TaxPersonal TaxStandards – E&Y restarts SOP row

Standards - E&Y restarts SOP row

Ernst & Young has reopened its battle with the Accounting Standards Board (ASB) over its Statement of Principles.

The row has simmered since 1996, when E&Y led the campaign against the ASB’s draft SOP. The board withdrew it and promised another version in 1997 after over 75% of responses were negative.

‘We are now in 1998, but there is no sign of the revised draft,’ wrote Nick Land, E&Y’s senior partner, in the firm’s latest salvo ‘Time for Action’.

‘Despite this, the ASB has published several further proposals that rely on the withdrawn exposure draft, as though its principles had been accepted.’

E&Y’s main argument is against the ASB’s effort to introduce current value accounting and the use of discounted values to show future amounts payable to creditors, for example on company pensions, on the balance sheet.

‘We’re trying to get the ASB to revive the debate before it’s too late,’ added E&Y technical partner Ron Paterson. ‘There are still standards due on tax, pensions and financial instruments as well as provisions and impairment – all of which depend on the framework.’

The firm’s report attacks FRED 14, the exposure draft on provisions, and FRS10: ‘Goodwill and Intangibles’ with illustrative examples of the ASB’s proposed fair-value techniques. E&Y advocates retaining the conventional approach of allocating transactions to the periods to which they belong using the accruals technique.

ASB assistant technical director Andrew Lennard said the revised SOP draft would be published later this year.

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