The European Commission has proposed that all listed companies in the European Union should be required to present IAS financial statements by 2005. Furthermore, the US Securities and Exchange Commission is likely to reduce the burden of US GAAP reconciliations for foreign issuers with IAS financial statements.
Given these and other developments, should the UK government require or allow UK companies to use IASs in place of UK standards? Should the Accounting Standards Board adopt all IASs as UK standards? The Convergence Handbook, a comparison between IASs and UK financial reporting requirements, which was published last week by the English ICA, seeks to answer these questions.
The handbook concludes that replacing all FRS with all IASs would undo much of the good work of the ASB. It would remove the requirement for a statement of total recognised gains and losses and the need for compliance with much of FRS 5 Reporting the Substance of Transactions. It would reinstate the flexibility to defer and amortise actuarial gains and losses and make more restructuring provisions on acquisitions. It would ban the UK form of cashflow statement, indefinite useful lives for goodwill and intangible assets, and the timing differences approach to deferred taxes.
As Sir Bryan Carsberg acknowledges in his foreword, the UK has a distinguished record in setting accounting standards. The handbook seeks to build on that record. It proposes the ASB should improve UK GAAP by adopting superior IAS requirements.
It also proposes that the IAS Committee should improve IAS by adopting superior UK requirements. It sets out a programme for the ASB and the IASC, and emphasises urgency on both sides. The ASB is treating the handbook as if it were an exposure draft; the comment deadline is 30 April 2001.
- David Cairns is a former secretary general of IASC. The Convergence Handbook is available from Jennifer Hay on 020 7920 8634
The second largest improvement in ‘significant’ levels of financial distress since the EU Referendum was in professional services, found research from Begbies Traynor
Just one half of UK practices have implemented a pricing structure around auto enrolment implementation and advice - with many suffering increased costs
Deloitte's north-west Europe foray; BDO, Smith & Williamson investment paths; Shelley Stock Hutter; and Wilkins Kennedy discussed by editor Kevin Reed on our Friday Afternoon Live broadcast
Accountants should alter their perspective on auto-enrolment to maximise business opportunities, according to Eric Clapton.