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How can life sciences businesses prepare for future changes to UK GAAP?

In March 2024, the Financial Reporting Council (FRC) published the final version of the Periodic Review 2024, which makes substantial amendments to FRS 102. This article, focussing on the life sciences industry, continues our series looking at the impact of these changes on key industries.

The changes to FRS 102 are mandatory for accounting periods starting on or after 1 January 2026 and are expected to result in material changes for many businesses in the life sciences industry. This article outlines the key changes and their commercial implications.

For tailored guidance for Life Sciences businesses, visit our Bridging the GAAP essential guide to IFRS, UK GAAP and narrative reporting developments.

Strategic considerations

One of the key areas that life sciences businesses should focus on is how the revised standards will affect their contracts with customers.

Contracts in the life sciences industry are often long-term so existing contracts could be impacted even though the effective date for the final FRS 102 updates is at least two years away. Specifically, they will need to identify the obligations in their customer contracts and follow the new revenue recognition model to allocate the transaction price and recognise revenue over time or at a point in time. This may require more judgement and estimation than under the current UK GAAP and could result in changes to the profile of revenue recognition. In particular:

How we can help

We have a dedicated team of accounting and financial reporting experts, experienced in both UK GAAP, IFRS 15 and IFRS 16 on which the major proposed changes for revenue and leases are based.

We can help you understand the impact of the revised standards on your management information, financial statements, and business operations, providing practical guidance on how to implement them effectively and efficiently.

We can also help you plan your communications with your stakeholders and ensure that your financial statements are clear, transparent and compliant with the new requirements.

If you require any support or would like to discuss financial reporting for your life sciences business in more detail, please contact Jonathan Collins, Graham Bond or Laragh Jeanroy.

authors:jonathan-collins,authors:graham-bond,authors:laragh-jeanroy