RegulationAccounting StandardsASB plans 12-month delay in roll out of new code for SMEs

ASB plans 12-month delay in roll out of new code for SMEs

Businesses have been given more time to prepare for the introduction of a new accounting code for SMEs

The UK accounting standard setter is set to take a tentative internal
decision to delay the introduction of a new accounting code for SMEs amid
concerns the original timetable gave little time for businesses to adjust.

Within the UK Accounting Standards Board (ASB) an initial decision to push
back its timetable by at least 12 months has been made in order to give
accountants and businesses more time to absorb new accounting rules, Accountancy
Age has learned.

Under the plan the switch over from current UK ­standards for SMEs to
inter­national standards will be delayed by about a year.

The switch to international rules will affect the accounting for more than
99% of UK-unlisted businesses. The ASB originally planned a switch date
beginning 1 January 2012, which would result in accountants to start using the
new rules on 1 January 2011.

The ASB released its proposals in August last year with most of the 155
respondents asking that the date be shifted.

“On balance we believe that it would be appropriate for the board to delay by
an ­additional nine to 12 months in order to allow entities slightly longer to
prepare and understand the impact on their accounts and business practices, with
the option of early adoption,” Brian Shearer, director of financial reporting at
Grant Thornton, said in his submission.

Asked whether the switchover date had been delayed, Ian Mackintosh, chairman
of ASB, said: “Many respondents felt that 2012 was too early and the board is
taking those responses seriously.”

A decision to delay would be greeted by smaller accounting firms and
businesses who were faced with switching their standards, while also fulfilling
new requirements by HM Revenue & Customs to file for the first time in
iXBRL, a tagged computer language.

Jonathan Russell, vice president of UK200 Group, which represents small and
medium-sized accounting firms, said they would support a postponement of the

start date.

“From our point of view the delay is welcome as it means another year before
we have to make all the changes,“ he said.

The ASB is also wrestling with the question of how to define an SME. In its
draft standards it refers to companies which are not publicly accountable.
Most respondents found it was public accountability, rather than size, which
should be the determinate of whether companies can adopt the new international
standards.

This may result in a situation where large non-listed com­panies such as
Virgin and John Lewis could use the same accounting standards as companies with
vastly smaller work forces and revenues.

The ASB plans to host an event later in the year to canvass opinion and will
work closely with the UK Department for Business, Innovation and Skills on the
issue in coming months.

IN OUR VIEW
It seems quite an easy and obvious move for the ASB to delay the
start date. There is no immediate need to switch from UK GAAP, and any move
which will ease the burden from accountants is likely to be welcomed. Next year
will likely be the year when accountants are coming to grips with new filing
requirements for HMRC. They don’t need an added burden of complying with a new
accounting system.

Further reading:

frc.org.uk/asb

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