Unveiling his thoughts on the future of financial reporting in the UK and its overlap with International Accounting Standards Committee, Tweedie told an ACCA conference last week that change was needed with more importance placed on the narrative attached to company accounts rather than the figures themselves. ‘Accountants must reflect what is going on in a company or we will become irrelevant,’ he said. Balance sheets would change dramatically over the next few years as several new initiatives are launched, including warned to lease accounting, derivatives, deferred tax and pensions costs, he said.A new FRS 3 is also due to appear by the summer of next year which will galvanise the movement to produce a new single performance statement. It will seek to merge the current profit and loss account with the statement of recognised gains and losses.This will show three types of entries – operations, financing and treasury activities such as interest and derivatives, and other gains and losses such as revaluations. ‘We must get away from looking at numbers and start analysing what they mean,’ said Tweedie.’The operating and financial review will also become more important. This is financial communication rather than financial reporting as the narrative become more important and the figures can be used to check back and see if the statement is true,’ he added.
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