Time to form a view

Monday, January 24, 2011 | Posted by: Grant Thornton
Categories: Future of UK GAAP, UK GAAP

By Katherine Martin, our secondee to the ASB as a Project Director on the Future of UK GAAP project

After the flurry of activity over the release of the exposure draft, things have gone temporarily quiet on the FRSME front, apart from a steady stream of webcasts (and ours is still available to view here!).

I suspect many interested parties have been busy reading and attempting to digest the full 688 pages, before settling down to the task of drafting their comment letters, and here in the Grant Thornton technical department it’s time to make a start on ours. With 27 questions in the ‘invitation to comment’, it’s going to take a lot of thinking about. And tempting as it is to answer them with ‘yes’, ‘no’ and ‘possibly’, somehow I don’t think that will pass muster as a constructive response. Some sort of reasoning is going to be needed. And that means I need to decide where I stand.

I’ve had the opportunity to hear many different opinions over the past few months, as I’ve attended a number of events on the subject. Some of these were organised by Grant Thornton for our clients, while others have had an audience of mainly technical specialists.

One of the most striking, if not perhaps surprising, things is how different the focus of these contrasting audiences is. Get a group of financial reporting specialists in a room, and the debate is likely to focus on topics such as the best solution for deferred tax under the FRSME and whether the financial instruments requirements do now comply with company law.

But for the people who are directly affected, such as the directors of SMEs, the concerns are very different. What will it cost? Will it really provide better information? Will it affect my tax bill? Is FRSME really going to be shorter and easier to apply than UK GAAP?

I think its important that, in the midst of the technical discussions about compliance with the 4th Directive, those wider issues don’t get forgotten.
Yes, it’s important that the standard makes internal sense, that there are no unintended consequences and that the requirements are legal, of course it is.
But let’s not forget that it’s preparers and users of financial statements who have the most at stake.

And I will be trying to keep those concerns in mind as I consider my own answers to those 27 questions…

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