Simpler accountancy standards 'on their way'

Date: 12th August 2009

An overhaul in the way in which small business accountants operate could be on the cards, with the release of a new discussion paper from the Accounting Standards Board (ASB).

One of the issues raised in the document is the potential future replacement of UK GAAP - the rules through which firms' bookkeeping and accounts should be dealt with by professionals - with an adaptation of the international standards.

Last month, the International ASB unveiled a new International Financial Reporting Standard (IFRS) specifically aimed at smaller firms.

In effect, the new standard is a simplified version of the IFRS which currently must by law be used by larger firms, including all companies listed on the stock exchange.

The ASB said in the paper that this adapted standard could play a "significant role" in future versions of UK GAAP.

Ian Mackintosh, chairman of the ASB, said: "For a number of years, the board has stated that, in the medium term, there is no case for the use of two different accounting frameworks in the UK.

"The recent publication by the IASB ... provides the board with the opportunity to consult on what we see as the future framework for financial reporting by UK and Irish entities."

Commenting on the move, Peter Holgate at professional services firm PricewaterhouseCoopers (PwC), said: "To base future UK practice on the IFRS ... makes sense for two reasons. Firstly, it gives the UK market something that is fit for purpose for entities that are not publicly accountable.

"Secondly, by recognising that the days of national accounting rules are largely over, it contributes to global harmonisation."

PwC figures suggest that the overall volume of disclosure requirements for the new small-firm IFRS is 80 per cent lower than full IFRS.

The ASB's proposals are open to comment until February 2010.