Endorsement of IAS
Endorsement of IAS
Existing EU-adopted IAS
At the point that the UK’s Transition Period (during which it remains subject to EU law) ends, legislation made under the European Union (Withdrawal) Act 2018 brings into UK law International Accounting Standards (IAS) already endorsed in the EU to provide continuity. These standards are defined as UK-adopted international accounting standards.
Establishing the UK endorsement body
The International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019 No. 2019/685 will give power to the Secretary of State to endorse new or amended standards, and to delegate this responsibility to a body. The intention is to delegate these functions to a newly-formed independent UK endorsement body.
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.
The Regulations can be found here.
IFRS influencing activities
During the establishment of the Endorsement Board, the FRC will undertake IFRS influencing activities in conjunction with Endorsement Board staff. All efforts will be taken to ensure that formal UK positions and comment letters on the IASB’s projects include input from stakeholders and the FRC’s Corporate Reporting Council. The FRC will also publish a Feedback Statement summarising the main comments it received for any outreach events held and explaining how they were considered during finalisation of the UK position.
During the establishment of the Endorsement Board, BEIS and FRC will put in place mechanisms to oversee the work of the Endorsement Board staff when developing advice for consideration by the Secretary of State. This will include assessment of new IASB amendments against the endorsement criteria in the Regulations, outreach to UK stakeholders to gather evidence, and making the draft Endorsement Criteria Assessment available for public comment. The input received, together with the views of the FRC’s Corporate Reporting Council, will be used to finalise the Endorsement Criteria Assessment. It will then be submitted to the Secretary of State for formal adoption. The FRC will also publish a Feedback Statement summarising the main comments received and explain how they were incorporated in the final advice.
Who will it affect?
All UK companies that apply EU-adopted IAS in their consolidated or individual accounts. During the Transition Period (11pm on 31 January 2020 to 11pm on 31 December 2020) entities will continue to apply EU-adopted IAS. For the end of the Transition Period:
- Entities with financial years beginning on or before 31 December 2020 but ending after that date, continue to apply EU-adopted IAS.
- Entities with financial years beginning after 31 December 2020, apply UK-adopted international accounting standards.
Currently, EU-adopted IAS are required to be applied in the consolidated accounts of listed UK companies and may be applied in the parent or individual company accounts of listed UK companies and can be applied by all other companies. The EU IAS Regulation (1606/2002) is the Regulation which introduced this requirement for all listed companies in the EU.
The UK Companies Act permits EU-adopted IAS to be applied in the accounts of other companies.
The EU IAS Regulation requires that, before an IAS can be applied by EU companies, it must go through an endorsement process.
The European Financial Reporting Advisory Group (EFRAG) provides advice to the European Commission on the endorsement of IAS in the EU.