ICAEW chief executive Michael Izza has said it is time to end the debate about the legality of IFRS and instead concentrate on making the standards work.
Last week, the FRC published a legal opinion from Martin Moore QC that appeared to quash concerns that international accounting rules conflict with UK law, while the Department for Business rubbished the claims as “misguided”.
Doubts about the legality of IFRS were raised earlier this year by Lincoln’s Inn counsel George Bompas QC, who identified inconsistencies between IFRS and existing company law, suggesting that company directors must override the standards in order to comply with competing legislation.
However, Moore has found that IFRS is legally binding and achieves a true and fair view in financial statements and could, in most instances, be achieved by complying with the rules.
According to Izza, it is time to end the argument. “The debate about the legality of IFRS has drawn attention to significant concerns about aspects of the current financial reporting framework. Perhaps it’s now time to move on from the debate over legality and to concentrate on the changes needed to make the standards work,” Izza wrote in his ICAEW blog.
“Alarm bells rang when the opinion of Mr Bompas cast doubt on the legality of accounts prepared in accordance with IFRS. This may have been unsettling to say the least for the large number of UK companies that prepare accounts in accordance with IFRS, and indeed to the users of those accounts.
“The clarification provided by the Moore opinion is also important as it should allow the focus to switch to resolving the many outstanding issues in financial reporting, such as the institutional challenges of global standard setting and the rising tide of complexity in financial reporting,” Izza concluded.
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