THE HEAD of the ICAEW’s financial reporting faculty has warned that the revised proposals for future financial reporting in the UK fail to provide certainty around reporting for small companies.
Under the new proposals the ASB will retain FRSSE for micro entities but will need to update it following the European Commission’s planned changes to the accounting requirements for smaller entities.
The EC’s new accounting directive will give member states an option to treat micro-entities as a separate category of company and to exempt them from certain accounting requirements.
“There is still unfortunately a lack of certainty over what will happen to the reporting requirements for small companies, which make up the vast majority of UK business, not least as the European Commission is currently consulting on a simplified regime for small and micro companies,” said Nigel Sleigh-Johnson, head of ICAEW’s financial reporting faculty.
“Looking to finalise a radical new regime for medium and large private companies without having clarity on the shape of the future regime for small companies is clearly not ideal.”
However, he welcomed the ASB’s decision to retain some aspects of UK GAAP, such as revaluation of tangible and intangible fixed assets, and capitalisation of borrowing costs and carrying forward certain development costs in the mid -tier accounting standard.
“We felt that too many of the options had been removed. The ASB has sensibly moved back,” Sleigh-Johnson told Accountancy Age.
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