Moves to adopt a two or three-tier system of financial reporting are being
considered in the UK.
Accounting Standards Board chairman Ian Mackintosh
told delegates at the ICAEW’s Financial Reporting conference that recent
roundtables in London, Edinburgh and Dublin revealed that the debate has moved
beyond the question of retaining two sets of GAAP.
‘The debate has now moved on to whether there should be a three-tier or
two-tier system of reporting in the UK and Ireland. A three-tier system would
see listed companies, and perhaps other large or important entities, applying
full IFRS; unlisted companies other than the smallest ones would apply the
IFRS for SMEs; and the smallest layer would continue to
apply the Financial Reporting Standard for Smaller Entities,’ said Mackintosh.
He said he personally favoured the three-tier system in practice because it
would be hard to tell smaller companies that they should adopt more complicated
‘The devil, of course, lies in the detail,’ said Mackintosh.
‘What would be the cut-off points for “publicly accountable entities” – the
ones that are not quoted but are important enough to warrant full IFRS treatment
– and between the SMEs that use the new IFRS and the littlest companies that
keep to the FRSSE? Nothing will be decided without full consultation and this
will take time,’ he said.
The International Accounting Standards Board is expected to finalise IFRS for
SMEs by the end of 2008.
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