UK: the future of financial reporting in the UK and Ireland

The Accounting Standards Board, part of the Financial Reporting Council, has today published far reaching proposals for a three-tier financial reporting framework, the aim of which, it states, is to "balance the needs of preparers and users of accounts". The framework will be based on three sets of standards: IFRS (tier 1), FRSME (tier 2) and FRSSE (tier 3).  Here is an overview of the new framework (taken from the ASB's press release, available here).

Quoted groups will continue to report under international financial reporting standards (IFRS), as adopted by the EU. They would be joined in Tier 1 by other companies that are publicly accountable. This would apply if their debt [or equity] is traded on public markets, or if they hold deposits or manage other people’s money. (Some very small financial institutions would be exempt.) The smallest companies will continue to use the simplified version of UK standards, known as the FRSSE. Those in between would report under a new standard based on the IFRS for SMEs, which is considerably shorter and less complicated than current UK standards. The FRSME, as it would be called, would be modified to comply with UK and EU law and to ease tax reporting. It runs to about 400 pages".

For further information see the Financial Reporting Exposure Draft available here (part 1: explanation, pdf), here (part 2: draft standards, pdf) and here (appendices, pdf) and a key facts document available here (pdf).