The UK Accounting Standards Board (ASB) has now published financial reporting exposure drafts (FREDs) 46 to 48 setting out revised proposals for the future of financial reporting in the UK and Republic of Ireland. These exposure drafts would significantly change the previous proposals in that they would:
a) Eliminate the tier system; The ASB will not proceed with the tier system previously proposed. The application of EU-adopted IFRS will not therefore be extended beyond that required by Regulation or by for example the rules of the Alternative Investment Market;
b) Introduce accounting treatments permitted under current accounting standards; options to revalue land and buildings, capitalise borrowing costs or carry forward certain development expenses have been incorporated into the FRED 48. The ASB is proposing to retain accounting treatments permitted under current accounting standards and international accounting standards rather than its previous policy to make minimal changes to the IFRS for SMEs,
and would mean the following major changes:
a) Replacing all current accounting standards with a single FRS. The ASB is proposing (consistent with its previous proposals) to use the IFRS for SMEs, as issued by the International Accountings Standards Board, as the base for FRED 48. This will reduce the volume of accounting standards from approximately 2,500 pages to 250 pages.
b) Introduction of a reduced disclosure framework. The framework permits certain entities (mainly subsidiaries) to apply the measurement and recognition requirements of EU-adopted IFRS with reduced disclosures.
c) Retaining the financial reporting standard for smaller entities (FRSSE).
The revised proposals are to take effect from for accounting periods beginning on or after 1 January 2015 with earlier adoption permitted. The exposure drafts are open for comment until 30 April 2012.
