Mario Christodoulou, Accountancy Age, Wednesday 20 October 2010 at 16:21:00

BIS concerned new accouting rules will burden UK businesses

The UK?s largest corporations have become the main beneficiaries ofinternational accounting standards with smaller companies felling littlebenefit, according to internal research by the Department of Business (BIS).

The research, summerised in a document seen by Accountancy Age,found that, ?the main beneficiaries have been the largest corporations?. Theresearch will undermine preparations by the UK Accounting Standards Board (ASB)to replace current UK GAAP with international standards for SMEs.

The IFRS for SMEs project will force an estimated 80,000 businesses to switchaccounting codes to new international rules. Accountancy Ageunderstands, BIS is concerned the new rules will present an unnecessaryburden to businesses recovering from the recession and absorbing the impact ofthe comprehensive spending review.

In a September 21 letter, BIS corporate law and governance director RichardCarter wrote to ASB chairman Ian Mackintosh warning new accounting rules ?couldwell involve a significant increase in net cost to UK businesses?.

?We had a word last week about the importance my ministers attach to ensuringthat any changes to UK GAAP lead to a net reduction in burdens on businesses,?he said.

BIS also urged the ASB not to present the draft standards as a forgoneconclusion when they are released for consultation later this month.

?It is important to be very clear from the start that this may or may notlead to a final standard similar to the current (proposals),? he said.

?To avoid this, and the risks of the ASB?s reputation potentially beingharmed, it will be important to be absolutely clear throughout the document,that the ASB has not reached a final view on any particular option.?

A BIS spokeswoman said it was essential the new rules ?be net beneficial tothe UK and its economy?.

Mackintosh stood aside as ASB chairman after he was announced as thenew vice-chairman of the InternationalAccounting Standards Board last week. The ASB is yet to announce an interimchairperson.

There?s also concern from within the ASB the new code will make accountingmore complicated for some businesses. Under the new classification systems alllisted companies have to use full international accounting rules.

Companies listed on the PLUS markets, which do not use full internationalaccounting rules, may be forced to contend with complex rules.

?We have pushed a significant number of small entities up into full IFRS,?said ASB board member Andy Simmonds.

?I have doubts whether full IFRS is suitable in view of its increasingcomplexity and theoretical nature.?

Further reading:

Youthculture: newly qualified accountants will bear the IFRS burden