LLP SORP in trouble

Ernst & Young made history on 6 April by becoming the first firm to register as a UK limited liability partnership. It was one of 18 firms to register on the day, including three other accountancy practices - Henton & Co in Leeds, Clough & Co in Bradford, and Macilvin Moore Reveres in London.

Over the next three years, 8,000 businesses are expected to register as LLPs.

However, there is still a major hurdle to overcome: how to account for them. The delay is a result of the difficulty the accountancy profession faces in translating concepts of partnership into what is essentially a corporate structure.

'We have had to deal with some quite knotty conceptual issues,' said one member of the CCAB steering group that is monitoring progress of the draft SORP. 'It has slowed us down considerably.'

But the delay has also been aggravated by the Accounting Standards Board's refusal to give its support to the draft Statement of Recommended Practice because of two particularly contentious issues - the accounting treatment of annuities, and whether the cost of partners' time should be included in work-in-progress.

Not surprisingly, pressure is mounting on the steering group to make some decisions and get a document out into the public arena for consultation. How soon that will be - and in what format - was the chief topic on the agenda at a CCAB steering group meeting last month; but the team is keeping quiet about any decisions it may have taken.

Given the time constraints, however, any document that is issued is likely to be an exposure draft, rather than a consultative document, especially since publication is not expected until the summer.

Be the first to vote

Rate this article

Related Articles