Hi Team
Appreciate if anyone could answer below queries raised by one of our clients on UK GAAP Adjustments introduced to lease accounting effective from 1st of January 2026.
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“As part of our Finance compliance review, we are assessing whether the IFS Cloud Lease Accounting module meets the requirements of the revised FRS 102 Section 20 (UK GAAP), which became effective for accounting periods beginning on or after 1 January 2026. As you will be aware, the FRC's 2024 periodic review has substantially aligned FRS 102 lease accounting with IFRS 16.
We understand that IFS Cloud currently offers IFRS 16 and US GAAP (ASC 842) as selectable accounting standards within the Lease Accounting module. We would be grateful for your formal response to the following questions:
1. FRS 102 Roadmap
Is FRS 102 (revised, Section 20) planned as a named, selectable accounting standard within IFS Cloud? If so, please confirm the target release version and expected general availability date.
2. Obtainable Borrowing Rate (OBR)
Revised FRS 102 introduces the Obtainable Borrowing Rate (OBR) as an additional discount rate option for lessees — defined as the rate a lessee would pay to borrow an amount equivalent to the total undiscounted lease payments over a similar term. Does IFS Cloud support OBR as a discount rate input, or must entities use the Incremental Borrowing Rate (IBR) as currently defined under IFRS 16?
3. Portfolio Discount Rate
FRS 102 explicitly permits entities to apply a single discount rate to a portfolio of leases with similar characteristics. Does IFS Cloud support the assignment of a single discount rate to a group or portfolio of leases, or is discount rate input restricted to individual lease level?
4. Exempt Lease Maturity Analysis Disclosure
Unlike IFRS 16, revised FRS 102 requires entities to disclose a maturity analysis of lease commitments for leases that are exempt (i.e., short-term and low-value leases). Is this disclosure available as a standard report or output within IFS Cloud 25R1? If not, is it on the product roadmap?
5. General Compliance Confirmation
Can IFS provide a formal written statement confirming whether the IFRS 16 module in IFS Cloud 25R1 is considered fit for purpose for entities reporting under revised FRS 102, pending the addition of FRS 102 as a named standard?
This query is time-sensitive as we are in the process of finalising our statutory accounts preparation and auditor sign-off for the 2026 reporting period. A formal response will be included in our compliance documentation” unquoted--
Regards