ASB has listened during the consultation process on the future of UK accounting, say experts
SENIOR ADVISORS have welcomed the “less revolutionary” changes to the UK’s accounting standards.
The proposals by the ASB include not extending the use of IFRS to other ‘publically accountable’ bodies. It has also attempted to allay fears that IFRS for SMEs in place of UK GAAP would be too simplistic, by looking to retain some aspects of UK GAAP in a mid0tier standard known as FRS.
Deloitte senior partner Isobel Sharp said the ASB had taken on the key criticisms of its earlier proposals. However, it would need to demonstrate that it could make a mix of UK GAAP and IFRS for SMEs work.
“The challenge for the ASB is to demonstrate that this proposal is a fine blend and not a stodgy pudding,” said Sharp.
Grant Thornton head of assurance Phil Crooks said the changes, while “less revolutionary” would not deflect from the project’s objective of updating UK accounting standards – but needed top be made quickly or risk being seen as slow to react.
Crooks said: “The ASB is seizing the chance to rationalise and restructure the framework, and bring accounting up to date with the modern business environment.
“The timetable has been laid out and we urge the ASB to avoid further delay, which would risk the project being overtaken by changes in international standards and could result in UK GAAP losing credibility by being seen as slow to react to the changing world around us.”
Crooks also welcomed the ASB’s proposal to ease reporting requirements for large company subsidiaries under IFRS.
“The potential for significant cost savings for large and listed businesses from the ASB’s proposed option of IFRS with reduced disclosures will also provide welcome relief.
“This option will result in a reduction in reporting burdens for business by streamlining the group reporting process through the use of consistent accounting, while removing unnecessary disclosures from parent and subsidiary company accounts.”
PwC welcomed the move by the ASB to allow financial institutions to apply new GAAP rather than moving to IFRS.
“Some financial institutions will now be allowed to apply the new GAAP rather than having to move to International Financial Reporting Standards (IFRS),” said PwC partner Iain Selfridge.
“Increasing the scope of companies that can use the revised UK GAAP is a sensible policy choice by the ASB. It will not impede the quality of financial reporting. But it will provide welcome relief for many companies in this economic climate, given the time and cost burden of producing accounts under full IFRS for the first time.”