Private groups face new accounting rules

Accounting has developed its own form of Esperanto in recent years, as countries jettisoned their own financial reporting norms to embrace the international standards known as IFRS.

But for all the talk of a globalised accounting language, a planned revamp of the UK and Irish financial reporting system shows that members of the profession will still need to master local dialects. Under proposals put forward by the UK’s Accounting Standards Board on Friday, tens of thousands of privately held companies will be obliged to switch accounting systems from mid-2013, at an estimated cost of £80m ($128.4m).

Out would go the 2,000 pages of rules and accumulated practice to which they have to conform currently. In would come a new, slimline – if 400 pages counts as slim – set of standards known as FRSME. Listed companies would continue to file under full IFRS, meanwhile.

The product of six years of planning and consultation, the FRSME rules are based on the international standard for small and medium-sized entities known as IFRS for SMEs.

They will not be identical to the IFRS rules, however – creating a local dialect situation that undermines the goal of increasing the international comparability of accounts.

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