A stay of execution for UK GAAP
Tuesday, April 27, 2010
| Posted by: Grant Thornton
Categories:
IFRS for SMEs,
UK GAAP
| Tags: IFRS,
IFRS for SMEs,
UK GAAP,
ASB,
SMEs,
Future of UK GAAP project,
financial reporting,
subsidiary accounts
By Katherine Martin, our secondee to the ASB as a Project Director on the Future of UK GAAP project.
So, UK GAAP has been granted an extra year of life, as the ASB has decided to put back the proposed adoption date for the IFRS for SMEs. They’re now working to an effective date of accounting periods beginning on 1 January 2013, twelve months later than the original proposal.
Personally, I think this was the right decision, in common with most of those who wrote comment letters on the consultation paper. Although proposing a deadline of 1 January 2012 may have served the purpose of concentrating minds, it just didn’t seem realistic to expect businesses to be ready for a transition date of 31 December 2010.
So everyone gets an additional year of breathing space, including the ASB. They’re going to need it, given the 155 comment letters which need addressing.
For a start, in response to those comment letters, the ASB has decided to look into allowing an option of IFRS with reduced disclosures for wholly owned subsidiaries, as long as they are included in IFRS consolidated accounts.
It’s easy to see why this looks attractive to preparers - the cost of extensive disclosures is often given as a reason for not adopting IFRS across a group. But what about the users? Who are the users of subsidiary accounts anyway? It’s tempting to say ‘no-one’ but it’s important to think about the potential needs of lenders, suppliers and other users.
Exemptions such as not producing a cash flow statement for subsidiaries are often taken for granted in current UK GAAP. But is this really information which no-one wants or needs?
These are just some of the questions the ASB will need to consider, and part of my role as a secondee to the ASB staff will be in gathering the information to help them assess the options.
So what do you think? What do the users of subsidiary accounts need to see, and which disclosures could be left out? These are issues with big implications for UK financial reporting, and, even with an extra year, there’s no time to lose.
Find out more here about how Grant Thornton can help with the impact of IFRS for SMEs
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