FRSME: 'Get on with it,' says ASB

ASB technical director David Loweth and IASB chairman Sir David Tweedie urged UK accountants to stop dragging their feet over moving towards internationally based accounting principles.

Loweth unveiled the exposure draft of the new Financial Reporting Standard for Mid-Size Entities (FRSME) to a gathering of Scottish accountants including IASB chairman Sir David Tweedie on Monday.

Resisting calls from Grant Thornton and ICAS members in his audience to delay implementation of the draft even longer than the exposure draft’s suggested 2013 date, Loweth said, “We’ve been consulting for six years or more. It’s time we got on with it.”

On this point he had Sir David’s backing. According to The Scotsman, the IASB chairman chipped in, “People don't like change, but change has got to come to simplify and improve company reporting. If you can't please everyone, you can at least please yourself and crack on.”

In a public comment on FRSME, Grant Thornton called on the ASB to split the roll-out of the revised framework into two stages in the UK, so listed companies could to adopt IFRS with reduced disclosures for subsidiaries as soon as possible, while delaying introduction for private companies until 2015. Waiting for a second phase would allow more time for the economy to recover and let the IASB iron out weaknesses in the IFRS for SMEs.

“There are issues with some elements of the FRSME - particularly the tax treatment -  which need to be addressed, and changing accounting standards with a weak economy could prove an unwelcome distraction for private businesses,” said Phil Crooks, head of audit at Grant Thornton.

Having published a regulatory impact assessment as part of its Future of UK GAAP proposals, the ASB has come under fire for the £78.9m estimate of the cost of moving to the new standard. Loweth pointed out that the cost assessement goes into very specific detail on how the new standard will affect different sized companies.  “Some commentators appear to overlook that FRSME will bring down costs for many companies through more consistent reporting practices. Quantifying those benefits is much more difficult,” he said.

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Comments

Not a done deal

Edward Beale | | Permalink

The Key thing that David Loweth said at the meeting is that this is not a done deal.  If sufficient people express concerns about these proposals they will be changed.

It is interesting  how many of the large audit firms have already made up their minds.  I wonder how many of their clients are still using UK GAAP for parent company reporting?  It will obviously be useful for subsidiaries to be allowed reduced disclosure as an alternative to using UK GAAP.  Grant Thornton's idea of splitting the project into two warrants consideration.

This is an opportunity for the ASB to point out to the IASB what it has got wrong in the IFRS for SMEs.  Should the ASB be doing this?

 

 

 

John Stokdyk's picture

Useful insights

John Stokdyk | | Permalink

Thank you very much for this and your previous perceptive comments on FRSME and the future of UK GAAP, Edward.

We are certainly taking them on board, and hope our members are as well.

Steve Collings, our FRSME correspondent at this point, has updated his comparison of UK GAAP and IFRS for SMEs. It's in my in-tray now and will be posted shortly on the site. Are there any areas you might suggest that AccountingWEB members could focus their attention to most effect?

As we have done with several recent HMRC consultations, we may well compile the feedback into our own submission for the ASB.