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ADVISORY
For many Irish sport’s governing bodies, membership fees, sponsorship income, competition entry fees, and education programmes form the backbone of annual revenue. However, from accounting periods beginning on or after 1 January 2026, the revised Section 23 of FRS 102 will introduce a fundamentally different approach to how much of that income can be recognised and, crucially, when it can be recognised.
The changes bring UK and Irish GAAP closer to international accounting standards by introducing a structured five-step model based on the transfer of goods and services to customers. While cash receipts may remain unchanged, the timing of revenue recognition could differ significantly from current practice, potentially affecting reported surpluses, deferred income balances and year-end financial results.
For Irish National Governing Bodies (NGBs), sporting charities, and representative associations with a 31 December year-end, the first financial statements impacted will be those for the year ending 31 December 2026. Organisations should begin reviewing contracts, membership arrangements, and sponsorship agreements now to understand where changes may be required and to avoid unexpected adjustments during the audit process.
Key Changes
Why Does This Matter?
Many sports organisations receive income from a variety of sources, including:
Under the current version of FRS 102, many of these income streams have traditionally been recognised when invoiced, received or earned according to established accounting policies.
The revised Section 23 introduces a more structured approach that focuses on the transfer of goods and services to customers.
As a result, the timing of revenue recognition may change for many organisations.
The New Five-Step Revenue Model
The revised Section 23 requires organisations to apply a five-step model:
1. Identify the Contract
Organisations must determine whether a valid contract exists and understand the rights and obligations of each party.
2. Identify Performance Obligations
Each contract must be reviewed to determine exactly what goods or services are being promised.
3. Determine the Transaction Price
The total consideration expected to be received under the contract must be established.
4. Allocate the Transaction Price
Where multiple services are provided, the income may need to be allocated across those services.
5. Recognise Revenue When Performance Obligations Are Satisfied
Revenue is recognised when control of the promised goods or services transfers to the customer.
This may occur at a point in time or over a period of time.
Areas Most Likely to Affect Sports Governing Bodies
Membership and Affiliation Income
Membership subscriptions and club affiliation fees are a key source of income for many Irish National Governing Bodies.
Under the revised Section 23, income cannot simply be recognised when invoiced or when cash is received. Instead, revenue can only be recognised when the related goods or services have been transferred to the member and the performance obligation has been satisfied.
For many sports organisations, membership provides access to a range of benefits throughout the membership period, such as competition eligibility, insurance cover, governance support, training resources and member services. As these benefits are consumed over time, the related income is typically recognised over the period in which those services are provided.
This means that where memberships or affiliations extend beyond the reporting date, a portion of the income received will be deferred into the following period and shown as deferred income on the balance sheet until the associated services have been delivered.
For example, if an NGB with a financial year end of 31st December 2026 receives annual affiliation fees in September 2026 covering the period to 31st August 2027, revenue would generally be recognised throughout the 12 months as clubs and members consume the benefits provided by the organisation. At the 31st December 2026, the affiliation income relating to the period from 1st Jan 2027 to 31st August 2027 will be deferred into the financial year ended 31st December 2027. Recognition of this income is deferred until those benefits are consumed by its members.
As a result, organisations should review the specific rights and services attached to their membership and affiliation arrangements to ensure that revenue recognition aligns with when those benefits are consumed by members, rather than when payment is received.
This may result in increased deferred income balances and require governing bodies to revisit existing revenue recognition policies ahead of their 31 December 2026 year-end.
Sponsorship Agreements
Sponsorship contracts are likely to be one of the areas most affected by the new requirements.
A sponsorship arrangement may include several obligations, such as:
Previously, organisations may have recognised sponsorship income evenly over the contract period.
Under the revised Section 23, each component may need to be assessed separately, with revenue recognised as each obligation is fulfilled.
Events and Competitions
Entry fees for championships, leagues and tournaments may require closer examination.
Organisations will need to determine when the underlying service is delivered and whether revenue should be recognised at registration, during the event period or upon completion.
Education and Training Programmes
Many governing bodies generate income through:
Where programmes are delivered over several months, revenue may need to be recognised progressively as training services are provided.
What About Grant Funding?
While grant income is generally addressed under separate provisions of FRS 102, sports organisations should carefully review funding agreements to determine whether any aspects of the revised revenue standard apply.
Particular attention should be paid to agreements where funding is linked to specific deliverables, performance targets, or contractual obligations.
Early discussions with auditors and advisers are recommended where arrangements are complex.
Practical Steps to Take During 2026
Review Existing Contracts
Identify contracts that contain multiple deliverables or obligations.
Priority should be given to:
Assess Current Accounting Policies
Determine whether existing revenue recognition policies remain appropriate under the revised standard.
Engage with Auditors Early
Many of the new requirements involve significant judgement. Early engagement can help avoid surprises during the year-end audit process.
Educate Boards and Finance Committees
The changes may affect reported results even where cash flows remain unchanged.
Boards should understand that changes in annual surpluses may arise from accounting timing differences rather than operational performance.
Looking Ahead
The revised Section 23 will require Irish Sports Governing Bodies to take a more detailed and contract-focused approach to revenue recognition.
While some organisations may experience only limited changes, others—particularly those with significant sponsorship income, membership programmes, or commercial arrangements—could see a material impact on the timing of revenue recognition and reported financial performance.
The key message for sports organisations is simple: do not wait until the 2026 year-end audit. A review of contracts, revenue streams, and accounting policies during 2026 will help ensure a smooth transition and minimise the risk of unexpected adjustments.
For many Irish NGBs, the implementation of revised Section 23 will be as much a governance and operational exercise as it is an accounting change.
If you need advice on the above changes or in relation OSK's audit and accountancy services please contact, Deirdre McDermott mcdermottd@osk.ie.
OSK is the official Audit and Accounting partner of the Federation of Irish Sport (FIS) and the preferred supplier of these services to the Federation’s members.
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