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ASB financial reporting proposals backed by ICAEW
Accountancy News |
02/02/2012
The Accounting Standards Board (ASB) of the Financial Reporting Council has set out revised proposals for the future of financial reporting in the UK.
New proposals recommend replacing all current accounting standards with a single financial reporting standard (FRS), which will reduce the volume of guidance from around 2,500 pages to 250 pages.
It is also recommending the introduction of a reduced disclosure framework, which permits certain entities to apply the measurement and recognition requirements of EU-adopted international financial reporting standards (IFRS) with reduced disclosures.
And the ASB plans to retain the financial reporting standard for smaller entities, in order to make life easier for local enterprises.
Following feedback to its previous exposure drafts, the ASB is also proposing to eliminate the tier system, and introduce accounting treatments permitted under current accounting standards.
The ASB wants the revised proposals to take effect for accounting periods beginning on or after January 1st 2015 with earlier adoption permitted.
Roger Marshall, chairman of the ASB, said that in developing the new exposure drafts, the board has listened carefully to the many responses to its proposals.
"The elimination of the tier structure means that the application of EU-adopted IFRS is not extended beyond its current boundaries," he stated.
"The proposals now fit better with current reporting needs in the UK and Republic of Ireland and will ease its application."
Responding to the ASB publication, Dr Nigel Sleigh-Johnson, head of the Financial Reporting Faculty at the Institute of Chartered Accountants in England and Wales (ICAEW), said fundamental change to UK accounting is "long overdue".
"The current UK rules are neither comprehensive nor coherent, and sit uncomfortably alongside the parallel regime of IFRS," he commented.
"The proposals published today represent a second attempt by the ASB to get the new standards just right, following feedback on the previous proposals, published in October 2010."
Mr Sleigh-Johnson said it was "good news" that the ASB has gone back to the drawing board, having acknowledged constructive criticism of the last proposals.
"Many of the major issues we highlighted back then appear to have been addressed," he added.
But Mr Sleigh-Johnson said there is still a lack of certainty over what will happen to the reporting requirements for small companies, which make up the vast majority of UK business.
The European Commission is currently consulting on a simplified regime for such firms.
"At present no-one without a crystal ball can be sure what the final implications of this for the UK will be," he commented.
"Looking to finalise a radical new regime for medium and large private companies without having clarity on the shape of the future regime for small companies is clearly not ideal."
Posted by Jon Aspinell
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