International Standards (Accounting)

In 2003 the government announced that from January 2005, all British companies will be able to use IFRS as an alternative to UK accounting standards.
European law requires listed companies to use IAS from 2005 when preparing their consolidated accounts.
However, as the result of a public consultation, the use of IAS has been extended to that:

  • publicly traded companies in the UK will also be permitted to use IAS in their individual accounts from the same date; and
  • other companies and limited liability partnerships in the UK will be permitted to use IAS in both their individual and consolidated accounts from the same date.

The Companies Act 1985 (International Accounting Standards and Other Accounting Amendments) Regulations 2004 (SI 2004/2947) introduce the option to use IAS and give full effect to the European IAS Regulation.  The Regulations also make a number of other changes to accounting and reporting requirements to implement the European Accounts Modernisation Directive and Fair Value Directive.

Three further sets of regulations, laid before Parliament on 15 August 2005, extend the option to prepare and distribute summary financial statements from listed companies to all companies that have had their accounts audited. They also ensure that companies preparing their accounts in accordance with International Financial Reporting Standards can continue to use summary financial statements.  The reference numbers for these Regulations are  2005/2281, 2005/2280 and 2005/2282.

Guidance for British Companies on these changes can be viewed in the related documents sections.

The International Accounting Standards Board (IASB) is responsible for writing accounting standards to be used by all listed groups (from 1 January 2005).  The standards are referred to as International Accounting Standards (IAS) or International Financial Reporting Standards (FRS).

Before standards as written by the IASB can be used by UK companies they are required to be adopted in the European Union. The Accounting Regulatory Committee (ARC) is composed of representatives from Member States and chaired by the Commission. The function of the Committee is a regulatory one and consists of providing an opinion on Commission proposals to adopt (endorse) an international accounting standard as envisaged under Article 3 of the IAS Regulation.  The Committee has been set up by the Commission in accordance with the requirements contained in Article 6 of the IAS Regulation.

The Accounting Standards Board (ASB) is the independent body responsible for setting accounting standards in the UK and the Republic of Ireland (UK GAAP).  These standards apply to all entities that have not chosen to use IFRS. In the last few years there have been a number of significant changes to accounting standards as The Board has embarked on a strategy of convergence with International standards, the Board is considering further convergence strategy.