Scotland’s businesses must embrace changes to accounting standards: Deloitte

There’s a major shake-up in accountancy standards on the way and it will have significant implications for the Scottish business community, according to the business advisory firm Deloitte.

The UK Accounting Standards Board (ASB) plans to abolish the current set of accounting standards (UK GAAP) by 2012, to be replaced with ‘International Financial Reporting Standard for Small and Medium-Sized Entities’ (IFRS for SMEs).

According to Deloitte, although 2012 may seem a long way off, the need for comparatives from 1 January 2011 means that businesses affected should get their new processes in place during 2010 to ensure a smooth transition.

Graham Hollis, Audit Partner for Deloitte in Aberdeen said: “Thousands of Scottish businesses will be affected by these changes to accounting standards – and they should act now to fully consider the potential consequences of the change, make any amendments across their businesses, test their processes and carry out education and awareness activities.”

In addition, the potentially significant tax implications of transition need to be carefully considered and advance planning will therefore also be essential in this regard.

Andrew Ogram, Tax Partner at Deloitte in Aberdeen, said: “Businesses should evaluate carefully the complex tax impact of transitioning to ‘IFRS for SMEs’. The immediate impact is the taxation of transitional adjustments, whilst in the longer term there will be the ongoing impact on tax calculations and tax planning.”

Over a hundred countries make use of IFRS but there has been a growing demand for the IASB to produce a regime more suited to businesses without public accountability. The IASB has taken six years to develop this and despite the title, the standard is applicable not only to SMEs but to all firms which do not have public accountability. This means that it will be suitable for most subsidiaries of listed companies as well as large private businesses, as long as they are not publicly accountable and so it will impact on the majority of Scotland’s companies. IFRS for SMEs is a much simplified version of full IFRS, with only a tenth of the 3,000 disclosure requirements contained in full IFRS.

Deloitte is holding a seminar to provide companies with an overview of the new accounting standard on Thursday 18 February at 4:30pm, at their offices at 2 Queens Terrace, Aberdeen. If you are interested in attending or would like further details please contact Liz Bain at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or on 01224 847341.