Information issued for accountants during the Brexit transition period
The UK Financial Reporting Council (FRC) and the Department for Business, Energy and Industrial Strategy (BEIS) have published a joint letter with information on accounting and corporate reporting standards now that we have left the European Union and are currently in a transition period.
The letter emphasises that there is no change to the UK’s accounting and corporate reporting framework during the transition period.
The information provided in the letter is immediately relevant for the transition period only. When this period ends on 31 December 2020, further advice and guidance on the changes that come into effect after the end of the transition period will be issued in due course.
UK Incorporated companies and groups
Currently, the Companies Act requires that UK-incorporated companies prepare their annual accounts either in accordance with International Accounting Standards (IAS) that have been adopted by the EU (“EU adopted IAS”), or in accordance with UK Generally Accepted Accounting Practice (UK GAAP) standards. For financial years beginning after 31 December 2020, UK incorporated companies and groups that currently use EU-adopted IAS will instead be required to prepare accounts using UK-adopted international accounting standards.
There will be no change for UK incorporated companies that use UK GAAP to prepare their annual accounts.
UK public companies with a UK listing
The reporting requirements for UK incorporated groups with securities admitted to trading on a UK regulated market will not change during the transition period: they can continue to prepare their accounts using EU-adopted IAS for the purposes of the Transparency Directive (TD) and Prospectus Directive (PD) as they do now.
For financial years beginning during the transition period, companies will continue to use EU-adopted IAS. Any new or amended standards that are adopted by the EU during the transition period can continue to be used.
If any new or amended standards are adopted by the EU after the end of the transition period, companies have two options:
(i) Continue to use EU-adopted IAS as they existed at the end of the TP; or
(ii) Choose to apply the ‘new’ UK adopted international accounting standards, that will include the new or amended accounting standards.
UK Endorsement Board
The Government is in the process of establishing the UK Endorsement Board (UK EB) to undertake the work of assessing, endorsing and adopting any new or amended International Accounting Standards published by the International Accounting Standards Board (IASB). The Endorsement Board is currently being established and is likely to be operational later this year once the appropriate infrastructure, Chair and staff are in place. Further information on the structure, legal basis and establishment of the UK EB can be found on the FRC website.
