Making the transition: IFRS for SMEs to UK GAAP

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In this article, Steve Collings outlines the notable differences between current UK GAAP and the proposed 'IFRS for SMEs' which will largely affect practitioners when this standard is introduced in the United Kingdom.

IFRS for SMEs is proposed to replace current UK GAAP in 2012 (although it's likely to be delayed) and is based on the principles in full IFRS, which have been heavily condensed in recognition of the standard's target audience. 

Looking at the proposed IFRS for SMEs, there are some notable differences which will affect practitioners who deal with those clients who could potentially fall under its scope.

Investment properties

Current GAAP (SSAP 19 Accounting for Investment Properties) requires investment properties to be carried in the balanc...

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About Steven Collings

collings

Steve Collings, FMAAT FCCA is the audit and technical partner at Leavitt Walmsley Associates Ltd where Steve trained and qualified.

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09th Jun 2010 10:46

IFRS for SMEs is not a done deal.

 The ASB is still deliberating on the future of UK GAAP and adoption of the IFRS for SMEs is not a done deal.  It is likely that changes will be made to the IFRs for SMEs before it is adopted as UK GAAP.  It is not too late to lobby for any changes that you think are needed.  

A useful comparison between current UK GAAP and the IFRS for SMEs has been published by ACCA and can be found at http://www.accaglobal.com/pubs/general/activities/library/financial_repo...

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By Anonymous
09th Jun 2010 10:55

IFRS
I've heard mixed stories on this. I've read FRSSE is going and I've also read that it might be staying. Does anyone know what's happening. A lot of course speakers are saying its a definate it is on its way and so are the various institutes.
Steve Collins article here says its coming in in 2012 but might be delayed. I've also been told the same thing. I think that's too soon.

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09th Jun 2010 11:00

Consultation
The consultation period ended earlier this year so I don't think you can lobby for any changes.

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09th Jun 2010 18:33

FRSSE

Hi,

IFRS for SMEs, in its current form, has not (as Edward Beale quite rightly states) been "set in stone" and the ASB are currently sifting through the responses to their consultation on the proposed future of UK GAAP (the consultation period closed on 1 February 2010).  I have been asked a lot about the differences between current GAAP and the proposed IFRS for SMEs by various interested parties, and have had discussions with AccountingWEB Editor's about it as well, hence the summary of the main GAAP differences.  The ASB should issue an Exposure Draft later in the year outlining their proposals, taking into consideration the feedback from their consultation.

Re the query about FRSSE - the proposal is for a 3-tier system with "very" small companies being able to continue to use FRSSE and the rest using IFRS for SMEs.  My main reservation on this is that FRSSE is based on current GAAP (a condensed version of FRS) and if current GAAP is consigned to the history books, then FRSSE will be based on a financial reporting framework which no longer exists so it will be interesting to see how the ASB go with this.  Also there are some accounting "mismatches" between FRSSE and IFRS for SMEs - a typical example being IFRS for SMEs prohibits revaluation of fixed (non-current) assets, whereas FRSSE (as it currently stands) allows this.  If the ASB decide to keep FRSSE, then it remains to be seen whether they will eventually align it more with IFRS for SMEs to iron out the inconsistencies. 

Kind regards

Steve

 

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By Anonymous
10th Jun 2010 08:52

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Thanks Steve for the clarification. I am coming up to retirement in the next few years and not before time! Luckily I am slimming my client base down to a few sole traders after 40 years of dealing with the bureaucrats at the Institute and now these people at the standard setting board, or whatever it is they call themselves these days who think the 'practicing' accountants have time to deal with all these constant changes.

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10th Jun 2010 15:17

Why not IFRS FRSSE

I'm a big fan of the FRSSE and it makes good sense for small companies to have reduced reporting requirements.

Having all your reporting requirements (CA and FRS of whatever denomination) in one relatively short document is useful had helpful to clients in that it keeps their fees down

Why not bring the FRSSE in line with the IFRS for SME? Seems like a sensible approach

 

Cheap accountants online

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10th Jun 2010 19:03

Alignment of FRSSE

Hi,

Aligning FRSSE with IFRS for SMEs could well be a possibility and would resolve the discrepancies between IFRS for SMEs and FRSSE.  That would be the most logical option if FRSSE is retained. 

Kind regards

Steve

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