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International Standards (Accounting)

European law requires listed companies to use International Accounting Standards (IAS) from 1 January 2005 when preparing their consolidated accounts. The relevant law is Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of International Accounting Standards.

The International Accounting Standards Board (IASB) is responsible for writing accounting standards to be used by all listed groups. The standards are also called International Financial Reporting Standards (IFRS) and the terms are often used interchangeably.

Before standards as written by the IASB can be used by European companies they are required to be adopted for use in the European Union. The Accounting Regulatory Committee (ARC) is composed of representatives from Member States and chaired by the Commission. The function of the Committee is a regulatory one and consists of providing an opinion on Commission proposals to adopt (endorse) an international accounting standard or an interpretation as envisaged under Article 3 of the IAS Regulation. The Committee has been set up by the Commission in accordance with the requirements contained in Article 6 of the IAS Regulation.

In the UK, the use of IAS has been extended to that:

• publicly traded companies in the UK are also permitted to use IAS in their individual accounts from the same date; and
• other companies and limited liability partnerships in the UK are permitted to use IAS in both their individual and consolidated accounts from the same date.

Guidance for UK companies on accounting and reporting: requirements under the Companies Act 2006 and the application of the IAS Regulation (293KB)