01 October 2019

Deloitte: UK endorsement of IFRSs post EU-exit

At the meeting of the International Forum of Accounting Standard Setters (IFASS) currently held in London, participants received a presentation by representatives of the UK Department for Business, Energy & Industrial Strategy (BEIS) on 'UK audit reforms; and UK endorsement of IFRSs post EU-exit'.

The main messages on the IFRS-related aspects of the presentation were the following:

• It is in the UK's own interest to stay with IFRSs.
• After Brexit, IFRSs in the UK will be known as "UK-adopted international accounting standards".
• There is legislation already in place that will
  • onshore and freeze existing EU-adopted IFRSs on the date of the EU exit;
  • transfer the European Commission's powers to endorse and adopt IFRSs to the Secretary of State; and
  • set out a mechanism for these powers to be sub-delegated to an endorsement and adoption board (currently expected to occur in the new year).
• The new endorsement board will
  • be hosted by the UK Financial Reporting Council (FRC) but will be sufficiently independent;
  • consist of a full-time Chair, part-time Board members and 12-15 staff; and
  • will also be responsible for upward influence of the pronouncements to be endorsed (for example, submitting comment letters to the IASB).
• The FRC, the current standard-setter,
  • will eventually be replaced by a new body, the Audit, Reporting and Governance Authority (ARGA);
  • has just recently been given a new leadership;
  • will continue to be responsible for UK GAAP; and
  • will continue to be responsible for the strategic report and, therefore, application guidance on non-financial reporting requirements.

The legislation that is already in place includes the Statutory Instrument (SI) 2019/685, which comes into effect on the day of EU exit, transfers the endorsement powers of the European Commission to the Secretary of State for BEIS. Regulation 7 sets out the endorsement criteria, which are almost identical to the criteria in the IAS Regulation.

Full press release on Deloitte

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