NEW ACCOUNTING rules that will oblige up to 90 per cent of Irish companies to change their system of financial reporting have been proposed by the Accounting Standards Board (ASB).

In a move that could benefit Irish exporters, the board proposes that British and Irish entities follow one of three versions of the International Financial Reporting Standards (IFRS) and cease using the UK or Irish Generally Accepted Accounting Principles (GAAP) standard from 2012. Irish firms listed on the stock exchange already adopt the full IFRS provisions.

Under the ASB proposals, IFRS provisions will apply to all organisations that are “publicly accountable”, which could include credit unions, according to Deloitte accounting partner Glenn Gillard.

A scaled-down version of IFRS known as IFRS for SMES (small and medium-sized enterprises) will apply to smaller companies.

Very small firms can apply to base their accounting practices on the Financial Reporting Standard for Smaller Entities (FRSSE).

About 5 per cent of Irish companies use IFRS, while 5 per cent use FRSSE, meaning the majority will have less than 2½ years to switch from the GAAP approach.

“These proposals, if implemented, will fundamentally change accounting in Ireland,” said Mr Gillard. “It is in the national interest that the accounts of even the smallest of our exporters or importers are internationally comparable.”

Adopting the three tiers of IFRS could promote Ireland’s ability to attract shared services divisions of multinationals and act as “the back office of the world”, Mr Gillard said. But he added that the Department of Enterprise, Trade and Employment needed to ensure that the proposals from the British-based ASB body were “fit for purpose and best suited to our needs here in Ireland”.

Mr Gillard said credit unions were “publicly accountable” bodies, but their smaller size meant full IFRS provisions would be unsuitable.