Youth culture: newly qualified accountants will bear the IFRS burden

It may fall onto the shoulders of the newest accounting recruits to guide the way through UK businesses’ adoption of new international accounting rules for unlisted companies.

Senior accounting figures will have to turn to their younger employees to educate them on new International Financial Reporting Standards (IFRS) when the UK makes the transition to new accounting rules next year.

The Accounting Standards Board (ASB) is in the process of deciding how to roll out IFRS for SMEs, which will be implemented for unlisted companies not classified as micro-entities.

Mid-tier and small accounting firms will have to retrain their staff to bring them up to speed with the new standards, and in doing so will likely turn to their newest graduates recently educated in the principles and concepts that underly IFRS. Anthony Harris, partner with Oxford-based accounting firm Critchleys, said he was drawing on the expertise of his younger employees to comprehend the new standards.

“They are more up to speed than the old codgers like me,” he said. “I have one of the chaps, who qualified last year, who is helping me on a presentation.”

Danielle Stewart, partner at mid-tier firm Baker Tilly and member of the ICAEW Financial Reporting Committee, said accountants need to be thinking about retraining staff now.

“Firms will be very reliant on their youth,” she said. “People need to wake up and smell the roses – it really is a fundamental change to UK GAAP…

“It means we are going to be suddenly able to converse with countries all over the world in financial speak.”

She estimates the transition cost will come to £1,000 for clients making the change, but believes the expense will be worth it.

“In such an internet-linked world, global trading is becoming increasingly common – even for very small companies,” she said.

The IFRS for SMEs standards, released in July 2009, are aimed at improving access to international capital by providing a consistent accounting platform for unlisted companies, estimated to make up 95% of the world’s businesses.

The ASB has been consulting on the subject since April 2004. In August 2009 it released a policy proposal on the subject and is still encouraging businesses to provide feedback on its plans.

Ian Mackintosh, chairman of the ASB, believes the transition will not cause too much of a headache for UK accounting firms. “I don’t think it will take all that much for anyone to get up to speed with it but, obviously, younger people who have been educated in IFRS might have a head start,” he said.

Marianne Mau, technical manager at the ICAEW’s financial reporting faculty, said smaller accounting firms should start thinking about retraining once there is more certainty on the final form of the rules. An exposure draft is due in late October. “In terms of when they should start [retraining] it is difficult to say,” she said.

She said that recently trained accountants will be better prepared for the new rules.
“It’s fair to say that those that have been qualified for longer are perhaps not as conversant in full IFRS, but one must not underestimate the training for everyone involved – it is still a different standard for full IFRS,” she said.

Further reading:

Leader: it's time for teamwork?

frc.org.uk