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FRC issues guidance on IFRS; uncertainties remain

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29th Apr 2005
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The Auditing Practices Board (APB) has announced the publication of advice to auditors on the application of IFRS.

The Draft Bulletin 2005/3 entitled ' 'Guidance for Auditors on First-time Application of IFRSs in the United Kingdom and the Republic of Ireland', was published yesterday.

The APB says that in August 2004 it 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."

It explained that 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. "

The Bulletin also includes guidance on the auditor's review of interim financial information in the first year of adoption of IFRSs.

But, says the Board, in "spite of the progress made in resolving many of the legal and regulatory issues" a number of uncertainties remain. It notes that in particular, "the specific wording to be used in the auditor's report when describing the financial reporting framework is still under debate."

It says, "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 says it "favours a consistent approach to this matter within Europe and accordingly this Bulletin is being issued as interim guidance and 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, APB chairman said:

'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accounting, legal and auditing issues gives rise to a degree of complexity and I hope that, by publishing this further draft guidance, APB will assist auditors' understanding of these issues and thereby ease the transition to IFRSs.'

The Bulletin is accessible at: FRC Guidance on application of IFRS
pdf

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