Proposals for a three-tier reporting framework in the UK

  • ASB (UK Accounting Standards Board) (lt blue) Image

29 Oct, 2010

The UK Accounting Standards Board (ASB) has published its proposals for the future of financial reporting in the UK and Republic of Ireland.

The Exposure Drafts set out proposals for a three-tier reporting framework, which aims to balance the needs of preparers and users of accounts.

The proposed three-tier approach, which has been developed and consulted on over the past six years, builds on the existing system:

  • Tier 1 – Quoted groups will continue to report under international financial reporting standards (IFRS), as adopted by the EU. They would be joined in Tier 1 by other companies that are publicly accountable. This would apply if their debt is traded on public markets, or if they hold deposits or manage other people's money. (Some very small financial institutions would be exempt.)
  • Tier 2 – All other UK entities, except those that apply the Financial Reporting Standard for Smaller Entities (FRSSE), would report under a new standard based on the IFRS for SMEs, which is considerably shorter and less complicated than current UK standards. The FRSME, as it would be called, would be modified to comply with UK and EU law and to ease tax reporting.
  • Tier 3 – The smallest companies will continue to use the simplified version of UK standards, the FRSSE.

The consultation period will run until 30 April 2011. It is proposed that the new framework would be effective from 1 July 2013.

The document published today includes an explanation of the proposals, a draft Impact Assessment and the two new proposed standards. Click for:

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