IMPLEMENTATION OF REPORTING CHANGES cannot be delayed said two of the largest global firms.
Ernst & Young and Grant Thornton have responded to a consultation on draft proposals to change financial reporting requirements.
The two firms were united in urging the Accounting Standards Board (ASB), which issued the consultation in January, to stay on track and continue without delay with its plans to overhaul UK standards.
The firms warn any delay could incur substantial costs to companies which are readying themselves for the proposed changes.
Jake Green, director of national assurance services, Grant Thornton said: “There are companies that have been planning this transition for some time and further delay would mean more cost as they update their transition plans and review another updated set of proposals.”
Currently companies fall into three tiers to make their financial reports; the largest organisations in the UK use IFRS (International Financial Reporting Standards); SMEs file in UK GAAP; and micro entities in FRSSE (Financial Reporting Standards for Smaller Entities).
However, under the changes the middle tier will be called FRS and incorporate IFRS into UK GAAP.
Ernst & Young warned that if a delay is likely around the introduction of FRS, then companies should be given an option by the ASB to use IFRS – albeit with reduced disclosures.
“In our experience, many entities are interested in taking advantage of IFRS with reduced disclosures at the earliest opportunity,” said Ernst & Young in a statement.
“This brings consistent recognition and measurement principles to IFRS used for group reporting purposes, while reducing the burden of the disclosures required by full IFRS.”
The latest revision will see SMEs using FRS instead of UK GAAP. The ASB will take the best bits from IFRS and UK GAAP – most notably reducing the pages in the standard from a UK GAAP high of 2,500 to about 250 under the new requirement.
Grant Thornton said the ASB should “be bolder” in reducing the amount of disclosures required by smaller businesses.
The consultation closed on 30 April and a standard is due by the end of the year with rollout expected on 1 January 2015.
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