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OK, so now that’s out of the way,
I’ve started reading through the consultation paper produced by the Accounting Standards Board for UK & Republic of Ireland. It recommends a three tier approach to the future of UK GAAP (see previous article).
Tier 1 Entities (=Businesses mainly) will adopt the full International Financial reporting Standards (IFRS)
Tier 2 Entities will adopt the SHORTER version of the IFRS known as IFRS for SMEs. SME is short for Small & Medium sized enterprises.
Tier 3 Entities will remain on the present standard called the FRSSE (which is short for Financial Reporting Standard for Small Enterprises)
Tier 2 Entities are expected to include only NonPublicly Accountable Entities.
Use of the term Entities is deliberate. When we talk about businesses we talk about Limited Companies, Sole Traders, partnerships and so on but there are many different types of Business Model and so ASB uses the term Entity to cover every kind of business organisation, whether in the “for Profit” sector or” Not for Profit” sector. It includes those kinds of organisations who have special accounting rules, such as charities.
The good news is that this set of rules is intended to apply only to those entities that are required to prepare financial statements that give a “true & fair view”. This means that FOR THE MOMENT, the focus of attention is on – as far as our clients are concerned at any rate – just Limited Company clients and entities which are publicly accountable.
Does that mean you can breath a huge sigh of relief and switch off from IFRS?
Unfortunately not – (if) UK GAAP is being ditched, something needs putting in its place and while there will be temporary and transitional arrangements (there usually are), eventually, even for those of us who are not limited companies or publicly accountable, there will be some new rules to get to grips with, so you might as well keep up to date with what’s happening now
That’s all for now.
Watch out for the next thrilling instalment of …….