The tools and methods in the field of online accounting are growing at an unprecedented pace. What started off as a method to help accountants deal with daily, mundane tasks, has evolved into a full blown accounting software-as-a-service revolution, and things don’t look like stopping any time soon!
This boost in the usage of online accounting software is also accompanied by the continuously updating accounting standards that are difficult to manage manually. Especially for businesses operating in the UK that use accounting software, the accounting standards in the UK require the businesses to stay more proactive with their accounting. Again, this is a feat that is nearly impossible if done manually. As a result of this, automated tools, based on the cloud, have emerged that take care of everything related to accounting while ensuring that the company stays compliant to accounting standards in the UK.
Such cloud-based and overall best accounting software is truly multi-purpose and can help businesses easily raise invoices, process payments, reconcile bank statements, and even take care of all the taxation duties. Further, with everything stored in one location, accessing the accounting documents becomes easy, and it allows businesses to stay away from any mishaps that can happen because of misplacement of financial documents.
If you are a business owner or an accountant, it is imperative in today’s world that you dive deeper into the world of accounting tools and find the one that fits your requirements the best. Further, if you have to stay compliant with all the accounting standards in the UK, it is important that you have an automated tool like accounting software by your side to help you stay up-to-date with any changes that happen in that regard. Talking more about that, let’s look at some accounting standards in the UK and how they impact various businesses working in and out of the United Kingdom.
Please note that the rules and regulations mentioned hereafter are referenced from the official website. More details on that can be found here.
Changes to the Operating Reporting Regime for Corporates in the UK
The accounting regime in the United Kingdom has gone through various changes over the years which have affected both big and small companies. Some of the UK accounting standards to be kept in mind if you use accounting software include:
Updations to Preparation of Annual Accounts
As per the updated accounting standards in the United Kingdom, all companies are required to use UK-adopted IAS (International Accounting Standards) instead of EU adapted standards. This change was implemented beginning from the year 2021. Before January 2021, both the sets of IAS were the same, but since then, United Kingdom standards were changed and accounting teams are required to comply with these changes.
For Businesses with Parent Company Incorporated in the UK
All the parent companies that are incorporated in the United Kingdom and have a subsidiary in the European Economic Area (EEA) are required to check the reporting requirements of the country where their subsidiary is based. The accounting standards and rules and regulations will vary based on the location, in that case.
For Businesses with a UK Listing
The methods that companies used to raise capital and trade securities on a regulated market has changed. UK incorporated groups with securities admitted to trading on a UK regulated market need to prepare accounts using UK-adopted international accounting standards for all financial years beginning on or after 1st January 2021. The companies can use EU-adopted IAS for accounting periods starting before this date. They are not needed to restate these accounts after that date.
For Public Companies with EEA Listing
If your company is listed in an EEA regulated market, you need to check the reporting requirements in the relevant jurisdiction. For example, you might be required to state that your accounts comply with both UK-adopted standards as well as IASB standards (as issued by the International Accounting Standards Board) for financial years beginning on or after 1st January 2021.
For Auditing Committees
All the public interest entities in the United Kingdom – from banks to building societies and more) have to comply with the following two standards:
- Disclosure and transparency rules issued by the FCA (Financial Conduct Authority).
- Rules issued by the PRA (Prudential Regulation Authority).
Updates to the Audit Directives
UK issuers of debt securities or shares that are admitted to only trading on the EEA regulated markets are not subjected to this framework as per the latest guidelines. The Audit Directive requirement still applies to companies with parent companies incorporated in the UK.
For subsidiaries that are issuers of securities on the UK regulated markets, their parent companies may be subjected either to PRA or FCA rules. On the other hand, the subsidiaries that are banks or insurers and qualify under the most limited exemption provided by the PRA, the parent must be subject to the PRA rules.
Regulations Regarding Appointing Auditors
The companies operating from the United Kingdom are required to appoint an audit firm that is registered in the UK. Then, the individual auditors are required to sign the report on behalf of the business. More rules that have changed in this regard.
Evidently, the changes to accounting standards in the UK are a consistent affair. The standards are meant to keep the customers and the businesses safe from any frauds or mishaps, and it is highly recommended that businesses stay true to these standards. However, it gets too confusing too quickly with frequent updates to rules and regulations. With accounting software, this task becomes extremely simplified with all the updates delivered to you at the right time. This information helps you stay compliant with the rules and operate in an atmosphere that is safe for both you and your customers!