Accountancy software providers have
much at stake when the UK Accounting Standards Board (ASB) releases
its plans for the future of UK financial reporting in the next
couple of months.
An unfavourable outcome for the
software providers could lead to reduced competition and increased
costs for their accounting firm clients.
The ASB’s draft proposals, released
in mid-2009, would see most entities that currently use UK GAAP
move to IFRS for SMEs. The proposed time frame would see the
changes effective for financial years beginning on or after 1
January 2012.
The change from UK GAAP to IFRS for
SMEs would come at a particularly bad time for software providers
because they have been working for a couple of years to create
products that allow UK GAAP to be tagged using iXBRL.
iXBRL is an electronic tagging
system for financial information. The UK Revenue & Customs
(HMRC) has made it mandatory for corporate tax purposes from March
2011.
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By GlobalDataIRIS Accountancy Practice Solutions
managing director Phill Robinson said IRIS completed that work on
UK GAAP, which was a seven-figure investment over the past couple
of years, at the behest of HMRC.
“Now you have got another body, the
Accounting Standards Board, saying we are going to introduce IFRS.
So all the work you have spent the last years doing is going to be
thrown away… and we have to do the work again, spend more money on
putting iXBRL into IFRS for SMEs,” Robinson said.
The burden of creating a product
that tags financial statements prepared under IFRS for SMEs with
iXBRL could be fatal for some software companies, reducing
competition among the companies that serve the accounting
profession.
The extra work would also flow into
more costs for accounting firm clients.
“Some of the smaller software vendors are creaking at the seams
just trying to do iXBRL for UK GAAP,” Robinson warned. “If you turn
around and say to them ‘throw away all that work you have done,
we’re going to start again and use IFRS’, that could be the straw
that breaks the camel’s back for some of the smaller guys.”
