The Accounting Standards Board has today published for consultation a policy proposal concerning the future of UK Generally Accepted Accounting Practice (GAAP) and its convergence with International Financial Reporting Standards (IFRS). The ASB is proposing substantial and wide ranging change through the creation of a three tier framework as follows:- Tier 1 - publicly accountable entities [including listed companies] to apply the IFRS as adopted by the EU.
- Tier 2 – all other UK entities other than those who can apply the ASB's Financial Reporting Standard for Smaller Entities (FRSSE) to apply the IFRS for SMEs.
- Tier 3 – small entities to apply the ASB's FRSSE.
... are intended to apply to all entities, other than those in the public sector, in the United Kingdom and the Republic of Ireland that are required to prepare financial statements that give a ‘true and fair’ view. That includes companies and other corporate structures in both the for profit and public benefit entity (also known as not-for-profit) sectors. They therefore encompass all the entities that are currently required to apply UK GAAP including those that presently apply the industry-specific guidance contained in the Statements of Recommended Practice (SORPs). It excludes those public sector entities for which government directly sets financial reporting requirements. We acknowledge the scale of such a proposal but consistent with our ambition we want to take this opportunity to deal with UK GAAP in a comprehensive manner to ensure reporting requirements are effective but simplified and produce more relevant, comparable and understandable information.
This will be a significant step in creating a common financial reporting language in the UK and the Republic of Ireland. In the Board’s view, it will potentially reduce costs of compliance with complicated financial reporting requirements and assist those who rely on published".
The consultation period ends on 1 February 2010.
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