Future of UK financial reporting: the FRSME
On 29 October 2010, the Accounting Standards Board (ASB) published a Financial Reporting Exposure Draft (FRED) titled The Future of Financial Reporting. The FRED deals with the ASB's proposals for the future of UK GAAP. These proposals have been under discussion for a number of years and deal with the convergence of UK GAAP with IFRS.
The FRED proposes a three tier approach for UK GAAP going forward:
- Tier 1 – publicly accountable entities would apply IFRS as adopted by the EU (‘EU-adopted’ IFRS). Examples of publically accountable entities are fully listed and AIM listed companies.
- Tier 2 – all other UK entities other than those who can apply the Financial Reporting Standard for Smaller Entities (FRSSE) could apply the Financial Reporting Standard for Medium Sized Entities (FRSME).
- Tier 3 – small entities could choose to continue to apply the FRSSE.
The FRSME has been developed following the publication by the International Accounting Standards Board of IFRS for Small and Medium Sized Entities in 2009. The ASB have amended this standard to both ease tax reporting and to comply with UK company law in the shape of the FRSME.
The proposed adoption date for the FRED is for periods beginning on or after 1 July 2013. So for a 31 December year end this would mean a transition date of 31 December 2014 (with 2013 comparatives).
The ASB are requesting comments by 30 April 2011.
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