The U.K.’s Accounting Standards Board is rethinking controversial plans to scrap the body of reporting rules that unlisted companies use, known as U.K. GAAP, amid concerns about compliance costs.
Last year the board released proposals that would see all U.K. businesses produce their accounts under International Financial Reporting Standards. But having received a deluge of responses to its ideas, many of them hostile, the board is looking at its proposals again.
The ASB wants to introduce a three-tier approach to replacing U.K. GAAP that would see private businesses use either full IFRS or a version modified for smaller companies, depending on their size.
The proposal caused concern among many listed companies, which face shifting their U.K. subsidiary businesses over to a new accounting regime.
Telecommunications company Vodafone, for example, said the “the cost of compliance will exceed any perceived benefits, particularly when extrapolated over a large number of subsidiaries.”
It added that the current U.K. GAAP offered a stable accounting framework, compared to IFRS, and one that users and preparers understood.
The proposals also raised concerns among overseas companies with U.K. operations. Under the ASB plans, subsidiary companies would use IFRS as adopted by the European Union, rather than the versions published by the International Accounting Standards Board. There are important differences between the two regimes.
Bank of America said wholly owned subsidiaries should be able to chose to adopt IASB standards, rather than the European version. Otherwise, there would be “significant cost implications” for preparers, it said—enough to outweigh the benefits of conversion.
The ASB said the responses to its plans “demonstrate a divergence of views on many important issues.” Board Chairman Ian Mackintosh said they would provide “an excellent basis for redeliberating the original proposal.”
The board now plans to hold a series of events later in the year, followed by a new exposure draft.