Euronext Dublin and enhances the reputation of ‘Ireland Inc’ globally. Níall Fitzgerald and Louise Gorman explain why Did you know that Ireland hosts one of the most extensive corporate governance infrastructures in Europe?  In Ireland, there are specific governance codes applicable to listed companies, charities, state bodies, financial services institutions, funds and sports organisations.  This is in addition to other entity-specific requirements that may also apply – charities may have to comply with multiple governance requirements as a condition of receiving state funding, for example.  Yet, until recently, Irish listed companies have relied on the best practice principles of the UK Corporate Governance Code (UK Code).  It is therefore worth considering the extent to which the recent publication of the Irish Corporate Governance Code 2024 (Irish Code) presents a new opportunity to tailor best practice in corporate governance to Irish listed companies. The Irish Code will apply initially to a small number of companies listed on Euronext Dublin, the Irish Stock Exchange, for financial years commencing 1 January 2025. Those dual-listed in both Ireland and the UK have the option to either follow the Irish Code or the UK Code in respect of their Irish listing.  The introduction of the Irish Corporate Governance Code is nonetheless significant.  Four years on from the UK’s departure from the European Union (EU), the Irish Code signals that the time has come for Irish companies to follow a path aligned with EU policy and practice, while remaining loyal to the overarching best practice principles established by the UK. It also reflects welcome proactivity in protecting and enhancing the reputation of ‘Ireland Inc’ on the global stage.  Historically, many corporate governance codes and laws internationally have been introduced in response to corporate failings.  By contrast, the Irish Code has emerged out of a desire to ensure that best practice is suitably tailored to the specific circumstances of Irish listed companies.  This comes at no cost to our competitiveness. We retain our well-established ‘comply or explain’ principles-based approach, while also remaining globally connected via our EU membership. Further, we host a US Public Company Accounting Oversight Board presence relating to both Irish companies listed on US Stock Exchanges and US listed companies operating in Ireland. What does this mean for Irish companies? Irish companies already complying with the UK Code will, for the most part, maintain their existing governance practices. They will need to address some specific Irish Code requirements, however. The extent of any differences here will vary depending on each company’s governance policies and structures.  Some companies may find the adjustment process less challenging, particularly those already preparing for the new UK Code applying from 1 January 2025 (apart from Provision 29, which applies from 1 January 2026).  The UK Code served as the basis for developing the Irish Code. Euronext Dublin has made changes only where necessary to ensure proportionality and relevance.  To enhance the principle-based approach, Euronext Dublin has also taken the decision not to include some of the more prescriptive requirements driven largely by the UK regulatory environment.  Maintaining close alignment makes sense as the UK Code is highly regarded and sets a high standard for corporate governance that is emulated internationally.  Our table illustrates some of the key differences between the Irish and the UK Code. Some of these differences, and what they mean for Irish companies, are further explained below. Internal control and risk management: A significant new requirement in the UK Code is included within Provision 29. This requires boards to provide a “declaration of effectiveness” on internal controls, identifying any ineffective controls as of the balance sheet date. Compliance will require boards to establish an independent framework to monitor and assess their internal control and risk management systems. The Irish Code also requires boards to review and report on the effectiveness of these systems, but it is less detailed, not requiring specific declarations or publication of ineffective controls at the balance sheet date. Audit committees: The UK Code requires audit committees to adhere to the Financial Reporting Council’s (FRC) “Audit Committees and the External Audit: Minimum Standard.” In contrast, the Irish Code outlines the roles and responsibilities of audit committees, which are consistent with Companies Act 2014 (Section 167) requirements, without reference to an additional standard, specifying that their work should be detailed in the annual report. Maintaining the principle-based approach in this area is practical, as best practices for audit committees are evolving in accordance with emerging recommendations on audit tendering oversight and sustainability reporting coming from bodies such as the FRC and Accountancy Europe. Less prescriptive and more proportionate: The Irish Code retains core principles, such as workforce engagement, but leaves it to boards to choose the most appropriate methods for their companies’ needs. This facilitates greater flexibility relative to equivalent parts of the UK Code which specify detailed considerations or criteria. The Irish Code aligns some provisions with those in smaller EU capital markets, enabling a proportionate governance approach. For example, while one of the criteria for assessing non-executive directors’ independence in the UK Code requires a five-year employee cooling-off period to be considered, the Irish Code sets this at three years, balancing market size and available talent. Regulatory oversight and enforcement: Like the UK, the Irish Code relies on the market mechanism. It aims to promote high standards of integrity, transparency and accountability. Investors and stakeholders can evaluate disclosures and make comparisons across companies in assessing corporate governance quality. These assessments then inform decisions and actions taken in the markets, such as the decision to buy or sell shares. The implication of this in the UK experience is that the FRC has no sanctioning authority in instances of weak compliance; sanctioning is left to the market mechanism. The FRC does, however, conduct thematic reviews to guide improvements in corporate reporting and governance. Ireland currently has no equivalent body for corporate governance assessment. However, the Irish Auditing and Accounting Supervisory Authority reviews annual reports for EU Transparency Directive compliance, without a specific corporate governance focus. While sanctions do not apply for weak governance compliance, Euronext Dublin can impose sanctions or suspend listings for violations of the listing rules. The Financial Conduct Authority in the UK has a similar approach.   The Irish Code and the UK Code: key differences Workforce engagement  The Irish Code requires boards to explain workforce engagement methods and their effectiveness, without mandating a specific method as in the UK Code. Additionally, it requires a board review of policies for raising concerns. This requirement aligns with the OECD Corporate Governance Principles 2023.  Threshold for addressing shareholder dissent The threshold for consulting with shareholders on a dissenting vote against a board recommendation is set at 25 percent under the Irish Code (20% in the UK Code). Unlike the UK, there is no requirement to provide a six-month shareholder update on the consultation, but it should be addressed in the next annual report. Non-executive director independence  When considering the independence of a non-executive director (NED), the criteria relating to previous employment by the company is whether they have been an employee of the company within the last three years (compared to five years in the UK Code). Board appointments The Irish Code does not include the UK Code restriction on the number of appointments a non-executive director has in a FTSE 100 or other significant undertaking. The Irish Code requires all commitments to be considered when determining whether the NED has the capacity to fully commit to the board. Company Secretary The Irish Code further elaborates on the role of the Company Secretary in ensuring a good information flow within the board, its committees and between management and non-executive directors – recording accurate minutes, facilitating induction and assisting with professional development of non-executive directors. Board evaluation The Irish Code replaces the UK Code reference to FTSE 350 companies with “companies with a market capitalisation in excess of €750 million” in the requirement to conduct an external board evaluation at least once every three years. Board skills and expertise The Irish Code includes an additional requirement for the nomination committee to use the results of a board evaluation to identify the board’s skills, knowledge and expertise requirements. This should be reflected in board succession plans, professional development plans and steps taken to ensure the board has access to the skills, knowledge and expertise it requires. This requirement is consistent with good governance practices in other EU countries, e.g. the 2020 Belgium Code on Corporate Governance. Diversity and inclusion Whereas the UK Code includes reference to UK equality legislation for diversity characteristics, the Irish Code requires companies to have a diversity and inclusion policy regarding gender and other aspects of diversity of relevance to the company and includes measurable objectives for implementing such a policy. The Irish Code requires this policy to be reviewed annually. Audit Committee To ensure consistency with the Companies Act 2014, the requirement for one member of the Audit Committee to have “recent and relevant financial experience” is changed to “competence in accounting or auditing”. Reference to “financial reporting process” is replaced with “corporate reporting process” to better reflect the audit committee’s role in monitoring financial and non-financial reporting, e.g. sustainability reporting. Reference to the UK specific Financial Reporting Council guidance on “Audit Committees and the External Audit: Minimum Standard” is also removed. Internal controls and risk management systems The Irish Code does not include the UK Code provision for the board to include a declaration of effectiveness of material controls, but the requirement to monitor the company’s internal control and risk management systems and review their effectiveness remains.  Remuneration Under the Irish Code, share awards in long-term incentive plans must vest over at least three years, unlike the UK’s five-year minimum. Malus and clawback provisions should be described generally in annual reports, and executive pensions require thoughtful comparison to workforce pensions, with less prescriptive rules than the UK Code. What next for the Irish Code?  Euronext Dublin is in the process of revising the Listing Rules to give effect to the new Irish Code and is further streamlining the requirements.  An Irish Corporate Governance Panel will be established, with responsibility for reviewing and advising on changes to the Irish Code in the context of the evolving corporate governance landscape in Ireland, the UK and Europe alongside other factors.  What impact the Irish Code will have remains to be seen. It represents a sensible approach to building on the reputation and quality of the UK Code, and while there are some differences between the Irish and UK Code, they are mostly aligned.  We have been careful to note that the Irish Code initially applies only to a small number of companies, so one may be forgiven for questioning its true significance. Nonetheless, key issues on the European regulatory horizon suggest that it may mark the start of a greater departure from the UK’s approach to governance.  The recent transposition of the Corporate Sustainability Reporting Directive into Irish law provides another example of this as the CSRD’s required disclosures on governance introduce an EU influence into governance in Irish companies.  Future revisions to the Irish Code may further reflect this newly established autonomy in governance in Ireland, particularly as we adopt the Corporate Sustainability Due Diligence Directive and other directives the European Commission will inevitably introduce over time.  Currently, best practice principles for Irish private companies are limited to voluntarily following the UK’s Wates Corporate Governance Principles for Large Private Companies. Just as the UK Code has influenced these principles, the Irish Code may provide a basis for further extension to large private entities.  There is also a strong argument that any evolution in corporate governance guidance deserves due consideration, particularly as boards deal with increasing risks and opportunities from environmental, social, economic and technological developments.  As it happens, there are no immediate plans to draft guidance to support the Irish Code, and the FRC’s Corporate Governance Code Guidance should, in the short term, be sufficient to fill the gap.  Experts in the area have long noted that attention tends be paid to corporate governance only when a failure occurs.  Given the level of public scrutiny such failures attract, and the associated reputational costs borne by board members, any Irish listed company director should be asking themselves if they can really afford not to pay attention to the new Irish Corporate Governance Code. Níall Fitzgerald, FCA, is Head of Ethics and Governance at Chartered Accountants Ireland Louise Gorman is Assistant Professor at Trinity Business School

Earlier today HMRC advised us that some of its telephone helplines are currently experiencing a reduced level of service due to a technical issue. HMRC first made us aware of this late last week. HMRC is working urgently to resolve this. Taxpayers and agents can continue to use online services, where relevant, which we have been advised are working as normal.

COP29 concluded in late November with uneasy agreement on the controversial Baku Finance Goal pledging $300 billion in climate funding to developing countries, writes Susan Rossney COP29, the global climate summit, concluded in the early hours of 24 November in Baku, Azerbaijan. There were some positive developments, such as the deal reached on Article 6 of the Paris Agreement to finally allow countries to trade carbon credits with each other. Most significantly, though, for this ‘climate COP’, was the final agreement called the Baku Finance Goal. In 2009, at COP15 in Copenhagen, parties agreed a collective goal for developed nations to provide $100 billion annually in climate financing to developing countries. The new goal agreed at COP29 ups the annual financial target to $300 billion, to be funded from public sources, with provision for the shortfall to be made up of funding from private sources. To say opinion was divided on this new goal is an understatement. While some parties are cautiously optimistic that the agreement would at least keep the core principles of the Paris Agreement alive, many more were outraged by how much the new goal falls short of what is actually needed. It is generally agreed that $1 trillion per year by 2030 (rising to $1.3tn per year by 2035) is needed to help developing countries build resilience, prepare for disasters and cut emissions of planet-warming greenhouse gases. While this figure is enormous, it’s worth noting for context that $2.4 trillion was spent on weapons in 2023, and at least $1 trillion was spent in 2022 on subsidies to keep fossil fuel prices artificially low. Also worth noting is that the provision of financial support to developing countries for climate action serves both a moral and economic purpose for wealthier countries. The chaos caused by the climate and biodiversity crises to societies and economies is not limited to developing countries alone. This was demonstrated most recently by the 224 lives lost in Spain as a result of flooding linked to rising temperatures in the Mediterranean Sea. On 28 November, Spain’s government approved a new “paid climate leave” entitlement of up to four days to allow workers take time off if unable to travel to their place of work in the event of official warnings of extreme weather conditions. The Institute for Economics and Peace further predicts that one billion people face being displaced within 30 years due to the climate crisis, with huge impacts for both the developed and developing worlds. COP30 will take place in Belém, Brazil in 2025. Its focus will centre on efforts by each country to reduce national emissions and adapt to the impacts of climate change (the so-called ‘NDCs’ or ‘nationally determined contributions’). It remains to be seen if COP30 will achieve what G20 leaders have said it should – i.e. to be “our last chance to avoid an irreversible rupture in the climate system”. Susan Rossney is Sustainability Advocacy Manager at Chartered Accountants Ireland. Check out Chartered Accountants Ireland’s sustainability centre for signposts to a variety of resources available to businesses. Also, subscribe to the Institute’s fortnightly Technical Round Up and weekly Sustainability/ESG Bulletins, both in the weekly Chartered Accountants Ireland newsletter, and on LinkedIn.

Comments from Chartered Accountants Ireland were included in a recent Sunday Independent article on the operation of benefit-in-kind on staff benefits. The Institute’s Head of Tax, Gearóid O’Sullivan was recently featured in the Sunday Independent answering readers’ questions on the rent tax credit and dividing land that is jointly owned.

Revenue has published the following new VAT manuals:  VAT notes for guidance following Finance Act 2024, and VAT treatment of share transactions and trading platforms. In addition, the following manuals have also been updated:  VAT Treatment of Factoring and Invoice Discounting, VAT and Solicitors includes a new paragraph (4) on legal fees relating to lenders, and VAT treatment of stock exchange fees has been updated to provide guidance on the current regime.

Section 125A SDCA 1999 provides for a stamp duty to be levied on certain health insurance contracts entered into between health insurers and their customers. Revenue has updated the Stamp Duty Manual which provides guidance on the levy on authorised insurers. The updated manual now includes the rates of the levy for accounting periods commencing on or after 1 April 2025, as provided for by section 10 of the Health Insurance (Amendment) and Health (Provision of Menopause Products) Act 2024, which was enacted on 11 November 2024.  The following stamp duty manuals have also been updated to reflect amendments to Part 9 SDCA 1999 contained in Finance Act 2024:  Part 9: Levies Part 9 - Section 126AB - Further levy on certain financial institutions

Revenue has published a new Tax and Duty Manual which provides guidance on obtaining a corporation tax deduction for stock exchange listing expenditure. With effect from 1 January 2025, new section 81D TCA 1997 provides corporation tax relief for expenditure of up to €1 million incurred by a company on listing its shares for the first time on an EEA stock exchange. According to the manual, the admission to trading of the company’s shares must take place on or after 1 January 2025 and on or before 31 December 2029.   

Revenue has updated the Tax and Duty Manual which provides guidance on pre-letting expenditure in respect of vacant residential premises. The updated manual now reflects the extension to 31 December 2027 for the deduction of expenses incurred on a vacant residential property against rental income from those premises under section 97A(2) TCA 1997.  

The Central Statistics Office (CSO) has published the Quarterly National Accounts for the third quarter of 2024. Modified Domestic Demand increased by 1.3 percent relative to the previous quarter and was up 4.1 percent on an annual basis. Gross domestic product (GDP) grew by 3.5 percent in Q3 2024 and increased by 2.9 percent on an annual basis.  Commenting on the figures, the Minister for Finance, Jack Chambers TD, said: “I am pleased to see continued strength in the domestic economy in the third quarter of 2024. Modified Domestic Demand – my preferred metric of Ireland’s economic performance – grew by 1.3 per cent on a quarterly basis and recorded strong annual growth of over 4 per cent. Importantly, growth on an annual basis has been broad based in nature with both consumer spending (1.7 per cent) and modified investment (10.4 per cent) making a positive contribution. This solid growth is consistent with the strength of our labour market and the robust exchequer figures released yesterday. Taken together these metrics all demonstrate that the economy has performed strongly this year. While today’s figures are encouraging they are, of course, backward looking. Indeed, the economic outlook has become increasingly uncertain and risks are now clearly titled to the downside with the most pressing risks external in nature. As a small, open and highly globalised economy, Ireland is particularly vulnerable to any deterioration in the external environment.  Put simply, these are risks that we cannot control directly – we must instead focus on managing what is in our control. In particular, we must continue to build up our fiscal buffers, invest in our people and our infrastructure, and ensure the economy remains competitive. This will help ensure that we are in the best position possible to address future challenges.” 

With November being the most important month of the year for tax receipts, the Minister for Finance noted that the recent November Exchequer figures indicate that tax revenues continue to perform well. November is the month in which the largest payments are made for corporation tax, as well as the last VAT-due month of the year. Total tax receipts for November amounted to €22.8 billion, €7.2 billion (or 46.1 percent) higher than November 2023.   November is also the deadline for self-assessed income tax. Income tax receipts in November were €4.7 billion, only €60 million (or 1.3 percent) ahead of November last year. However, this relatively weak performance year-on-year was offset by continued growth in PAYE receipts. Overall, income tax receipts were €1.9 billion, or 6.4 percent, ahead of November 2023.   Corporation tax receipts in November amounted to €13.7 billion, which is €7.4 billion (or 116.8 percent) higher than November last year. The bulk of the increase is due to receipts arising from the Apple tax case ruling in September. On a cumulative basis, corporation tax receipts of €35.0 billion are now ahead of last year by €13.0 billion (or 59.1 percent).  VAT receipts to end-November are €3.1 billion, 1.3 billion (or 6.4 percent) up on the same period last year. The Exchequer surplus stood at €13.8 billion, to end-November, an increase of €8.4 billion in comparison with the same period last year, reflecting the Apple tax case revenues received in November. Commenting on the figures, the Minister for Finance, Jack Chambers TD, said:  “The Exchequer returns to end-November show most tax heads have demonstrated steady growth across the year. The growth in income tax and VAT receipts demonstrates the strength of our economy and labour market, but our public finances remain exposed to highly volatile corporation tax receipts. This revenue stream is also skewed by the receipt of around two-thirds of the revenue arising from the CJEU ruling of September 10th.”   

Amendments to FRS 102: are you ready for change? Aimed at improving financial reporting practices, the latest FRS 102 amendments introduce important changes finance teams must begin preparing for today. Emer Fitzpatrick and Cayetano Bautista III delve into the details. FRS 102 is the predominant accounting standard used by small and medium businesses (SMEs) and private family businesses across the island of Ireland. It was introduced in 2013, applying to accounting periods commencing on or after 1 January 2015, with early adoption permitted. The UK Financial Reporting Council (FRC) is the standard setter for FRS 102 and performs periodic reviews of the accounting standard, at least every five years. The aim of these reviews is to take account of changes in global accounting standards – such as changes to the International Accounting Standards Board (IASB) accounting standards, and to respond to specific issues as they arise, such as regulatory decisions and stakeholder feedback. Amendments are then developed and proposed after feedback has been sought from the relevant stakeholders. The first periodic review of FRS 102 was completed in December 2017, coming into effect on 1 January 2019, and the FRC recently completed another periodic review in March 2024. This most recent review has taken several years to complete due to the need for extensive consultations with stakeholders. The effective date of the amendments arising from this review will be applicable for accounting periods on or after 1 January 2026. (Earlier effective dates apply to new disclosures about supplier finance arrangements, starting from 1 January 2025, with early application permitted). Early application is, however, permitted where all amendments are applied simultaneously. So, what are the key amendments arising from this review, and how can you prepare for these changes? FRS 102 review: key amendments Single lease accounting approach for lessees (Section 20) Under the current model, lessees classify leases as either finance or operating, depending on whether the lease transfers substantially all the risks and rewards of ownership from the lessor to the lessee. This approach is similar to the model used under old Irish Generally Accepted Accounting Principles (GAAP) and IAS 17 – “Leases”. The FRS 102 amendments will largely align Section 20 with IFRS 16 – “Leases”, eliminating the distinction between finance and operating leases for lessees. This will require lessees to recognise right-of-use assets (ROU) and lease liabilities on the Statement of Financial Position (SOFP) for all leases, apart from short-term leases and low-value assets. Subsequently, the ROU is depreciated over the lease term on a straight-line basis, while the lease liabilities are amortised using the effective interest method, which results in a frontloading of the lease expense, reflecting the underlying financing nature of leases. Let’s illustrate this with an example. Lease term   3 years  Annual payment payable at the end of the year  €50,000  Discount rate (annual)  5% SOFP – lease commencement (rounded to the nearest €000)   ROU / lease liability   €136,000*   *The initial ROU/lease liability is for illustrative purposes only. These should be calculated using the following formula: Present value (PV) of lease payments not paid at that date and discounted using the appropriate discount rate. [PV of €50,000 × 3 years at 5%] In most cases, the ROU and lease liability will be equal to each other on the inception of the lease. Statement of Comprehensive Income (SOCI) – Year 1   ROU depreciation (operating profit)  €45,333 [€136,000 ÷ 3]  Interest on lease liability (finance cost)  €6,800 [€136,000 × 5%] SOFP – Year -1    ROU   €90,667 [€136,000 – €45,333]  Lease liability  €92,800 [€136,000 – €50,000 + €6,800] The amendments provide guidance on what constitutes a lease, how to determine the lease term, how to account for modifications and remeasurements and other practical expedients. It is important not to underestimate the complexity of this new lease model. Consideration must be given to several factors, such as whether an arrangement meets the definition of a lease and how to calculate an appropriate discount rate for every lease. Five-step revenue recognition model (Section 23) The FRS 102 amendments also introduce a comprehensive five-step model for revenue recognition aligning Section 23 of FRS 102 with IFRS 15 – “Revenue from contracts with customers.” The five steps are as follows: Identify the contract(s) with a customer. Identify the performance obligations in the contract. Determine the transaction price. Allocate the transaction price to the performance obligations in the contract. Recognise revenue when (or as) the entity satisfies a performance obligation. The core principle is to align revenue recognition with the transfer of control of goods or services to customers which may either be over time or at a point in time. This also aligns revenue recognition with the contractual terms in relation to the enforceable rights and obligations of the customer and supplier. The five-step model aims to address the challenges in accounting for bundled goods and services by introducing the concept of allocating the consideration from the customer to the separate and distinct performance obligations, representing the promised goods or services within the contract. The amendments also provide guidance on several topics, such as combining two or more contracts entered into, at or near the same time with the same customers, contract modifications and some practical expedients. It is important to note that the new five-step revenue recognition model could alter the timing of revenue recognition, especially for complex contracts with bundled goods and variable consideration. Other important amendments to note The amendments to FRS 102 also contain several incremental improvements and clarifications including, but not limited to, the following: IAS 39 option removal: Entities not already applying IAS 39 recognition and measurement principles for financial instruments can no longer adopt such policies under Section 11 and 12 of FRS 102. Supplier financing: Section 7 of FRS 102 will now require additional disclosures about supplier finance arrangements and their impact on SOFP and cash flows. Fair Value measurement: A new Section 2A (Fair Value Measurement) replaces the Appendix to Section 2 of FRS 102, incorporating the principles of IFRS 13 – “Fair value measurement.” Going concern disclosures: Section 3 of FRS 102 has new requirements for management to affirm consideration of future information and to disclose significant judgments on going concerns. Business combinations: Section 19 of FRS 102 has been updated to include guidance on the identification of an acquirer in a business combination similar to the principles of IFRS 3 – “Business combinations.” Share based payments (SBP): Section 26 of FRS 102 includes enhanced guidance on accounting for vesting conditions, fair value determination and SBPs with cash alternatives. Uncertain tax treatments: Section 29 of FRS 102 includes guidance for uncertain tax treatments, which aligns with IFRIC 23 – “Uncertainty over Income Tax Treatments” principles. FRS 102 amendments: next steps We have outlined some practical steps you can take to help prepare for these changes. Assess the impact on your financial statements and business metrics As discussed above, the changes to Leases and Revenue may have a significant impact on financial statements (FS). The new lease accounting model may affect your company’s financial metrics or key performance indicators (KPIs) such as EBITDA, net profit and net debt, to name a few. Not only will the changes to KPIs have an impact on the FS but they may also impact your lending arrangements or covenants. For the new revenue model, consideration must be given to how any potential changes to the timing of revenue recognition may impact both reported and forecasted revenue and profits. You will also need to consider how the other amendments listed above will impact the FS and whether you have the necessary in-house expertise on your finance team to carry out the work required to comply with these amendments. Increased disclosure will be required in the notes to the FS, and this may include some new and previously undisclosed information. Understanding these requirements will help guide your accounting processes and the preparation of the FS. Being well-prepared will ensure compliance and transparency in your financial reporting. Consider whether operational changes are required The new lease accounting and revenue recognition models are closely tied to contractual terms and conditions. This will require additional information and financial modelling from contracts. An early assessment of your current accounting processes, systems and controls is essential to identify the necessary operational changes. Other considerations, such as the number of lease agreements and revenue contracts a company may have, will determine the amount of work involved, especially with regard to preparing an amortisation table and the potential need for external valuation expertise to determine an appropriate discount rate for every lease agreement. Determine the best game plan for the transition It is critical to ensure that your finance team is ready for these changes. Engaging your finance team through training courses, workshops and other methods – before and during the transition phase – will be important in ensuring your team fully understands the upcoming changes. Preparing for change: act now The aim of these FRS 102 amendments is to improve financial reporting by aligning FRS 102 more closely with IFRS. Although most of the amendments will not take effect until 2026, early application is allowed if all amendments are adopted simultaneously. Thus, it is critical that companies put a game plan in place today to determine the optimal timing, scope and method for adopting the FRS 102 amendments. The time to act is now. Emer Fitzpatrick is a Senior Manager in PwC Corporate Reporting Services and a member of the Financial Reporting Technical Committee of Chartered Accountants Ireland. Cayetano Bautista III is a Senior Manager in PwC Capital Markets and Accounting Advisory Services.