Parallel accounting bill presented to Commons

A BILL requiring companies to prepare two sets of accounts will have a second reading in the House of Commons next month.

The proposal would oblige certain financial institutions to account separately under International Financial Reporting Standards and UK GAAP, as well as marking to market for their exposures to derivatives.

The requirement has been justified on the basis of lower historic cost “and for connected purposes”. One source close to accounting standards said that the Bill is an effort to safeguard companies reporting under IFRS, which can obfuscate capital and liquidity holdings, potentially masking insolvency.

French accounts are already prepared under this dual system and Stella Fearnley, professor of accounting at Bournemouth University, said such a move can protect businesses and prevent them being forced to report under the globally developed standards.

Steve Baker MP is sponsoring the Bill and further details should be published in the next few days.