Watchdog urges Britain to retain global accounting rules after Brexit

Britain's accounting watchdog has urged the government to ensure the UK retains global book-keeping rules even after it leaves the European Union, although the current regulations could be adapted.

The International Accounting Standards Board (IASB) sets out the accounting rules for listed companies across Britain and Europe, but the UK's vote to leave the 28-country bloc could have serious implications in terms of financial reporting rules.

"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 (FRC).

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

A number of British lawyers have previously criticised the IASB's standards, claiming they were found wanting in terms of rigour and contributed to the exacerbation of the financial crisis, but the FRC said the rules could be adapted to suit the Brexit process.

In a report released on Friday (21 October), the watchdog pledged to examine potential risks to Britain's accounting system relating to the UK's exit from the EU and to consider any opportunities for improvement.

The report, based on 192 companies filings up to March, also found that accounting practices among British companies were generally good, although the regulator stressed the need for firms to adopt a more balanced view of their results.

"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.

"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."