The Accounting Standards Board (ASB) has published a revised proposal on the future of financial reporting in the UK softening the current three tier reporting system following a consultation.
Under the latest exposure draft most companies – medium and large unlisted companies – will fall under FRED 48, which is a draft Financial Reporting Standard (FRS) based on amendments to IFRS for SMEs.
FRS replaces the pre-consultation proposal, which said those companies should follow EU adopted IFRS.
The ASB found little support for its original proposal and as a response drafted FRS.
This proposal will eliminate the current reporting requirements, which demand medium or large unlisted companies to report under full UK GAAP, which stretches 2,300 pages – the new FRS is covered on about 250 pages, a vast difference.
Under the ASB’s revised financial reporting proposal things remain unchanged for listed companies which are still required to report under IFRS and for small companies which will still report under FRSSE – unless EU accounting directive changes come to effect.
The draft is open for comment until 30 April 2012 and changes are expected to be adopted 1 January 2015.
The Institute of Chartered Accountants in England and Wales head of its Financial Reporting Faculty Nigel Sleigh-Johnson said fundamental changes to UK accounting is long overdue, “as the current UK rules are neither comprehensive nor coherent and sit uncomfortably alongside the parallel regime of IFRS”.
“Ultimately it is good news that the ASB has gone back to the drawing board, having recognised the constructive criticism of the last proposals. Many of the major issues we highlighted back then appear to have been addressed,” Sleigh-Johnson said.
Grant Thornton’s head of assurance Phil Crooks believes the move is an important step towards the much-needed modernisation and streamlining of UK accounting standards, which he called ‘cumbersome’ to use and ‘difficult’ to maintain.
“The decisions not to extend the use of IFRS and to amend the new UK standards to bring them closer to current practice will make these proposals less revolutionary, however the key objectives of the project should still be achieved,” he said.