The consultation also sets out the Government's proposed approach to implementation of an EU Directive that modernises the existing accounting Directives.
Under the EU's IAS Regulation, companies and building societies with securities traded on an EU regulated market will be required to use IAS in their consolidated accounts for financial years commencing on or after 1st January 2005.
Last year the DTI announced that it intended to allow such publicly traded companies to choose to use IAS in their individual accounts, and all other companies to choose to use IAS in either their individual or consolidated accounts, or both. HM Treasury intends to extend this optional approach to building societies.
The new consultation sets out detailed proposals for the operation of this choice and for the incorporation of IAS into company and building society legislation.
In particular, the Government is proposing that an election to use IAS should be irreversible in most circumstances, and that all companies within a group should make a consistent choice unless there are good reasons against this. It is also proposed that charity companies are required to continue to prepare their accounts in accordance with UK generally accepted accounting practice.
The Government is also required to implement the provisions of the Modernisation Directive by 1st January 2005. This is designed to bring EU accounting requirements into line with modern accounting practices by eliminating conflicts with IAS.