What does the new revenue model mean for FRS 102 reporters in Ireland?

The revisions to FRS 102 (PR 24) brings revenue recognition more closely aligned with IFRS 15’s five-step model, with some simplifications. For businesses reporting under Irish GAAP, these changes could affect both the timing and amount of revenue recognised, depending on the nature of customer contracts and current accounting policies. The requirements are effective for periods beginning on or after 1 January 2026, so now is the time to assess the impact on your financial statements, existing contracts and any arrangements that rely on financial information or KPIs.

How will this affect financial reporting?

Revenue will still be recognised either at a point in time or over time, but the revised model is more prescriptive in how customer contracts are analysed. In particular, entities will need to assess whether promises in a contract should be combined or separated and how the transaction price should be allocated across them.

The five-step model requires entities to:

1. identify customer contract(s);
2. identify the performance obligations in the contract;
3. determine the transaction price;
4. allocate the transaction price to the performance obligations; and
5. recognise revenue when, or as, the performance obligations are satisfied.

Although this may appear familiar, the detailed application can lead to very different revenue outcomes. The revised approach replaces some of the current distinctions between goods and services with a single framework focused on control and performance obligations. For some entities, this could materially change revenue profiles and related disclosures.

Areas likely to require closer attention include identifying performance obligations, licensing and royalty arrangements, non-refundable upfront fees, variable consideration including refunds, and customer options, warranties, rights of return and acceptance clauses. The revised requirements also introduce more detailed considerations around principal versus agent assessments, contract modifications, and the treatment of costs to obtain or fulfil a contract.

Disclosures will also expand. Businesses may need to provide more information on classes of revenue, the timing of recognition, unsatisfied performance obligations and significant judgements made in applying the standard. Entities can generally choose between full retrospective application and a modified transition approach, depending on their circumstances.

What should finance teams do first?

A practical starting point is to review the different types of customer contracts currently in place and identify which terms could affect the pattern of revenue recognition under the revised FRS 102 model. Finance teams should also consider whether future changes in products, services or commercial terms could introduce new accounting complexities. Early assessment can help avoid surprises later in the implementation process.

What impact could this have on systems and management information?

From our perspective, businesses should not assume this is solely a technical accounting exercise. Applying the revised revenue recognition model may require changes to reporting processes, data capture and management information systems, particularly where contracts contain multiple performance obligations or variable pricing features. Starting early gives businesses more time to design an implementation plan, assess system readiness and align finance, operations and commercial teams around the changes.

What wider implementation issues should businesses consider?

Revenue is a critical metric in financial statements and often underpins tax, distributable reserves, lending covenants, earn-out arrangements and performance targets. For that reason, the impact of the revised FRS 102 model may extend beyond financial reporting into broader commercial decision-making. We would therefore encourage businesses to assess the likely effects early, identify any knock-on consequences for agreements and KPIs, and communicate with stakeholders in good time.

If you would like to discuss how the amendments to revenue recognition under FRS 102 might affect your business in Ireland, please get in touch with your usual RSM Ireland contact.