ACCA responds to revised Financial Reporting Exposure Drafts (FREDs) 46-48 on the future of financial reporting in the UK and Ireland | ACCA Global
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While ACCA supports the implementation of the proposals without undue delay, we are concerned that not enough time may have been left for the development of related Statements of Recommended Practice (SORPs). Those entities which are subject to a SORP which is due to be revised, may well find that they have insufficient time to prepare.
—Richard Martin, head of corporate reporting, ACCA

ACCA supports the Accounting Standards Board’s (ASB’s) strategy of convergence of UK standards with IFRS for SMEs

ACCA (the Association of Chartered Certified Accountants), while supporting the proposals overall, believes they are, to some extent, a missed opportunity to progress further towards international convergence.

In its official response to the ASB’s consultation, ACCA states that its preferred approach would be for the ASB to work with the International Accounting Standards Board (IASB) to incorporate changes set out in FREDs 46-48 in a revised and updated International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs), and thereby keep UK adaptations to a minimum. 

This greater step towards convergence would make UK and Irish financial statements more readily understandable on a global basis, and further reduce the cost of training in more than one accounting regime.

In addition, ACCA does not believe that the proposed removal of the 'publicly accountable' tier of entities (which would have been required to apply EU-adopted IFRS) is either desirable or necessary. ACCA’s view is that full IFRS are appropriate for many entities of this nature. The definition of ‘publicly accountable’ could have been made more precise, in order that the full requirements of IFRS are only adopted by appropriate types of entities. ACCA has suggested that a suitable definition could be established with the use of clear criteria, for example relating to the size of an entity.

ACCA would also like the ASB to set a timetable for the removal of the Financial Reporting Standard for Smaller Entities (FRSSE), bringing smaller entities within the scope of the proposed ASB Standards. ACCA envisages that this would be achieved through exemptions which reflect the simpler accounting needs of such entities, including those set out in company law. However, ACCA does acknowledge that these changes would need to be co-ordinated with those emanating from the proposed EU Accounting Directive.

Richard Martin, ACCA’s head of corporate reporting added: 'While ACCA supports the implementation of the proposals without undue delay, we are concerned that not enough time may have been left for the development of related Statements of Recommended Practice (SORPs). Those entities which are subject to a SORP which is due to be revised, may well find that they have insufficient time to prepare. They will need to wait until the revision has taken place, then will require a period to establish comparative figures before implementation of the new Standards becomes compulsory. We anticipate that the revision process for the SORPs will involve the additional task of considering whether and how the Public Benefit Entity provisions in the proposed FRS 102 should be amended for particular sectors.'