International Financial Reporting Standards services
IFRS for Private Sector businesses
The majority of smaller limited companies in the UK present their accounts under UK accounting principles.
Listed companies and certain subsidiaries of International Groups prepare their accounts under International Financial Reporting Standards (IFRS). They do this to meet the needs of accounts users in public capital markets.
IFRS covers a wide spectrum of issues (some complex and detailed) and require numerous disclosures.
These requirements were regarded as unsuitable for most private entities – going beyond the needs of users of their accounts, who are generally more focused on assessing cash flows, liquidity and solvency.
To address this, the IFRS for SMEs was developed with the aim of providing simpler accounting guidance than that provided in full IFRS, which meets the needs of the users of private entity accounts whilst balancing costs and benefits from a preparer perspective. It was finally published in July 2009.
The key issues for SMEs are:
- The level of detailed accounting guidance is 85% less than the full IFRS.
- The detailed explanations and requirements about complex areas not applicable to SMEs are mainly removed and there are reduced disclosure requirements
- There is simplification of recognition and measurement requirements
- It represents a stand alone document to follow
Why adopt IFRS for small and medium-sized entities?
An IFRS for SMEs has clear benefits for investors, lenders and those seeking to raise finance through a consistently applied global set of financial reporting standards. It will also ease transition to full IFRS for growing entities once they become publicly accountable.
IFRS for Public Sector
The public sector is not immune - Financial reporting in the public sector has undergone significant changes in recent years, replacing a mainly cash-based system of financial reporting and budgeting with one that uses accruals data.
The most significant current change is the transition to IFRS.
Central government organisations are part way through the transition process:
- Stage 1 - involved the compilation of opening balance sheets
- Stage 2 - involves the preparation of ‘shadow’ accounts – a full set of IFRS compliant accounts, which restate the 2008/9 statutory accounts on an IFRS basis.
- Stage 3 - the final stage - represents the full transition to fully compliant IFRS accounts.
The process of transition to IFRS can become complicated and our IFRS team is able to assist at any stage in the conversion cycle. Our IFRS team has practical experience in helping clients in this way – particularly in areas such as:
- Conversion to IFRS
- IFRS accounts preparation
- Compliance issues
- Reporting system modifications
- Corporate governance and risk management
Contact Carol Warburton to arrange a consultation meeting to discuss your specific IFRS service requirements.