FRC issues Brexit-related financial reporting guidance, amendments to FRS

UK regulator the Financial Reporting Council (FRC) issued guidance and amendments at the end of 2020 relating to legislative changes resulting from the UK’s exit from the EU — as well as amendments required as interest rate benchmarks are reformed.

The FRC issued guidance for preparers using IFRS, and their auditors, where company accounting periods straddle the end of the Brexit transition period on 31 December 2020.

The guidance is designed to ensure consistent understanding and application of requirements in the Companies Act, the FRC said.

Amendments to UK and Ireland standards

Earlier, the regulator set out amendments to UK and Republic of Ireland accounting standards to ensure consistency with UK company law and to update legal references and terminology used in the standards as the UK left the EU.

The Amendments to UK and Republic of Ireland Accounting Standards: UK Exit From the European Union change five accounting standards, as well as the FRC’s pronouncement on interim reporting and the implementation guidance accompanying FRS 103, Insurance Contracts.

The effective date for amendments is beginning on or after 1 January 2021. The FRC issued an impact assessment of the amendments.

Additionally, the FRC issued Amendments to FRS 102, The Financial Reporting Standard Applicable in the UK and Republic of Ireland: Interest Rate Benchmark Reform (Phase 2).

These amendments relate to interest rate benchmark reform and are intended to adapt and simplify accounting requirements and provide disclosure of the nature and extent of risks that arise, the FRC said. The regulator also issued an impact assessment and feedback statement.

The International Accounting Standards Board issued in August amendments to IFRS in response to reform of interbank offered rates (IBORs) and other interest rate benchmarks.

— Oliver Rowe (Oliver.Rowe@aicpa-cima.com) is an FM magazine senior editor.