Auditing Practices Board Publishes IFRS Guidance For UK And Ireland

by Jason Gorringe, Tax-News.com, London

06 May 2005

The Auditing Practices Board (APB) has published Draft Bulletin 2005/3 entitled – ‘Guidance for Auditors on First-time Application of IFRSs in the United Kingdom and the Republic of Ireland’.

In August 2004 the APB published a draft Bulletin that provided auditors with preliminary guidance on issues that may arise when companies (and other entities that are subject to audit) undertake the transition from UK/Irish GAAP to IFRSs.

Since then a number of uncertainties have been resolved and there have been various developments in auditing and financial reporting that are reflected in this further interim guidance. Guidance has also been added on the auditor’s review of interim financial information in the first year of adoption of IFRSs.

In spite of the progress made in resolving many of the legal and regulatory issues there are some remaining uncertainties, such as the specific wording to be used in the auditor’s report when describing the financial reporting framework, which is still under debate.

The wording used in the draft Bulletin is “those IFRSs adopted for use in the European Union” but there is a continuing discussion within Europe on the best term to use. The APB favours a consistent approach to this matter within Europe and accordingly the bulletin was issued as interim guidance. However, the description of the financial reporting framework used in it may be changed if there is a European consensus for a different description.

Richard Fleck, Chairman of the APB noted that:

“The adoption of IFRSs is a very significant development in financial reporting and is a key issue for auditors of listed companies in 2005. The interaction of accounting, legal and auditing issues gives rise to a degree of complexity and I hope that, by publishing this further draft guidance, APB will assist auditors’ understanding of these issues and thereby ease the transition to IFRSs.”

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