Call for delay in new accountancy rules

AN ACCOUNTANCY firm has called for a two-year delay in the implementation of new accounting standards for private UK firms in order to reduce cost burdens.

Grant Thornton said delaying the new accounting rules - Financial Reporting Standards for Medium-sized Entities (FRSME) - until 2015 would put off the estimated 79 million cost of implementing the changes and would allow the rules to be "road tested" in other countries adopting them ahead of the UK.

The UK Accounting Standards Board (ASB), last week released its accounting standards proposals for smaller and private firms after six years of devising the rules.

The new way of reporting accounts for smaller firms are a change from UK GAAP, which the ASB described as "an unwieldy and incoherent mixture of old UK standards", compiled in a booklet that extends to 2,000 pages.

The IFRS standards - developed by the International Accounting Standards Board (IASB) - were adopted by UK listed firms in 2005 under EU rules.

Robert Hannah, regional managing partner for Grant Thornton in Scotland, welcomed the overhaul of the accounting system, which will bring the UK into line with as many as 69 countries that have already adopted the new standard.

But he argued that "changing accounting standards with a weak economy could prove an unwelcome distraction for private businesses, many of which will be focusing on strategies for survival, and that needs to be recognised".

At a breakfast meeting in Edinburgh yesterday, David Loweth, technical director for the ASB, said that, by the time the standards are implemented in 2013, the economy will be in a "different part of the cycle". He added: "We think these proposals will help reduce burdens."

The ASB argues that the 79m cost of adopting the new rules will be recouped through the simplification of reporting for many companies and that companies would also probably enjoy a reduced cost of debt. Many of the reforms are aimed at giving lenders greater clarity on business performance.

But Sir David Tweedie, chairman of the IASB and author of the new international accounting standards, showed little sympathy for calls to delay the new small company standards.

He said: "People don't like change, but change has got to come to simplify and improve company reporting.

"If you can't please everyone, you can at least please yourself and crack on."

Hannah said that despite his misgivings over the timetable and "some issues" related to the tax treatment of SMEs under the new rules, he said FRSME was "very welcome".

He said: "Rationalising the existing over-complex accounting standards to create one internationally comparable system for both listed company subsidiaries and private companies is a very welcome and positive move.

"There is no doubt that this has to be the way forward."