I spy a professional conspiracy against the public

Britain\’s accounting authority, the Accounting Standards Board, is consulting on plans to replace UK standards for private businesses, first published in 1971, with a new version based on international standards.

However, two of the country\’s leading accountancy membership bodies – the Institute of Chartered Accountants in England and Wales (ICAEW) and the Association of Chartered Certified Accountants (ACCA) – have used the consultation, which closes today, to call for the \”small entities\” standard to be scrapped.

At present, the majority of small, private businesses can use a simplified version of the UK reporting standards known as FRSSE, that requires fewer disclosures.

They could even be correct, that changing the accounting standards for small companies is just, righteous and something that must be done.

But of course the change would mean more work and higher fees for the massed ranks of accountants who are members of ICAEW and ACCA and my, aren\’t we all shocked to see that ICAEW and ACCA would propose a course of action that would increase the work and fees of the massed ranks of their members?

3 comments on “I spy a professional conspiracy against the public

  1. I am afraid to say that I found the article rather confusing.

    However, as I understand it, the ASB is proposing a 3 tier structure of reporting for UK companies. At present, there is a 2 tier structure.

    In itself, this will probably mean that a number of SMEs or even large privately owned companies that currently have to use the full reporting apparatus will be able to drop down a tier to a more streamlined basis. How that creates extra work for the ICAEW or ACCA is something that you will have to explain to me.

    However, some companies that now are entitled to use the small company reporting regime, will move up to the middle tier if they are publically accountable in some way.

    The problem with retaining the existing small companies regime is that it will no ,onger be compatible with the way that other businesse report. The ICAEW is asking the ASB to introduce an SME-lite version of the new regime to ease this problem.

    Again, you will have to tell me what the conspiracy is here because I cannot see it.

    The relevant paraqgraph from the ICAEW’s response is here:
    “One of the main benefits that would result from moving directly to a two-tier regime would
    be a reduction in complexity. Conceptually, we believe that a single set of principles should
    underpin the accounting for all entities and we applaud the steps the Board has taken
    toward achieving this goal by proposing to shift UK GAAP onto an IFRS-based platform.
    Retention of the FRSSE would perpetuate the situation where two different platforms were
    in operation. This creates practical difficulties in training and education, as most students
    will have been trained first in IFRS before encountering the entirely new platform
    represented by FRSSE. This complication could increase the risk of error, and could cause
    difficulties in systems, in comprehending the financial statements, and in transitioning
    between the two (or three) levels. It is also confusing for users of the financial statements.”

  2. Is the current regimen broken? If not then anyone seeking to alter it is a malefactor (H/T Lord Falkland.)

  3. I think that the ASB is on a mission to destroy the usefulness of financial statements, so I would agree with you, David.

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