However, the preface was broadly welcomed by the profession, as it reaffirms the International Accounting Standards Board’s commitment to a principles-based approach.
But, previously, the preface stated that immaterial items, such as a contingent liability worth £20, did not need to be accounted for since they had little effect on the accounts. This statement has now been omitted without prior consultation among the profession.
Peter Holgate, senior technical partner at PricewaterhouseCoopers, said: ‘It’s quite troubling. It’s important to get good standards with good rules, but it’s important not to waste time on something that’s not important.’
He said it was bad news on a practical level creating more work with ‘no appreciable effect’.
Brian Shearer, a technical expert at Grant Thornton, said: ‘It’ll give people a lot more work trying to work out if you have to disclose a lot more information about things that won’t have an effect. I think that’s a very confusing message to give.’
Holgate also pointed out that it could lead to unwitting breaches of international accounting standards by preparers.
The IASB said it recognised it was something that needs to be addressed soon, but said the preface was not the appropriate place to deal with the issue.
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