Privately-owned small and medium-sized companies in the Midlands will soon benefit from the introduction of new accounting rules, according to PwC.
The new SME standard is much less restrictive than the existing International Financial Reporting Standards (IFRS), and is expected to be mandated shortly in the UK by the Accounting Standards Board.
Keith Harrington, head of assurance at PwC in the Midlands, said the new rules would be considerably easier to apply, and would also help non-publicly accountable companies in the region to update their corporate reporting in readiness for any future requirements to adopt specified standards.
He said: “The publication of this standard is the death knell for UK Generally Accepted Accounting Practice and its impact will be felt by many Midlands companies, large and small.
“For many privately-owned companies in the region, the standard will make the transition to IFRS easier and after the initial conversion work is done, in the medium term there should be real cost benefits.
“This will particularly be the case if other countries follow the UK lead and either require or allow IFRS – in either its full or SME form – for all companies.
“For larger businesses with complex structures or many non-listed UK subsidiaries, or for companies adopting IFRS for the first time, there will be a substantial amount of work to convert the accounting records and supporting systems and consider the wider consequences on the business, such as changes in tax payable.”
He said overall, the new rules were likely to be welcomed, adding: “The SME standard is a welcome simplification. What companies will need to consider very carefully is what exactly is meant by “publicly accountable” in each country. It is likely to cover listed companies and banks and some other financial sector companies.
“That should mean that most other entities will be able to use the simplified version of IFRS.