The largest step is usually from small to medium. A qualifying small company can use the small companies' regime and FRS 102 Section 1A; once that regime is no longer available, the company moves to the full presentation and disclosure requirements of FRS 102, subject to any other exemptions for which it qualifies. The move from medium to large is different: the company is already applying full FRS 102, so the additional requirements arise mainly from specific Companies Act and associated reporting provisions rather than from another wholesale change in the accounting standard.
This article reflects the position at 27 August 2026, including the principal FRS 102 Periodic Review 2024 amendments effective for accounting periods beginning on or after 1 January 2026. That effective date is important when considering the reporting requirements applicable to companies moving between size categories. The current edition of FRS 102 incorporates the Periodic Review 2024 changes, whose principal effective date is 1 January 2026.
1. Moving from small to medium
Section 1A falls away, but this is mainly a presentation and disclosure change
A small company applying Section 1A is still applying FRS 102. It is not using a fundamentally different recognition and measurement framework. Section 1A provides a proportionate presentation and disclosure regime for small entities.
Under the current standard, a Section 1A company is specifically relieved from complying with Sections 4 to 7, covering the detailed presentation requirements for the statement of financial position, statement of comprehensive income, statement of changes in equity and cash flow statement. Its required complete set instead comprises a statement of financial position, an income statement and notes, although additional statements may be necessary to achieve a true and fair view. FRS 102 paragraphs 1A.7A–1A.9 make that distinction explicit.
Once the company becomes medium-sized, Section 1A is no longer available. The company therefore applies the normal presentation and disclosure provisions of FRS 102. That does not, however, mean every disclosure in a full FRS 102 checklist automatically appears in every medium-sized company's accounts: materiality still applies to FRS 102 disclosures where appropriate, individual companies may qualify for the reduced disclosure framework in paragraph 1.12, and some Companies Act requirements contain specific medium-sized exemptions.
A cash flow statement normally becomes part of the accounts
This is one of the clearest practical changes.
A Section 1A small entity is exempt from Section 7. For an entity applying full FRS 102, paragraph 3.17 includes a statement of cash flows in the complete set of financial statements, and paragraph 7.3 requires cash flows to be classified between operating, investing and financing activities.
Accordingly, a company moving from small to medium should normally expect to prepare a cash flow statement for the first time.
There are important exceptions. In particular, an eligible qualifying entity preparing individual financial statements may use the reduced disclosure exemption in FRS 102 paragraph 1.12(b), which includes exemption from Section 7. There are also narrow entity-specific exclusions in paragraph 7.1A. It would therefore be too broad to say that every medium-sized FRS 102 company must present a cash flow statement.
The equity statement moves onto the full FRS 102 basis
Section 1A does not automatically require a statement of changes in equity. It recognises instead that one may be needed where there are changes in equity other than profit or loss in order to give a true and fair view. Under Section 1A, the equity statement is therefore not an automatic presentation requirement, although it may be necessary where required to achieve a true and fair view.
Full FRS 102 takes a different starting point. Paragraph 6.1 requires an entity to present its changes in equity, while paragraph 3.17 includes a statement of changes in equity in a complete set of financial statements. Where the specified conditions are met, the company can instead use a statement of income and retained earnings.
The practical consequence is that the equity movement needs to be considered as a formal primary-statement requirement rather than simply as an additional statement which may be necessary under the Section 1A true-and-fair assessment.
The note disclosure framework becomes substantially broader
The more significant preparation exercise is often in the notes.
A small company does not simply have "no disclosures" outside Appendix C. Current Section 1A requires, as a minimum, the Appendix C disclosures relevant to its transactions, events and circumstances, together with any additional information necessary for a true and fair view. Paragraph 1A.17 nevertheless confirms that a small entity is not otherwise specifically required to comply with the disclosure requirements of Sections 8 to 35.
A medium-sized company moves onto those full FRS 102 disclosure sections. The effect is therefore best described as a broader and more systematic disclosure framework, not as a list of individual notes that suddenly become mandatory in every case.
Two particularly visible examples are management judgements and estimation uncertainty. Under full FRS 102:
Paragraph 8.6 requires disclosure of judgements, other than estimates, that have the most significant effect on amounts recognised; and paragraph 8.7 requires information on key assumptions and other sources of estimation uncertainty where there is a significant risk of a material adjustment to assets or liabilities within the next financial year.
Section 1A is deliberately different. Its Appendix C requires accounting policies, but describes paragraph 8.6 judgement information more generally as information that may be useful to users, although specific judgement disclosures can still be required elsewhere, for example in the going-concern assessment.
This is a useful area to address early in the accounts process. Moving to medium may require finance teams to document significant accounting judgements and estimation uncertainty in a form suitable for external disclosure rather than only for the audit file.
Do not assume every detailed note first appears at medium
This is an area where simply comparing the disclosure requirements applicable to small and larger companies can give a misleading impression.
Section 1A was expanded as part of the Periodic Review 2024. For periods beginning on or after 1 January 2026, Appendix C now expressly includes, among other matters, disclosures relating to provisions and contingencies, leases, revenue performance obligations, current and deferred tax and related-party transactions. It also retains specific fair-value and financial-instrument disclosures.
Likewise, small companies already have substantial statutory fixed-asset disclosures: current Section 1A requires movements in fixed-asset classes and accumulated depreciation or impairment information.
It would therefore be inaccurate, under the current standard, to write that taxation, related parties, contingencies, fixed-asset notes or financial-instrument disclosures first become relevant when a company moves to medium. What changes is that the full applicable FRS 102 disclosure requirements replace the more targeted Section 1A framework.
Employee disclosures become more detailed
There is a clear Companies Act distinction here.
All companies, including small companies, must disclose the average number of employees. A company not subject to the small companies' regime must additionally disclose the average number within each category of employee. It must also disclose total staff costs, split between wages and salaries, social security costs and other pension costs. The legislation expressly excludes companies subject to the small companies' regime from those additional staff-cost disclosures.
Accordingly, the move to medium does not create the average employee-number note from scratch. It adds the employee-category analysis and the statutory staff-cost breakdown.
Auditor remuneration becomes a statutory note
There is a specific size distinction in the auditor-remuneration requirements: small companies benefit from a statutory exemption, while medium-sized companies are not exempt from the basic audit-fee disclosure.
This reflects the 2016 amendment to the auditor-remuneration regulations, which removed small companies from regulation 4. A medium-sized company therefore discloses the remuneration receivable by its auditor for the audit of its accounts, together with the further regulation 4 information where relevant.
The more extensive disclosure of fees for non-audit services is a separate large-company issue considered below.
A strategic report is normally required
Under the current Companies Act regime, a small company is exempt from preparing a strategic report. A medium-sized company is not. Companies House's current guidance consequently lists a strategic report as part of medium-sized accounts.
For a medium-sized company, the strategic report therefore introduces a fair review of the business, a description of the principal risks and uncertainties, and a balanced and comprehensive analysis of the development and performance of the business during the year and its position at year-end. To the extent necessary for that understanding, the analysis includes financial key performance indicators.
There is an important medium-sized exemption: the company need not provide the paragraph 414C(4) analysis insofar as it relates to non-financial information.
As at August 2026, the Government has announced an intention to exempt medium-sized private companies from the strategic-report requirement, but Companies House confirms that further legislation is still being prepared. It should not be treated as a current exemption.
A parent company may acquire a consolidation requirement
This is conditional, but potentially significant.
A parent subject to the small companies' regime may choose to prepare group accounts but is not obliged to do so merely because it is a parent. Section 399 reverses that starting point for companies outside the small regime: a parent must prepare group accounts unless one of the statutory exemptions applies. FRS 102 Section 1A reflects the same small-company position in paragraph 1A.21.
For a growing small parent, therefore, the first medium-sized reporting period should include an early assessment of whether consolidated financial statements will be required.
2. Moving from medium to large
The medium-to-large transition is narrower from an FRS 102 perspective. Both categories are already within the full FRS 102 presentation and disclosure regime. The additional work arises mainly where company law expressly exempts medium-sized companies or imposes requirements specifically on large companies.
Non-financial KPIs enter the strategic report
A medium-sized company's strategic report already contains the core business review, principal risks and financial KPI analysis. The additional change at large-company level is that the medium exemption from non-financial KPIs falls away.
Section 414C requires, where appropriate and to the extent necessary for an understanding of the company's development, performance or position, analysis using other KPIs, including information relating to environmental and employee matters. Section 414C(6) is the medium-sized exemption from that requirement.
The wording matters: this is not a requirement to publish an arbitrary catalogue of environmental or employee metrics. The statutory tests of necessity and appropriateness still apply.
A Section 172(1) statement becomes required
This is one of the clearest large-company-only changes.
Section 414CZA requires a strategic report to contain a Section 172(1) statement describing how the directors have had regard to the matters in sections 172(1)(a) to (f) when performing their duty to promote the success of the company. The legislation expressly disapplies that requirement where the company qualifies as medium-sized.
For an ordinary large private company, this is likely to be one of the most visible differences in the annual report following a size transition.
Auditor remuneration disclosure broadens again
At medium size, the statutory requirement is focused on remuneration for the audit of the company's accounts. Once the company is no longer small or medium-sized, regulation 5 requires substantially wider information, including remuneration receivable by the auditor or its associates for other services supplied to the company or its associates, subject to the detailed categories and exemptions in the Regulations.
The practical effect is that the finance team may need a more complete analysis of audit, audit-related and non-audit fees across the relevant group and auditor network, rather than simply obtaining the statutory audit fee.
Payment-practices reporting is now a large-company directors' report requirement
This is a relatively recent addition to the large-company reporting requirements. For financial years beginning on or after 1 January 2026, new provisions in Schedule 7 require large companies within scope to include information on supplier payment practices in the directors' report. This covers standard payment terms and changes to them, the average time taken to pay, percentages and amounts paid within specified time bands, and the percentage and amount of qualifying payments that were overdue. Medium-sized companies are outside the requirement. Group and subsidiary exemptions also apply.
For companies crossing into large status, this is a good example of information that needs to be captured operationally throughout the reporting period rather than reconstructed when the statutory accounts are drafted.
Large unquoted companies can enter the SECR regime
A large unquoted company is within the Streamlined Energy and Carbon Reporting (SECR) provisions in Schedule 7, subject to the detailed conditions and exemptions. The disclosures include UK energy use and associated greenhouse-gas emissions, methodology, an intensity ratio and energy-efficiency measures where applicable.
This does not mean every large company will produce the same SECR note. In particular, an unquoted company consuming 40,000 kWh or less during the relevant period can omit specified disclosures if it states that this is the reason, and group and serious-prejudice provisions also exist.
Becoming large does not automatically trigger every sustainability disclosure
Care is particularly important here.
The non-financial and sustainability information statement (NFSIS) and the statutory climate-related financial disclosures have their own scoping criteria. The FRC's current Companies Act scoping tables show that an ordinary large private company below the relevant additional thresholds is not brought into those regimes merely because it has moved from medium to large. Additional conditions involving, for example, company status, turnover and employee numbers must be considered.
The same principle applies to the separate corporate-governance-arrangements statement for companies of a particularly significant size. "Large" under the ordinary Companies Act size definition should not be used as shorthand for every enhanced corporate reporting regime.
Older employee and stakeholder-engagement requirements are no longer a current large-company difference
This is another area where using outdated reporting requirements can lead to an incorrect conclusion.
For financial years beginning on or after 6 April 2025, the Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 removed Parts 3 and 4 of Schedule 7, including the former directors' report provisions relating to disabled employees and engagement with employees, suppliers, customers and others.
Accordingly, those former directors' report requirements should not be presented as a current additional consequence of moving from medium to large. The Section 172 statement remains relevant for large companies, but that is a separate strategic-report requirement.
Some medium-sized legal exemptions do not produce an obvious additional FRS 102 note at large
Medium-sized Companies Act accounts retain certain statutory disclosure exemptions. Companies House notes, for example, exemptions relating to compliance with accounting standards and certain related-party information.
That does not automatically mean the financial statements visibly gain those notes only when the company becomes large. Full FRS 102 itself requires an explicit statement of compliance and contains related-party disclosure requirements. This interaction matters because a Companies Act exemption does not necessarily remove a separate disclosure requirement arising under FRS 102. For example, the statutory medium-sized company exemption needs to be considered separately from the related-party disclosure requirements in FRS 102 Section 33.
This distinction between a Companies Act exemption and the independent requirements of the accounting standard is important when identifying genuine medium-to-large changes.
3. Small vs medium vs large company accounts: practical comparison
| Area | Small company | Medium-sized company | Large company |
|---|---|---|---|
| FRS 102 disclosure regime | Section 1A available if eligible | Full FRS 102 presentation and disclosure requirements, subject to any qualifying-entity exemptions | Same full FRS 102 basis as medium |
| Cash flow statement | Exempt under Section 1A | Normally required; qualifying-entity and limited entity-specific exemptions may apply | Same as medium |
| Statement of changes in equity | Not automatically required under Section 1A, but may be necessary for a true and fair view | Required under full FRS 102, subject to the permitted statement of income and retained earnings alternative | Same as medium |
| Significant judgements / estimation uncertainty | Section 1A has a reduced framework; some specific disclosures remain mandatory | FRS 102 8.6 and 8.7 apply where their criteria are met | Same as medium |
| Employee information | Average total employees required | Average total plus employee categories; staff costs split into statutory categories | Same as medium |
| Auditor remuneration | Statutory small-company exemption | Audit remuneration disclosed | Wider auditor and auditor-associate service-fee disclosures apply, subject to detailed exemptions |
| Strategic report | Exempt | Required under current law | Required |
| Financial KPIs in strategic report | Not applicable while strategic-report exemption applies | Required to the extent necessary | Required to the extent necessary |
| Non-financial KPIs | Not applicable while strategic-report exemption applies | Specific medium-sized exemption | Required where appropriate and necessary under s414C |
| Section 172(1) statement | Not applicable while strategic-report exemption applies | Exempt | Required |
| Group accounts where company is a parent | Small-regime parent may choose not to consolidate | Consolidation required unless a statutory exemption applies | Same principle as medium |
| Payment practices in directors' report | Not within large-company requirement | Exempt | Required for financial years beginning on/after 1 January 2026, subject to applicable exemptions |
| SECR – unquoted company | Not applicable on size grounds | Not applicable on size grounds | Large unquoted companies in scope, subject to low-energy, group and other statutory exemptions |
| Companies House filing – current position | Can currently omit the profit and loss account and directors' report from the filed copy | All component parts must be delivered; a reduced P&L filing option is available | Full filing requirements apply |
The filing distinction in the final row concerns the copy delivered to Companies House, rather than what must be prepared for members. Companies House has announced further filing changes from 1 April 2028, so this aspect will need updating when those provisions take effect.
4. What finance teams should do before a size transition
The most useful way to approach a company-size transition is not to wait until the statutory accounts are being drafted and then compare last year's accounts to a longer disclosure checklist.
For a small company becoming medium-sized, the key preparation exercise is to identify the information needed to support full FRS 102 presentation and disclosure, the cash flow and equity statements, the more detailed employee and auditor-remuneration notes, the strategic report and, for a parent, any new consolidation requirement. The company's eligibility for the FRS 102 qualifying-entity disclosure exemptions should also be assessed rather than assuming that every full-FRS disclosure automatically applies.
For a medium-sized company becoming large, the accounting framework itself changes much less. The focus moves to the size-specific Companies Act reporting requirements: non-financial KPI analysis, the Section 172(1) statement, expanded auditor-remuneration disclosure and, for periods beginning from 2026, payment-practices reporting. Large unquoted companies should also assess SECR, while more specialised sustainability and governance requirements need to be scoped against their own thresholds rather than assumed to apply simply because the company is large.
In both cases, the practical point is the same: identify the transition before year-end and build the additional data requirements into the reporting timetable. Some information, particularly cash-flow classifications, narrative KPIs, supplier payment performance and energy data, is considerably easier to capture during the year than to reconstruct during the audit.