Mario Christodoulou, Accountancy Age, Wednesday 21 July 2010 at 11:55:00

UK accounting chief says rule change must meet cost-benefit criteria

The UK accounting board?s plans to replace the existing accounting code withinternational standards will still have to pass the government?s cost-benefittest, the head of the body warned yesterday.

Ian Mackintosh, chairman of the UK Accounting Standards Board (ASB), said theplanned replacement of UK GAAP, used by non listed, mid-tier companies, wouldstill need to be sold to the UK government on cost-benefit grounds.

?We have a new government, we have a strong emphasis on cost saving, onderegulation across all the government and it is going to be very important forus to be very clear on the cost-benefit of making these changes,? he said.

The ASB wants to bring in new international accounting rules for small andmedium-sized businesses, released in July 2009 by the International AccountingStandards Board. The new rules will have conform with EU directives on financialreporting and be endorsed by the Department of Business, Innovation and Skills.

Mackintosh appealed to an audience of accountants at the ICAEW yesterday, tohelp make the case for the new rules.

?As you know in all these cases, the costs we can estimate, but the benefitsare very difficult to quantify. Nevertheless, we will be required by thegovernment to make a good case for what ever it is we propose and it isfundamental to the success of the proposals,? he said.

Also at yesterday?s event, Mark Smith, secretary with the influential butreclusive Hundred Group of Finance Directors and director external reporting atFTSE 250 company Tomkins, said the case had not yet been made to replace theUK?s existing accounting code.

?I?m not convinced that now is the right time to commit to scrapping theexisting body of UK GAAP,? he said.

?Why is it necessary to have IFRS for SMEs ? a form of IFRS light. Doesn?tthis mean that there?s actually a problem with IFRS in that they are too complexto be used by many companies?

?I reckon it?s likely that the majority of companies in this country have noidea that the board is proposing these changes let alone that we are sittinghere debating them.?

Further reading:

TheFuture of UK GAAP

Vodafoneattacks ?costly and burdensome? code change