U.S. Markets closed

Accounting watchdog urges UK to stick with global rules

A general view is seen of the London skyline from Canary Wharf in London, Britain, October 19, 2016. REUTERS/Hannah McKay

By Huw Jones

LONDON (Reuters) - Britain should not go it alone by adopting its own book-keeping rules after it leaves the European Union, though the global regulations in place could be tailored, the UK's accounting watchdog said on Friday.

Listed companies in Britain and across the EU apply the accounting standards adopted by the International Accounting Standards Board.

Some British lawmakers have said the IASB rules exacerbated the financial crisis and lack rigour.

"Brexit could have significant implications for the adoption of international financial reporting standards depending on the exit arrangements negotiated by the government," said Paul George, executive director for corporate governance and reporting at the Financial Reporting Council, said,

"The FRC continues to support the application of a single set of high quality global financial reporting standards for listed companies."

The watchdog said it will identify potential risks to the accounting framework at the point Britain leaves the EU and afterwards, and consider opportunities for improvements.

The comments were included in a check of company reports in Britain, which found that financial statements were generally good but needed to inject more balance in their reporting of performance.

"Trust is eroded by excessive or inappropriate use of underlying profit figures, alternative performance measures, and failure to acknowledge when things haven't gone as well as expected," the FRC said.

  The watchdog, which has powers to fine accountants and their firms for falling below auditing standards, reviewed 192 company reports up to March.

"We wrote to 33 companies to alert them that we will review their tax disclosures in their next annual report and accounts in order to encourage more transparency," the FRC said.

The companies and their auditors were not named in the FRC report, which said most companies concerned had agreed action to resolve the issues.

"Disappointingly, no FTSE 100 company that we reviewed stood out as a role model in this area of reporting," it added.


(Reporting by Huw Jones; editing by John Stonestreet)