UK and Ireland Accounting Standards – ACCA says a single set of accounting principles is a priority ACCA wants to see the use of full IFRS and IFRS for Small and Medium Sized Enterprises (SMEs), with the phasing out of FRSSE.
BigNews.Biz - Feb 09,2010 - Convergence of accounting standards in the UK and Ireland is necessary so that all companies in these countries are reporting under single set of accounting principles, says ACCA (the Association of Chartered Certified Accountants) in its response to the Accounting Standards Board’s consultation on The Future of UK GAAP (Generally Accepted Accounting Principles.)
The global accountancy body believes there is little sense in maintaining the current system, where three tiers of accounting standards are in operation – International Financial Reporting Standards (IFRS), full UK and Ireland standards and Financial Reporting Standard for Smaller Entities (FRSSE).
Instead, ACCA wants to see the use of full IFRS and IFRS for Small and Medium Sized Enterprises (SMEs), with the phasing out of FRSSE.
Aziz Tayyebi, financial reporting officer at ACCA, says: “We have long supported the convergence of UK GAAP with IFRS. We appreciate there will be challenges and costs in adopting IFRS for SMEs as a replacement to UK GAAP. But the benefits will far outweigh these challenges.”
ACCA explains the benefits as follows:
• Comparability between the reports of listed and unlisted companies in the UK and Ireland,
• Comparability between reports of companies across jurisdictions, which would contribute to cross-border trade and ‘levelling of the playing field’
• The preparation of accounting information on a more consistent basis, helping to simplify internal reporting, and so reducing costs for companies
• Accountants preparing or auditing financial statements having to be familiar with only one basis for preparation, reducing scope for confusion and complexity
• The training and education of accountants and users being simplified by being based on a single system of financial reporting
• a saving of resources involved in maintaining a separate system of UK GAAP.
As well as looking at the accounting for the private sector, the ASB also propose a single standard for the public sector. ACCA do not see this is as the best way forward, given the wide ranging types of entities this would have to cover. Because of this, ACCA would prefer to see the not-for-profit and charity sector continue to use Statements of Recommended Practice (SORPs) which would need to be aligned to the revisions to UK GAAP.
Aziz Tayyebi concludes: “ACCA conducted field testing about IFRS for SMEs with a selection of companies using FRSSE. The findings showed few issues amongst SMEs regarding any transition from one reporting system to another. An adoption date of 2012 may seem a long time away, but we believe this is adequate time to deal with the legal issues surrounding these changes. For this reason, we believe IFRS for SMEs, with some key exemptions for small businesses, should be the way ahead.”
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