IFRS, US GAAP, and International GAAP
All UK groups that are listed on the London Stock Exchange or AIM are required to produce their year-end consolidated and interim financial statements in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU.
It is also becoming increasingly common for non-listed companies to choose to prepare their financial statements in accordance with IFRS if:
- A listing is intended to take place in the future
- Shareholders have requested it
- They wish to aid comparison with other companies in their industry
- They are an international group
Working with BDO on IFRS
BDO will help you to understand and prepare for the changes that will take place. We can assist you in managing this process with an assessment of the impact of these new accounting standards or with their implementation.
We identify the precise implications of the changes and first time adoption adjustments on your financial statements and the timing and amounts of tax payments to HMRC. We can also help you prepare for conversion and support you through the implementation process for IFRS to ensure it runs smoothly.
We have significant experience in helping companies and other organisations through the process of transitioning to IFRS.
Why ignoring IFRS is not an option
IFRS has the potential to radically change the amounts reported in financial statements and cause substantial issues for companies. The potential issues include disputes about bonuses or earn-outs that are linked to revenue or profit, higher finance charges where interest rate margins are linked to key ratios, and breaches of bank covenants.
Failing to plan for IFRS could also result in profit warnings, delays in lodging financial statements, qualified audit reports, a loss of investor confidence and sharp reductions in share prices.
More details of how BDO can help.
Three new accounting standards are now effective and due to the significant changes from previous standards have the potential to transform how a company presents its performance and financial position in its financial statements. More details on the specific impacts of each of these three new accounting standards can be found on the specific page for that standard, which can be accessed from the following:
The Financial Reporting Council (FRC) monitors disclosures by companies on these new standards, including the impact in the year of adoption, and disclosures in relation to IFRS 15 and IFRS 16 will form part of the FRC’s thematic reviews in 2020/21.
The UK FRC’s Corporate Reporting Review team issues annual guidance for companies to improve their corporate reporting.
More details on UK narrative reporting requirements.
Model IFRS statements
These are illustrative IFRS financial statements of a listed company, prepared in accordance with International Financial Reporting Standards, but are not UK Company specific, and do not incorporate UK Companies Act disclosure requirements.
These illustrative IFRS financial statements are intended to be used as a source of general technical reference, as they show suggested disclosures together with their sources. They are not intended to address the particular circumstances of any particular entity.
There is also a supplement to the 31 December 2020 illustrative financial statements which focuses on disclosures that may arise as a result of COVID-19. This publication has two parts:
- Section A: a high level disclosure checklist, which highlights areas within most IFRS standards that may require disclosure due to the effects of COVID-19. This could be used as a tool for assessing the completeness of disclosures, though it does not highlight every possible situation.
- Section B: for certain areas in Section A, we have illustrative disclosures under various scenarios, including going concern, impairment of assets, government assistance, etc
IFRS At A Glance
This publications provides a high level overview of all IFRSs in issue at 31 December 2020.