Accounting Standards

BigFish75

Hi all,

Can anyone either explain or send me a link to an article explaining (in fairly straighforward English) what accounting standards apply here in Ireland, what the standard setting body for Ireland is and how does the IFRS and FRSSE fit into the overall picture as it applies to Irish businesses? I'd also be interested to know if there is a European wide accounting standard either in place or being developed so that there is a level playing field for all buisnesses in the EU in terms of the burden of compliance and so that comparable businesses accounts in different countries can be reviewed side by side in the knowledge that they are prepared on the same basis.

Appreciate any comments or guidance I can get as I'm truly baffled by it all.

Fish

BigFish75

OK, I've been trawing through the interweb and it seems to me that there are two key bodies with responsibility for regulating financial reporting standards here in Ireland.

First off there is the IASB who are trying to set a 'global' financial reporting standard and then there is the UK and Irish GAAP as defined and managed by the UK based Accounting Standards Board, the ASB.

Right now the IFRS standards do not apply to Irish businesses regardless of size. The UK based ASB have made a general statement that they wish to converge their standards to comply with the IFRS but that's a work in progress. Right now the only standards which apply to Irish businesses are the UK and Irish GAAP as defined by the UK based ASB.

Am I correct on the above?

Also, am I correct in my reading that publicly quoted Irish and UK companies can voluntarily opt to adhere to the IFRS standard as defined by the IASB rather than the local GAAP standards defined by the UK based ASB. Is this correct or is it a case that UK and Irish publicly quoted companies are still obliged to apply the local GAAP standard but may also state or reconcile their financial statements to IFRS standard?

Am I getting somewhere or have I completely mis interpreted my research?

Fish

jack90210

As of Jan 1st 2005, all publicly quoted EU companies must report using IFRS.

BigFish75

Thanks Jack, that clarifies one issue for me i.e. that as of now all publicly quoted companies in the EU must apply IFRS and by default all private businesses are still governed by UK/IRL GAAP as defined by the UK Accounting Standards Board. Correct?

HeinekenTicket

All other entities have the option to prepare financial statements using IFRS but they are not obliged.

Most have not opted to prepare under IFRS and therefore prepare under UK/Irish GAAP.

As you noted, a process of convergengence is ongoing. Over the next few years, the structure of reporting is likely to be something along the lines of
(i) full IFRS for publicly quoted entities
(ii) IFRS for SME for non-publicly quoted entities
(iii) FRSSE for entities regarded as small (being defined by legislation)

For further detail, have a look at
http://www.charteredaccountants.ie/en/General/News-and-Events/Media/2008/2009/ASB-consultation-on-IFRS-for-SMEs/

kluivert

Please note that IFRS fill in the gap whereby an issue is not already covered by an FRS.

IFRS's have been used to update already published FRS's.

The call for international standards will allow small medium companies compete on international markets for capital and will also allow international firms translate foreign subs using same standards which will allow greater comparisons between similiar companies operating in different countries.

On a personal level I think the whole accounting standards have got too complicated and complication leads to confusion which can lead to material mis statement.

I think the IFRS for SME's was a big step forward because this set of standards only require at least 10% disclosures of the full IFRS that publicly quoted companies have to adhere to.

Compliance with accounting standards can be a costly function for a business therefore the simplication of standards for SME's is another big step in the right direction.

HeinekenTicket

@kluivert

kluivert wrote: »

Please note that IFRS fill in the gap whereby an issue is not already covered by an FRS.

IFRS's have been used to update already published FRS's.

Neither of these statements is correct. IFRS does not fill in any FRS gaps nor have they 'updated' FRSs. IFRS and FRS are separate regulatory frameworks - each reporting entity establishes which framework applies to it and follow the appropriate standards.

There is a lot of overlap between the frameworks in terms of reporting requirements but this does not mean they fill in for each other or that it's okay to mix and match.

The call for international standards will allow small medium companies compete on international markets for capital and will also allow international firms translate foreign subs using same standards which will allow greater comparisons between similiar companies operating in different countries.

On a personal level I think the whole accounting standards have got too complicated and complication leads to confusion which can lead to material mis statement.

evidently!

I think the IFRS for SME's was a big step forward because this set of standards only require at least 10% disclosures of the full IFRS that publicly quoted companies have to adhere to.

10%? where did you get this from?

Compliance with accounting standards can be a costly function for a business therefore the simplication of standards for SME's is another big step in the right direction.