The future of UK GAAP

The ASB has published proposals for the future shape of the financial reporting regime for UK and Irish entities. 

The ‘Policy Proposal: the future of UK GAAP’ proposes a three-tier approach to developing UK GAAP converged with IFRS. The recently-published IFRS for SMEs would play a significant role and the FRSSE would – at least for the time being – be retained.

Published: 11 August 2009
Comments by: 1 February 2010

The Financial Reporting Faculty has published a briefing paper setting out its views on the future of UK financial reporting.

Summary of ASB Proposals

In its latest consultation paper the ASB seeks views on its intention to work under the IASB framework and to converge to the fullest extent possible with IFRS, in a way that is consistent with the needs of UK entities. As a result current ‘UK GAAP’ will cease to exist, although the FRSSE would – at least for the time being – remain available for small entities.

The Board’s proposals set out a differential regime based on public accountability, as follows:

    • Accounting regime
    • Type/Nature of entities
    • Tier 1
      EU IFRS

    • EU listed-consolidated
      AIM
      Publicly accountable including 100%
      Publicly accountable subsidiaries
    • Tier 2
      IFRS for SMEs

    • Non-publicly accountable entities
    • Tier 3
      FRSSE

    • Small (as at present)

Public accountability will broadly be in accordance with the IASB’s definition and the consultation discusses a number of alternative approaches to what is meant by publicly accountable. It would potentially include investment trusts, building societies and friendly societies.

Under the proposals all entities will have the option to voluntary adopt a higher tier, for example a subsidiary that is part of a group that reports under IFRS could choose to use full IFRS.

The proposals are intended to apply to all entities, other than those in the public sector, in the UK and the Republic of Ireland that are required to prepare financial statements that give a ‘true and fair view’. That includes companies and other corporate structures in both the for profit and not-for-profit sectors.

The Financial Reporting Faculty has published Q&A on this important topic

Financial Reporting Faculty event

The consultation on the future of UK GAAP is perhaps the single most important debate affecting UK private companies and not-for-profit entities for a generation.

The ASB and experts from the faculty discussed the proposals on the 26 November 2009 at Chartered Accountants' Hall, providing an opportunity for debate ahead of the ASB’s submission deadline.

Webcasts from the event:

    • Applying the IFRS for SMEs
      Speaker: Brian Shearer, National Director of Financial Reporting, Grant Thornton
    • ASB Proposals
      Speaker: Ian Mackintosh, Chairman, Accounting Standards Board
    • A Not for Profit Perspective
      Speaker: Robert Humphreys, F&IS Director, Oxfam
    • The EU Dimension
      Speaker: Arto Leppilahti, Financial Reporting Policy Officer, European Commission
    • Panel Discussion
      Speakers: including Andy Simmonds, Partner, Deloitte

ICAEW Response on the Future of UK GAAP

The ICAEW has published its response to the ASB consultation.

The latest response has been prepared after discussions by a broadly-based ICAEW working party and takes into account the views expressed at the ICAEW event and elsewhere.

Available downloads

Related links