The future of UK GAAP

Friday, July 17, 2009 | Posted by: Chris Smith
Categories: Future of UK GAAP, UK GAAP | Tags: Chris Smith, IFRS, UK GAAP, FRSSE, UK economy, ASB, IASB

It’s here!  On 9 July the IASB finally published its IFRS for SMEs distilling more than 2,000 pages of full IFRS into a mere 250, a notable achievement indeed.

Taking the broad principles of full IFRS and moulding them to the needs of SMEs spells simple IFRS - admittedly an oxymoron for some - which going forward can only be a good thing. And going forward, replacing UK GAAP with a new single standard will help to address the current position and inherent inconsistencies, namely full IFRS for listed companies, UK GAAP for others and the FRSSE for those who are small.

The ASB is expected to publish its views this month going for, I suspect, adoption in 2012.

For the enthusiasts out there the future of UK GAAP can be found on the IASB website and those who read it will discover some notable simplifications, for example on goodwill you can continue with the UK GAAP approach and amortise it over its useful life - no need for detailed annual impairment reviews (unless circumstances indicate one is required).

As a final thought, the SME project was started some time ago so, understandably, has not taken into account those potential changes to full IFRS which are in the pipeline - for example the discussion paper on operating leases which, for lessees, may lead to all operating leases coming on balance sheet.

The future may be here but don’t believe that’s it . Where there’s IFRS there’s always room for change and, dare I say it, improvement.

Chris Smith, Partner, Grant Thornton
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Find out more on our IFRS for SMEs site