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Brexit resources

Changes to the UK’s accounting, corporate reporting, auditing and corporate governance regimes 

Under the European Union (Withdrawal) Act 2018, the UK ceased to be a member of the EU on 31 January 2020. Under the withdrawal agreement, enacted in UK law by the European Union (Withdrawal Agreement) Act 2020, there is an implementation period (IP), which ends on 'IP completion day', defined as 31 December 2020 at 11.00 p.m. UK time.

UK reporting continues to be subject to the EU legislative framework until IP completion day. This means that:

  • existing company law relating to accounts and audit continues to apply;
  • companies that are required or choose to adopt IFRS Standards must use IFRS Standards 'as endorsed for use in the European Union', meaning that new or revised Standards cannot be adopted before EU-endorsement; and
  • the FRC remains a competent authority of an EU Member State, tasked with monitoring and supervising compliance with ESMA’s common enforcement priorities, which therefore remain relevant for UK company reporting.

There are a number of changes to the UK’s accounting, corporate reporting, auditing and corporate governance regimes after the end of the transition period.  These changes are reflected in a number of statutory instruments which have been made by the government.  These instruments amend retained EU law and EU-derived domestic legislation to address deficiencies and ensure that the law continues to operate effectively after IP completion day. They take effect from IP completion day, although in many cases transitional provisions exist such that changes take effect only for financial years beginning on or after IP completion day.  The majority of changes made by these statutory instruments are to the Companies Act 2006 and affect a variety of provisions including eligibility for the small companies regime, exemptions from preparing consolidated accounts and the availability of audit exemption for subsidiaries. They also introduce a new legal term ‘UK-adopted international accounting standards’ for IFRS Standards as adopted by the UK and provide for a UK endorsement mechanism of IFRS Standards. 

The Department for Business, Energy and Industrial Strategy (BEIS) and the Financial Reporting Council (FRC) have jointly published updated letters to audit firms and companies setting out changes to the UK’s corporate reporting framework after the end of the transition period.

Investor and FRC expectations in annual reports

The significant uncertainties in relation to the UK’s future relationship with the EU and the terms of any future economic partnership agreement continue to persist. Investors look for transparent information on how the uncertainties arising from the ongoing UK-EU negotiation affect the company, including its ability to continue as a going concern and its longer-term viability and prospects.

In its letter to Audit Committee Chairs and Finance Directors, the FRC's expectations are clear.  It expects company reports to explain company-specific risks and uncertainties arising as a result of Brexit. This should include the impacts on different parts of the business and any effects on the financial statements including major sources of estimation uncertainty, amounts at risk and ranges of potential outcomes.

This page includes all of our resources on the financial reporting implications of Brexit.  It includes links to:

Related resources

FRC and BEIS letters on accounting and reporting from 1 January 2021

27 Nov 2020

The Department for Business, Energy and Industrial Strategy (BEIS) and the Financial Reporting Council (FRC) have jointly published updated letters to audit firms and companies setting out changes to the UK’s corporate reporting framework after the end of the transition period on 31 December 2020. The changes are particularly relevant for UK incorporated companies, multinational groups with a UK and EEA presence and UK and EEA companies with cross-border listings.

Governance in brief - FRC issues advice on annual reports for 2020/21 reporting season

23 Nov 2020

FRC issues advice on annual reports for 2019/20 reporting season

FRC publishes year-end advice to Audit Committee Chairs and Finance Directors in advance of the 2020/21 reporting season

14 Nov 2020

The Financial Reporting Council (FRC) has published a letter to Audit Committee Chairs and Finance Directors, in advance of the 2020/21 reporting season, setting out its expectations for preparers of reports and accounts for the coming year.

Annual report insights 2020-Surveying FTSE reporting

29 Oct 2020

Our latest annual reporting survey, Annual report insights 2020, provides insights into practices in annual reporting, focusing on areas where requirements have changed, where regulators are focusing or where innovative practices are emerging.

FRC publishes findings on the quality of corporate reporting in 2019/2020

21 Oct 2020

The Financial Reporting Council (FRC) has published its Annual Review of Corporate Reporting 2019/2020, which provides the FRC's assessment of corporate reporting in the UK based on evidence from a variety of sources, including the work of the FRC's own Corporate Reporting Review (CRR) team. The report sets out the FRC’s expectations of areas of corporate reporting that require improvement and what it expects companies to focus on in the coming reporting season. The FRC expects companies to consider its findings during the financial reporting process.

Need to know — Accounting, auditing and corporate governance – legal and regulatory changes arising from Brexit

04 Sep 2020

This Need to know discusses the accounting, auditing and corporate governance – legal and regulatory changes arising from the UK's withdrawal from the EU ("Brexit").

FRC publishes its plan and budget for 2020/21

24 Mar 2020

The Financial Reporting Council (FRC) has published its plan and budget for 2020/21.

FRC and BEIS publish revised Brexit accounting and audit letters

14 Feb 2020

The Financial Reporting Council (FRC) and the Department for Business, Energy and Industrial Strategy (BEIS) have jointly published revised letters for auditors and accountants with information regarding auditing, accounting and corporate reporting standards during the transition period following the UK’s exit from the EU on 31 January 2020.

FRC publishes its draft plan and budget for 2020/21

12 Feb 2020

The Financial Reporting Council (FRC) has published its draft plan and budget for 2020/21. Comments are requested by 28 February 2020.

FRC announces thematic reviews for 2020/2021

16 Dec 2019

The Financial Reporting Council (FRC) has announced the corporate reporting and audit quality thematic reviews that it will undertake in 2020/21.

Accounting Roundup - Closing Out 2019

10 Dec 2019

Closing Out 2019 discusses the significant corporate reporting issues relevant to 31 December 2019 annual reports, covering areas of regulatory focus identified in the FRC’s Annual Review of Corporate Reporting 2018/2019 and the ESMA’s common enforcement priorities for issuers in the European Union, together with other developments in reporting standards and areas of investor interest.

Governance in brief — FRC issues advice on annual reports for 2019/20 reporting season

14 Nov 2019

The FRC has issued its Annual Review of Corporate Reporting and annual open letter to finance directors and audit committee chairs covering its perspectives on key developments and areas of focus for 2019/20 annual reports. The report sets out the FRC’s “expectations for corporate reporting to improve trust in business”, emphasising the annual report is a vehicle of trust and stewardship.

FRC publishes findings on the quality of corporate reporting in 2018/2019

30 Oct 2019

The Financial Reporting Council (FRC) has published its Annual Review of Corporate Reporting 2018/2019, which provides the FRC's assessment of corporate reporting in the UK based on evidence from a variety of sources, including the work of the FRC's own Corporate Reporting Review (CRR) team.

FRAB minutes for April and June 2019 meetings released

28 Oct 2019

The minutes of the Financial Reporting Advisory Board’s (FRAB’s) meeting of 4 April 2019 and 13 June 2019 have been made available on the HM Treasury website

FRC publishes letter to Audit Committee Chairs and Finance Directors on the UK's exit from the EU

27 Sep 2019

The Financial Reporting Council (FRC) has published a letter to Audit Committee Chairs and Finance Directors setting out some of the actions companies should consider in advance of the UK’s exit.

FRC plan and budget highlights key areas of focus for 2019/20

23 May 2019

The Financial Reporting Council (FRC) has published its Plan and Budget for 2019/20, which sets out its priorities for 2019/20.

Government approves the International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019

28 Mar 2019

The International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019/685) have been approved by the government.

Need to know — Accounting, auditing and corporate governance – legal and regulatory changes arising from a “No Deal” Brexit

06 Mar 2019

This Need to know discusses the accounting, auditing and corporate governance – legal and regulatory changes arising from a “No Deal” Brexit.

Government approves the Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019

28 Feb 2019

The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 (SI 2019/177) have been approved by the government.

FRC and BEIS publish ‘no deal’ Brexit accounting and audit letters

22 Feb 2019

The Financial Reporting Council (FRC) and the Department for Business, Energy and Industrial Strategy (BEIS) have published letters for auditors and accountants to share information in case there is no deal for leaving the EU by 29 March 2019.

Correction list for hyphenation

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