The Accounting Standards Board (ASB) has issued its proposals for the future reporting requirements for UK and Irish entities.

These proposals will replace existing UK GAAP with International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) for UK companies that are not publicly accountable.

This change is planned for companies with financial years beginning on or after 1 January 2012 (including short periods commencing on or after that date). Therefore under the current proposals the first full year of accounts prepared in accordance with IFRS for SMEs will be for the year ending 31 December 2012. This means comparative IFRS information will have to be prepared for the year ending 31 December 2011, with a conversion of opening balances required at 1 January 2011 (the date of transition). Provisions are included in the proposals to ease the transition.

What will the impact be?

These changes will have a significant impact on any company currently preparing its financial statements in accordance with UK GAAP. Small companies who at present are able to adopt the Financial Reporting Standard for Smaller Entities (FRSSE) are expected to be able to continue to do so if they so wish or adopt IFRS for SMEs.

These proposals will entail significant changes to the presentation and disclosure of information in the financial statements for all companies required to adopt the standards, as well as changes to the numbers themselves in many cases. IFRS for SMEs will change the recognition criteria for certain assets and liabilities; the basis on which some items are measured and the accounting treatment of certain gains and losses.

What should you do?

If you need advice on how these changes will impact your company’s financial statements then please get in touch with your usual Baker Tilly contact. Alternatively, or if you are not yet a Baker Tilly client, please contact Colin Roberts on 01483 307070.