On 11th August 2009, the Accounting Standards Board (ASB) in the UK issued a consultation paper 'Policy Proposal: the future of UK GAAP', which sets out its proposals for the future reporting requirements for UK and Irish entities.
This follows the recent publication by the International Accounting Standards Board (IASB) of its International Financial Reporting Standard (IFRS) for Small and Medium-sized Entities (SMEs), which the Board believes can play a significant role for future UK and Irish GAAP. [To access a July news item on the publication of the IFRS for SMEs, please click here.]
The ASB's proposals envisage a differential reporting regime based on public accountability, broadly in line with the IASB's definition in the IFRS for SMEs, which states that entities do have public accountability if they (a) trade their debt or equity instruments in a public market or (b) hold assets in a fiduciary capacity for a broad group of outsiders as one of their primary businesses.
The ASB is proposing a three-tier approach to developing UK and Irish GAAP converged with IFRS as follows:
- Tier 1 - publicly accountable entities would apply IFRS as adopted by the EU ('EU-adopted' IFRS).
- Tier 2 - all other UK and Irish entities other than those who can apply the Financial Reporting Standard for Smaller Entities (FRSSE) could apply the IFRS for SMEs.
- Tier 3 - small entities could choose to continue to apply the FRSSE.
Entities within Tier 2 and Tier 3 would have the option of using EU-adopted IFRS if they wished, and those in Tier 3 would have the option of using the IFRS for SMEs.
Comments are sought by 1 February 2010. The consultation paper, and the press release by the ASB, can be accessed by clicking here.