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EEA and UK Accounting: Accounting for Companies operating in the UK and European Economic Area (EEA)

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EEA and UK accounting: how companies incorporated in the UK or where the parent company is incorporated can comply with UK reporting and accounting requirements.

Following the modifications to the UK’s corporate reporting system, a small number of companies have been affected by changes in the UK’s corporate reporting system.

Preparing the annual accounts for companies in the United Kingdom

For financial years starting on or after January 20, 2021, all companies must use the UK adopted international accounting standard (IAS). Both sets of standards were in effect the same as on January 20, 2021.

When preparing your accounts to cover financial years that began before 1 January 2021, you can still use EU-adopted IAS.

Certain types of companies may need to take additional action.

  • UK incorporated parent businesses: UK incorporated parent firms with a subsidiary in Europe must check the reporting requirements for the subsidiary’s country.
  • UK companies that have a presence within the EEA. UK companies with a physical presence in an EEA nation – such as a branch – need to verify the reporting requirements.

UK public companies with a listing in the United Kingdom

Companies have changed the way they raise capital and trade securities in a regulated marketplace.

UK incorporated companies that have securities to trade on the UK regulated exchange must prepare accounts according to the UK adopted international accounting principles for any financial year beginning after or on January 20, 2021.

They can use the EU-adopted IAS to account for periods beginning before January 2021. These accounts do not have to be recalculated after this date.

UK public companies that have an EEA listing.

You must check the reporting requirements of the relevant jurisdiction if you are listing on an EEA-regulated exchange. You may have to declare that your accounts are compliant with the UK adopted international accounting standard and International Financial Reporting Standards, (IFRS), as published by the International Accounting Standards Board. This applies to financial years beginning after January 1, 2021.

Audit committees

All UK public interest entities, including banks, insurance companies, insurers, and issuers securities trading on UK regulated markets, must follow these guidelines:

  • Financial Conduct Authority (FCA), has issued transparency and disclosure rules;
  • Prudential Regulation Authority (PRA), issues rules.

Modifications to the Audit Directive

This framework does not apply to UK issuers or holders of shares or bonds securities. They can only trade on EEA-regulated markets.

Companies with a UK incorporated parent company still have to comply with the Audit Directive.

IF A SUBSIDIARY IS AN ISSUER OF SECURITIES ON UK-REGULATED MARKETS, IT MAY BE SUBJECT TO EITHER THE FCA OR PRA RULES.

The PRA rules apply to subsidiaries that are banks or insurance companies and fall within the limited exemption.

Appointing auditors

UK companies must appoint a UK-registered audit firm. The audit report must be signed by an individual UK registered auditor.

EEA and UK Accounting: Are your EEA companies and groups based in the UK?

Learn how EEA groups and companies with a presence within the UK can comply with UK reporting and accounting requirements.

Group Accounts

Group accounts may not be produced by intermediate UK parent companies that have an immediate EEA parent. You can find and learn more about the accounting sector from the Financial Reporting Council (FRC), and the government.

Annual Accounts

Companies House requires UK registered dormant businesses with an immediate EEA parent to file their annual accounts for the accounting periods starting on or after January 20, 2021.

Exemptions

EEA companies that have a UK incorporated subsidiary might not be eligible to receive certain exemptions from filing and preparing accounts.

Financial periods that begin on or after January 1, 2021, are exempted from the production of non-financial financial information statements and modification of accounting reference dates.

EEA and UK Accounting: Operating as an EEA Company with a UK listing.

EEA incorporated entities that issue debt or other securities can continue to use accounts prepared according to the EU adopted international accounting standard (IAS) which is allowed to trade on a UK stock exchange.

EEA and UK Accounting: Auditing EEA Companies that issue securities and are allowed to trade on the UK regulated market.

Ensure that your EEA auditor has been registered as either a:

  • UK Statutory auditor;
  • An auditor from a third country on the FRC register.

This applies to all accounting years that begin after January 2021. This may not apply to EEA companies audited and registered by UK audit firms and UK auditors.

EEA and UK Accounting: Accounting for UK companies in the EEA

Learn what to do if your company is based in the UK and you want to operate in the EEA.

Companies incorporated in the UK or where the parent company is incorporated can comply with UK reporting and accounting requirements. However, a small number of companies have been affected by changes in the UK’s corporate reporting system.

Preparing the Annual Accounts

For financial years starting on or after January 20, 2021, all companies must use the UK adopted international accounting standard (IAS). Both sets of standards were in effect the same as on January 20, 2021.

When preparing your accounts to cover financial years that began before 1 January 2021, you can still use EU adopted IAS.

Some companies may need to take additional action.

  • The UK incorporated parent businesses: UK incorporated parent firms with a subsidiary in Europe must check the reporting requirements for the country in which the subsidiary is located.
  • UK companies that have a presence within the EEA. UK companies with a physical presence in an EEA nation – such as a branch – need to verify the reporting requirements.

UK Public Companies with a UK listing.

Companies have changed the way they raise capital and trade securities in a regulated marketplace. Therefore UK incorporated companies that have securities to trade on the UK regulated exchange must prepare accounts according to the UK adopted international accounting principles for any financial year beginning after or on January 20, 2021.

They can use EU adopted IAS to account for periods beginning before January 2021. These accounts do not have to be recalculated after this date.

EEA and UK Accounting: UK public companies that have an EEA listing.

You must check the reporting requirements of the relevant jurisdiction if you are listing on an EEA-regulated exchange. You may have to declare that your accounts are compliant with the UK adopted international accounting standard and International Financial Reporting Standards, (IFRS), as published by the International Accounting Standards Board. This applies to financial years beginning after January 1, 2021.

Audit Committees

All UK public interest entities, including banks, insurance companies, building societies, and insurers, must follow these guidelines:

  • Financial Conduct Authority (FCA), has issued transparency and disclosure rules;
  • Prudential Regulation Authority (PRA), issues rules.

Modifications to the Audit Directive

  • This framework does not apply to UK issuers or holders of shares or bonds securities. They can only trade on EEA regulated markets.
  • Companies with a UK incorporated parent company still have to comply with the Audit Directive.
  • If a subsidiary is an issuer of securities on UK regulated markets, it may be subject to either the FCA or PRA rules.
  • The PRA rules apply to subsidiaries that are banks or insurance companies and fall within the limited exemption.

Appointing Auditors

UK companies must appoint a UK registered audit firm, and the audit report must be signed by an individual UK registered auditor.

If you found this article helpful, please go to the rest of the website to read more on Accounting, Audit, Taxation in The United Kingdom, and International

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