FRS 102 lease accounting software
LOIS automates FRS 102 Section 20 compliance for UK and Irish organisations: right-of-use asset calculations, full audit trails, and CA-qualified expert support.
Updated May 2026. FRS 102 Section 20 is effective for accounting periods beginning on or after 1 January 2026. This page covers what the standard requires, where compliance gets complicated, and how LOIS handles it.
From 1 January 2026, UK and Irish organisations must recognise most leases on their balance sheet under the updated FRS 102 standard. LOIS is a purpose-built lease accounting and management platform that automates FRS 102 Section 20 compliance, from right-of-use asset calculations to audit-ready reporting, supported by CA-qualified accountants who understand the standard in practice.
2017
In the market since
IFRS 16 + FRS 102
Standards supported
30 to 10,000+
Leases per portfolio
CA-qualified
Accountants on every team
What FRS 102 Section 20 requires from your finance team
Under the updated FRS 102 standard, effective 1 January 2026, UK and Irish lessees must recognise a right-of-use asset and a corresponding lease liability for almost every lease in their portfolio. The single operating-expense line disappears. In its place: depreciation on the asset and interest on the liability, both tracked separately, every month, for every lease in scope.
The scope of what counts as a lease has also widened. FRS 102 now requires organisations to look beyond labelled lease contracts and identify leases embedded within service agreements. If there is an identified asset that your organisation controls and derives economic benefit from, it likely falls within scope. IT agreements, logistics arrangements, and outsourced service contracts all deserve a second look.
Short-term leases (under 12 months) and assets below a defined low-value threshold remain exempt. For most mid-market and enterprise organisations, though, the majority of the portfolio will need to come onto the balance sheet.
FRS 102 Section 20 (from January 2026) aligns UK and Irish lease accounting with IFRS 16. Most leases must now be recognised on the balance sheet, with a right-of-use asset and lease liability replacing the single operating-expense entry. Organisations that have already worked through IFRS 16 will recognise the model; those that have not are starting from scratch.
The financial statement impact is real. EBITDA will increase for most organisations, because what was once a simple lease payment now sits below that line. Reported liabilities rise as well, which can affect debt covenants, credit assessments, and how investors read the balance sheet. These are structural changes, not presentation choices, and they need to be planned for carefully.
For a deeper breakdown of the accounting mechanics, including how the ROU asset is initially measured and depreciated, see our plain-English guide to FRS 102 right-of-use assets.
Where FRS 102 compliance gets complicated
LOIS has supported organisations through major accounting standard transitions since IFRS 16 in 2019. The same pattern appears each time: teams handle the initial transition well, then the real pressure builds in the months that follow. FRS 102 will be no different. Six failure points appear consistently.
Ongoing lease modifications: Every extension, rent change, early termination, or scope reduction triggers a remeasurement, making modifications a continuous accounting obligation across every lease, every period rather than a one-off task at transition. Without a system that handles them automatically, the workload compounds fast.
Data scattered across departments: Property teams hold lease event data while finance holds the accounting. When these live in different systems or separate spreadsheets across periods, the versions diverge. Month-end becomes a reconciliation exercise before the compliance work has even started.
Audit scrutiny on process, not just numbers: Auditors under FRS 102 will follow the same pattern seen with IFRS 16: they examine how decisions were made, how changes were tracked, and how consistency was applied over time. A correct answer without a demonstrable process does not satisfy the audit. The trail matters as much as the number.
Key person dependency: When knowledge of how lease calculations work sits with one or two individuals rather than embedded in a system, the organisation is exposed. People leave, go on leave, or hand over mid-year. Reconstructing historical decisions from memory or fragmented files is far harder than it looks on paper.
Embedded leases in service contracts: FRS 102 requires organisations to identify leases inside service contracts that finance teams have not traditionally reviewed. IT agreements, outsourcing arrangements, and equipment contracts may all contain in-scope leases. Missing them is a compliance failure, not a technical oversight.
Spreadsheets under increased pressure: Spreadsheets can handle a small portfolio at transition. They struggle when modifications accumulate, when multiple contributors are involved, and when auditors ask for version history. The control environment sits outside the tool, relying on discipline rather than system-enforced rules.
For a step-by-step plan covering the full transition, see the FRS 102 Section 20 transition checklist for finance teams.
How LOIS handles FRS 102 compliance
LOIS automates FRS 102 Section 20 calculations across the income statement, balance sheet, and cash flow statement, handling everything from initial recognition to monthly remeasurement and audit-ready disclosure packs. The platform is built and supported by CA-qualified accountants who understand the standard in practice, so the finance controller who runs month-end close is working with a system designed around the decisions they actually face.
| Capability | What it means for your team |
|---|---|
| Automated ROU asset and liability calculations | LOIS calculates initial recognition, subsequent depreciation, and remeasurement. No manual formulas, no version risk, no month-end recalculation from scratch. |
| Full modification and reassessment tracking | Every extension, rent change, scope reduction, and early termination is captured and processed with the correct accounting treatment. Once entered, LOIS can action the appropriate remeasurement without manual recalculation. |
| Complete audit trail | Every change, input, and decision is logged against a timestamped record. Auditors can see exactly how each number was arrived at, and who actioned it. Audit conversations become shorter and less costly. |
| General ledger integration | LOIS connects directly with your existing ERP, automating journal posting and reconciliation. Month-end close is controlled rather than manual, and the GL stays in step with the lease register. |
| Unified finance and property data | Property and finance teams work from the same data in one platform. Lease events from the property side, such as rent review dates and renewal options, feed directly into the accounting calculations. |
| Automated disclosures and reporting packs | LOIS generates the disclosure notes, amortisation schedules, and reporting packs needed for FRS 102 compliance. Reports are audit-ready by default, not assembled manually after the numbers are done. |
| Scalable from 30 to 10,000+ leases | Whether your organisation has 50 leases or a complex portfolio of thousands, LOIS handles the volume without the process breaking down. Standardised upload templates mean fast data loading at any scale. |
How CA-qualified expertise changes FRS 102 outcomes
Where most lease accounting software is built by software developers with accounting knowledge added after the fact, LOIS is built and supported by CA-qualified lease accounting experts from the ground up. That difference shows up every time a complex judgement call is needed: a lease modification that does not fit a standard template, an embedded lease that requires interpretation, a discount rate that needs to be defended to an auditor.
The platform reflects real-world accounting knowledge accumulated across hundreds of IFRS 16 and FRS 102 implementations. Working with accounting firms across the UK and Australia, LOIS has supported finance teams through major accounting standard transitions and understands where the complexity builds and where the audit pressure lands.
"FRS 102 introduces similar pressures to IFRS 16. Training explains the accounting requirements. Transition tests whether systems and technical support can sustain defensible reporting when complexity increases and scrutiny intensifies."
Drawing on LOIS experience from IFRS 16 implementations since 2017
When organisations choose LOIS, they are not buying software and then working out FRS 102 compliance on their own. They are working with leasing specialists who understand the standard and will guide the team through the judgements and decisions that arise during and after transition.
Do you need a managed service for FRS 102?
The LOIS managed service is suited to organisations where lease accounting is complex, in-house resource is limited, or the risk of errors carries real consequences: a finance team running 400 leases across multiple property types, with modifications arriving every month and auditors asking for documentation of every decision. For organisations with sufficient capacity and expertise, the LOIS platform handles FRS 102 compliance in-house. For those who need more, LOIS experts validate the data, run the calculations, and deliver fully reconciled, audit-ready outputs each month.
Learn more about the LOIS managed service.