Small businesses will have to move to FRSSE 2015 to report their accounts for year ends 31 December 2015, and then potentially move to a totally different accounting framework due to the introduction of the EU Accounting Directive into UK law, which is slated for July 2015.

An FRC spokesperson said that although FRSSE 2015 would have a ‘short shelf-life’, companies would still have to adopt it unless there are overwhelming objections in the consultation feedback.

Although the final decision is out for consultation at the moment, there are no signs that FRC will back down on this, although there is still five weeks until the consultation closes on 21 November.

In a statement, FRC told Accountancy that ‘for accounting periods beginning on or after 1 January 2015 a small company applying the FRSSE [2008] (effective April 2008) will need to move to the FRSSE [2015] (effective January 2015)’.

The new EU Accounting Directive will come into effect for accounting periods beginning on or after 1 January 2016. This means that the FRC will have to publish an accounting framework for businesses with turnover under £10.2m, the new threshold for the EU rules.

FRC has indicated that it is looking to introduce another new framework under the moniker FRSME, Financial Reporting Standard for Micro-Entities, while it will push for medium-sized companies to adopt FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland, albeit under a FRS 102 ‘light’ environment with reduced disclosure requirements.

Richard Martin, head of corporate reporting at ACCA  said: ‘There may be some debate about whether the application of FRS 102 should be delayed for those companies for a year, so they can just move to the new regime in 2016.’ 

Some businesses could also face additional costs of implementing the new short-life accounting framework, including one-off training costs, potential software costs and potentially a one-off accounting software upgrade.

Stakeholders and the small business community should respond to the consultation to ensure that the FRC considers whether the compliance costs of introducing a short-term FRSSE 2015 make commercial sense.

FRC stresses that there is minimal change between FRSSE 2008 and FRSSE 2015, and retaining the FRSSE 2008 for an extra year would not be practical.

‘However, for most entities the change from the FRSSE [2008] to the FRSSE [2015] (effective January 2015) is not expected to be significant (for example, changes to existing accounting policies are not expected to be necessary), as the differences between the two are primarily administrative consequential amendments to enable the FRSSE to operate alongside FRS 102 by updating references to accounting standards that will be withdrawn when FRS 102 becomes mandatory. 

‘This also means that it is not practical to retain the FRSSE (effective April 2008) for accounting periods beginning on or after 1 January 2015 because it cross-refers to accounting standards that will have been withdrawn.’

The FRC consultation, Accounting standards for small entities - Implementation of the EU Accounting Directive, closes on 21 November 2014.

The FRC expects the new and amended accounting standards to be effective from the same date as the changes in legislation are effective, which is expected to be accounting periods beginning on or after 1 January 2016.The documentation is available here: http://bit.ly/1rIUPVG