Options set out by the government to extend international accounting standards (IAS) to all companies could cost business up to 1.4 billion [pounds sterling], according to official figures.
An EU regulation adopted earlier this year requires listed companies in Europe to use IAS when preparing their consolidated accounts from 2005. Now the DTI is consulting on extending the regulation to unquoted companies and stand-alone accounts of listed companies. The potential cost implications to business of extending the regulation are contained in an appendix to the green paper outlining the options. These include whether to require or allow the regulation to be extended to the individual accounts of listed companies, unlisted companies or specific industries such as banking and insurance.
IAS could mean a big change for hundreds of private UK firms, which will have to alter the way they account for areas of their business, warned Andrew Vials, IAS partner at KPMG. "While the switch may be relatively straightforward for smaller companies, the resources required to effect the transition and the cost will depend on the complexity of the business" he said. "Those with treasury operations dealing in financial instruments may have a lot to change in terms of systems. Those with overseas subsidiaries will require more planning and time to prepare."
The government has warned that businesses need to think ahead...