Major changes have taken place recently in financial reporting in the business world however, the most important change is the convergence around International Financial Reporting Standards (IFRS). IFRSs are considered a "principles based" set of standards in that they establish broad rules as well as dictating specific treatments.
At present Government Departments prepare their accounts on the basis of generally accepted accounting practice (GAAP) in the UK to the extent that it is meaningful and appropriate in a public sector context. As part of the 2008 UK Budget, the Westminster Government announced that all UK Government Departments and other public sector bodies will prepare IFRS compliant accounts from financial year 2009-10 with shadow IFRS accounts prepared for 2008-09.
The budgetary deadlines for IFRS are now fully recognised to allow restatement of the Scottish Budget on an IFRS basis for 2009-10 and appropriate revisions, as agreed with HM Treasury, will be presented to the Scottish Parliament at the 2009-10 Autumn Budget Revision.
HM Treasury have confirmed that the Financial Instruments Standards (FRS 25, FRS 26 and FRS 29) will be implemented from 2008-09 and any prospective changes to the Scottish Budget will be reflected at the 2008-09 Spring Budget Revision laid before the Scottish Parliament in January 2009.
The Scottish Government's accounts for 2009-10 will be produced under IFRS, as interpreted for the public sector in the IFRS-based Financial Reporting Manual (the I-FReM). The Scottish Government is currently assessing the budgetary impact arising from the adoption of IFRS now that the I-FReM is available.