Week 2 Assignment
March 13, 2015
United Kingdom Adopted IFRS
IFRS is a set of accounting standards promulgated by the International Accounting Standards Board (IASB), an international standard-setting body based in London. It was designed as a common global language for business affairs so that company accounts are comparable and understandable across international boundaries (Ghosh, 2010). In June 2002, the European Union (EU) adopted an IAS Regulation requiring European companies listed in an EU/European Economic Area (EEA) securities market to prepare their consolidated financial statements in accordance with IFRS starting in 2005 (United Kingdom).
EU countries have four options: require or permit IFRSs in parent company financial statements; require or permit IFRSs for unlisted companies; permit companies that are listed on exchanges outside of the EU and that currently prepare their primary financial statements using a non-EU GAAP to delay IFRS adoption to 2007; permit companies whose only listed securities are debt securities to delay IFRS adoption to 2007 (United Kingdom).
The United Kingdom (UK) is an EU Member and adopted IFRS beginning 2005. As of 2011, public companies are required to use the IFRS for their consolidated accounts. Listed companies with no subsidiaries may continue to use UK GAAP. Companies with securities trading on a regulated market may use UK GAAP in preparing their company only financial statements. Other companies are also allowed to use the IFRS, but most choose not to do so, and continue to use the UK accounting standards largely developed prior to 2005. For medium-sized companies that are not public companies, the Accounting Standards Board has proposed replacing the UK's GAAP with the Financial Reporting Standard for Medium-sized Entities, which is based on the IFRS for Small and Medium-sized Entities. Companies deemed small may elect to report under the Financial Reporting Standard
References: Ankarath, N., Ghosh, T.P., Alkafaji, Y. A., & Mehta, K. J. (2010). Understanding IFRS Fundamentals: International Financial Reporting Standards. ISBN: 9780470399149 DeVry Library eBooks 24/7 United Kingdom. Retired from http://www.iasplus.com/en/jurisdictions/europe/uk Lee, E., Walker, M. , Christensen, H.B. (2008). Mandating IFRS: its Impact on the Cost of Equity Capital in Europe. Retried from http://www.accaglobal.com/content/dam/acca/global/PDF-technical/financial-reporting/rr-105-001.pdf