The Institute of Chartered Accountants of England and Wales is calling for a “big bang” approach to implementing a series of new International Financial Reporting Standards.
The ICAEW argues that implementing the standards simultaneously would reduce the costs and disruption for business simultaneously. Making all the new standards scheduled for completion this year effective in one fell swoop would be the most efficient option for both users and preparers of financial reports, according to the group.
“There is an avalanche of changes to International Financial Reporting Standards heading our way,” said Dr. Nigel Sleigh-Johnson, head of ICAEW’s Financial Reporting Faculty. “There will be a steep learning curve for both businesses preparing financial reports and the users of these reports, and inevitably there will be demands on the resources of the hard-pressed finance function. The transition to these new and revised requirements is more likely to be smooth if the IASB make them all effective from a single and certain date, rather than let them trickle through under a phased approach.”
The International Accounting Standards Board has recently completed its consultation with stakeholders on how and when the new standards should be implemented.
“Businesses all over the world will be impacted by the decisions made on the back of this consultation,” said Sleigh-Johnson. “It is critical that they pay close attention to the requirements and timelines as, although the impact will vary from business to business, some of the changes may require a substantial amount of work and potentially investment both in training and systems. An early start on assessing the impacts is highly advisable.”
The ICAEW said that the new standards due for completion in 2011 — including financial instruments, insurance and leasing — should be made mandatory no earlier than in 2015 to allow for a minimum three-year transition period. However the ICAEW suggests that early adoption should be permitted, particularly as this may help those encountering IFRS for the first time to start using the new standards straight away.
Separately, elsewhere in the United Kingdom, the Accounting Standards Board is objecting to replacing U.K. GAAP with IFRS for SMEs for midsized enterprises.
“The ASB ought to review the IFRS standards and not just make limited changes for the sake of convergence,” said ASB member Edward Beale, according to Accountancy Age. “IFRS aren’t perfect. We shouldn’t be afraid to replace them.”
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