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 international accounting standards’ instead of ‘EU adopted IAS’ for financial years beginning on or 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 when preparing your accounts for financial years beginning 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

If you list on an EEA regulated market you will need to check the reporting requirements in the relevant jurisdiction. For instance, you may need to state that your accounts comply with both UK-adopted international accounting standards and IFRS as issued by the IASB for financial years that begin on or after 1 January 2021.

Audit committees

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.

Appointing auditors

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.

Accounting for EEA companies in the UK

Find out what you need to do if you’re an EEA company working the UK.