New rule book to simplify accounting practice
NEW financial reporting standards for Irish companies were published yesterday in a bid to move the system here, and in Britain, in line with standards elsewhere.
The rules, known as Financial Reporting Standard 102 (FRS 102), will come into effect at the end of next year.
Thomas Guglielmi, of accountancy firm Ernst & Young, says Irish companies need to start planning for the new standards now as they will have many different impacts related not just to accounting, including repercussions for tax systems and processes.
The new rules simplify accounting procedures. At under 300 pages, the rule book is far shorter than its predecessor GAAP (Generally Accepted Accounting Principles), which is over 2,500 pages long.
There has been a global move for consistency in reporting standards for many years.
In 2005, all stock exchange-listed companies in the EU moved to the International Financial Reporting Standard (IFRS).
FRS 102 now sets out rules for unlisted companies which conform to IFRS but make more sense for smaller companies.
The new rules will be used by all Irish and UK entities that are not already legally required to comply with IFRS. This includes subsidiaries of listed companies as well as charities.
The Financial Reporting Council, which published FRS 102, said that standards had not kept pace with evolving business transactions and in some areas were out of date.
"As business practices change, so too must accounting requirements to ensure that financial statements continue to show a true and fair view."