Change - real change - is something that doesn't occur with great regularity in the accounting world. However, like buses, two changes to the accounting landscape are upon us in quick succession. Not only will statutory accounts have to be filed online with HMRC in iXBRL format from 31 March 2011, those statutory accounts prepared under UK accounting standards will be prepared under a wholesale new set of accounting policies within a couple of years. UK accounting standards as we know them are due to be replaced by the Financial Reporting Standard for Medium-sized Entities (FRSME) (companies applying FRSSE will not be affected under current proposals). The current transition date is for accounting periods ending from 30 June 2014 - although accounting periods ending then will need an opening balance sheet conversion as at 1 July 2012, not that far away.
The reality is that implementing these changes will cost business, either in terms of cash or in time, mostly likely in both. But the cost of iXBRL compliance will be deeper. Clearly HMRC will be using the iXBRL formatted accounts to perform deeper analyses, which is likely to lead to more questions from the tax man ... and all that follows. The exposure draft of the new FRSME accounting standard will significantly impact the accounts of some businesses - which could have far reaching consequences, requiring alterations across a broad range of areas, from loan covenants to management bonus scheme structures. Businesses will need to brace themselves to perform a detailed impact analysis, and be ready to invest the time to calculate and negotiate changes to key arrangements - a further draw on management.
Businesses will rightly question how this reflects the government's desire for the private sector to grow and flourish ... where is the added value in these proposals to businesses?
Nevertheless, businesses should speak to their advisors to ensure that required alterations are carefully assessed, planned and implemented.
Two buses are approaching - many businesses will need to catch both - and they should be prepared for a potentially costly fare to a destination they may well not want to go to.
Find out more about the potential implications of the FRSME both from an accounting and a tax perspective, or find out more about our specialist ixbrl tagging services, by contacting either your usual BDO adviser, Tony Spillett who leads our specialist iXBRL team or email iXBRL@bdo.co.uk
If you would like to find out more about the potential implications of the FRSME both from an accounting and a tax perspective, and the requirements and options related to the submission of iXBRL, you can register for one of our forthcoming events.