MyCIMA

The End of the Road for UK GAAP

Posted: Thursday 13 August 2009 by Nick Topazio
Replies : 1
Category: Financial reporting
Keywords: IFRS, IFRS for SMEs, UK GAAP
Nick Topazio's picture

The Accounting Standards Boards's (ASB's) reaction to the new IFRS for SMEs, published by the IASB in July, is to propose withdrawing all FRSs and SSAPs.  Entities in the UK and Ireland would then be faced with using either IFRS as adopted by the EU, IFRS for SMEs or the existing Financial Reporting Standard for Smaller Entities (FRSSE).

The new framework would look like this:   

Tier Accounting Regime Type/Nature of Entities

1

EU adopted IFRS

EU listed – consolidated accounts; Alternative Investment Market; Irish Enterprise Exchange; Other publicly accountable including publicly accountable 100% subsidiaries

2

IFRS for SMEs

Non-publicly accountable entities

3

FRSSE

Small (as currently defined)

 

An entity would be publicly accountable if:

- it has debt or equity instruments traded in a public market or it is in the process of issuing such instruments, or

- the entity is a deposit-taking entity and/or holds assets in a fiduciary capacity for a broad range of outsiders as its primary business

The ASB's consultation paper "The Future of UK GAAP" sets out a useful comparison of IFRS for SMEs and UK GAAP and potentially there are some significant differences in the following areas:

Cash flow statement

Consolidated accounts

Business Combinations

Goodwill 

Financial Instruments

Deferred Tax

Investment Properties

Segment Reporting

Earnings per Share

The deadline for comments to the consultation paper is 1 February 2010.  Following consideration of the responses received the ASB’s intention is to publish an exposure draft outlining its recommendations for the future of UK GAAP with an anticipated transition date for financial years beginning on or after 1 January 2012. 

The consultation paper can be downloaded from the ASB website. CIMA will be responding and I am very keen to hear your views on the proposals

Death of UK (& Irish) GAAP

Posted by Adam McGrath on Friday 21 August 2009 15:11
I think this is a good thing, it doesn't make sense to have two different sets of standards in place - especially as the ASB essentially mirrors any new standards or amendments by the IASB. For people like me who work in preparing financials for different clients in line with different standards it'll also mean we only have to keep up to date with one set of standards! The big impacts for me are going to be the loss of the cash flow exemption under FRS 1, the switch to IAS 34 from the ASB Statement: Half Yearly Financial Reporting, and the different presentation requirements under IAS 1 compared to, say, FRS 3. A number of SORPs are also being removed under these proposals. After the transition year however I don't see that this change would present any problems. My personal professional view is that we should be responding favourably to this for Tier 1, although I don't do any SME reporting so don't have a view on Tier 2 or Tier 3.