Peter Hughes
Chartered Accountant
IFRS for Small and Medium-Sized Entities
The International Accounting Standards Board issued "IFRS for Small and Medium-Sized Entities" on 9 July 2009. This was followed by a Consultation Paper from the UK Accounting Standards Board on 11 August. The ASB's proposal is that small companies should continue to apply the Financial Reporting Standard for Smaller Entites (FRSSE) as they do at the moment. Listed companies and other public interest companies would continue to apply full IFRS as required by European law. Other companies - in other words, most privately-owned companies which are not classed as "small" - would apply the new IFRS for SMEs.
If approved, the changes would not take effect until 2012. Companies would need to think about it before then, as their 2011 figures would need to be restated when they appear as comparatives in the 2012 accounts. There would be a number of changes in accounting policy (deferred taxation, research and development, borrowing costs and group accounting among them), and the disclosures in the notes would differ from what is required under UK GAAP. Cash flow statements would be compulsory for most companies, which would include 90% subsidiaries who enjoy an exemption under UK GAAP.
Consultation closes on 1 February 2010.
11 August 2009