THE CONSULTATION on international financial reporting standards for SMEs concludes at the end of April, and the signs point to change on the horizon.
Stakeholders were first invited to comment on the Accounting Standards Board’s consultation document in October. Chairman Roger Marshall said around 20 written replies have been received so far.
However, the body has also been doing “lots of outreach”, bringing up the issue of SME reporting rules at around 35 meetings, and receiving plenty of oral feedback.
“The replies always come flooding in right at the end, we are confident that the response will be good”. Marshall revealed there is general support for the main thrust of the document, which proposes a three-tier framework where listed companies keep IFRS and the smallest outfits stick to the FRSSE standard.
Up until now, the draft IFRS for SMEs has been known as FRSME, but Marshall revealed its name is set to change. More material alterations are likely to centre on attempts to simplify the standards by removing some of the options available under full IFRS. These include revaluation and development cost capitalisation, and some FRSME users are fighting for the right to retain these accounting tools.
Kathryn Cearns, technical accountant at Herbert Smith, is confident that the ASB stands ready to make concrete alterations to the draft proposals. She said some of the changes already made – such as reduced disclosure for group subsidiaries – are a “big step” in the right direction, saying subsequent amendments could see increased flexibility on this issue.
Members of the profession also seem to favour change, as a new report from ACCA shows 93% of almost 700 accountants want to see the old UK GAAP merge with IFRS. As one of the most internationally active of the institutes, this is perhaps unsurprising, but the study also uncovered firm support for fazing out FRSSE in favour of IFRS for SMEs.
Cearns shares this interest in the future of reporting standards for micro-companies, and has urged the ASB to launch a consultation on the future of FRSEE as soon as possible. An online poll by the ICAEW showed a significant proportion are in favour of a single set of standards for all non-listed companies, and Cearns said these are generally the better informed members of the industry, especially those who have been involved in the FRSME consultation.
Stakeholders have until 30 April to comment; responses will be published in the summer, and the ASB could have a new set of SME standards prepared by the end of the year.
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