In Autumn 2016, we posted that the FRC were consulting on changes to FRS 102. FRS 102 is the accounting standard that will apply to most Credit Unions. The more straightforward changes were planned to be introduced in 2019. The FRC had also announced a number of more significant changes to FRS 102. These had been planned to be introduced into 2022. The FRC have now stated that there will be a delay in introducing the more significant amendment. This is in order to allow the FRC to gather more information and views.
This will be of interest to Credit Unions as one of the delayed changes was with regard to introducing the ‘expected loss’ model into FRS 102. The ‘expected loss’ model if applied to Credit Unions could significantly increase the level of Credit Union bad debt provisions. This is because the expected loss model means the provision needs to be based on expectations of how many of your loans with default. The rules already apply to banks applying full IFRS.
We will provide further updates once the FRC announce their plans. Please see our Audit and Accountancy pages on how we can help with FRS 102.