Changes to the UK’s corporate reporting regime
There will be changes to the UK’s corporate reporting regime from 2021. These changes will affect a small number of companies.
Preparing annual accounts
All companies will need to use ‘UK adopted IAS’ instead of ‘EU adopted IAS’ for financial years beginning after the 1 January 2021. Both sets of standards will be the same on 1 January 2021. There may be differences later if the UK adopts or amends standards and the EU does not.
You can continue to use EU adopted IAS (International Accounting Standards) when preparing your accounts for financial years beginning on or before 1 January 2021.
Some types of companies will need to take further action from January 2021.
UK incorporated parent companies
UK incorporated parent companies with a subsidiary in the EEA need to check the reporting requirements in the country where the subsidiary is based.
UK companies with a presence in the EEA
UK companies with a presence in an EEA country - for example, a branch - need to check the reporting requirements in that country.
UK public companies with a UK listing
The way companies raise capital and trade securities on a regulated market will change.
UK incorporated groups with securities admitted to trading on a UK regulated market will need to prepare accounts using UK adopted IAS for all accounting periods beginning on or after 1 January 2021.
They can use EU adopted IAS for accounting periods starting before January 2021. They will not need to restate these accounts after that date.
UK public companies with an EEA listing
UK incorporated groups that issue debt from a subsidiary incorporated in the EU will need to do both of the following:
- comply with the rules of the country where the subsidiary is based
- produce accounts that comply with the UK Companies Act 2006
All UK public interest entities (banks, building societies, insurers and issuers of securities that trade on UK regulated markets) will have to follow:
- Disclosure and Transparency Rules issued by the Financial Conduct Authority (FCA)
- rules issued by the Prudential Regulation Authority (PRA)
Changes to the Audit Directive
UK issuers of shares or debt securities that are only admitted to trading on EEA regulated markets will no longer be subject to this framework.
The Audit Directive requirement will still apply to companies with a parent company incorporated in the UK.
For subsidiaries that are issuers of securities on UK regulated markets, the parent company may be subject either to the FCA or the PRA rules.
For subsidiaries that are banks or insurers and qualify under the more limited exemption provided by the PRA, the parent must be subject to the PRA rules.
UK companies will need to appoint a UK registered audit firm. An individual UK registered auditor will need to sign the audit report on behalf of the firm.
Some rules relating to approving individuals and firms for registration as auditors will change. Find out more about auditing from 1 January 2021.
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