Tax and accountancy: meaning of ‘international accounting standards’
S997 Income Tax Act 2007, S1127 Corporation Act 2010
The term ‘international accounting standards’ (IAS) has the same meaning for Income Tax and Corporation Tax purposes as in EC Regulation 1606/2002 of the European Parliament and the Council of 19 July 2002 on the application of international accounting standards.
Where, in accordance with the Regulation, the European Commission has adopted a standard with modifications, then GAAP as it applies to IAS accounts is taken to permit the use of the standard with or without the modifications, and accounts prepared on either basis are taken to be prepared in accordance with IAS.
Article 2 of the Regulation defines ‘international accounting standards’ as International Accounting Standards (IAS), International Financial Reporting Standards (IFRS) and related Interpretations (SIC-IFRIC interpretations), subsequent amendments to those standards and related interpretations, future standards and related interpretations issued or adopted by the International Accounting Standards Board (IASB).
The International Accounting Standards Board
The International Accounting Standards Board (IASB) is the standard-setting body of the IFRS Foundation, a non-governmental body which is committed to developing a single set of global accounting standards. The Board co-operates with national accounting standard setters to achieve convergence in accounting standards around the world.
The IASB publish:
- International Financial Reporting Standards,
- Exposure Drafts, and
- International Financial Reporting Interpretations Committee (IFRIC) Interpretations of International Financial Reporting Standards.
It has also taken over those standards published by its predecessor, the International Accounting Standards Committee (IASC) namely:
- International Accounting Standards, and
- Standard Interpretations Committee (SIC) Interpretations of International Accounting Standards.
Standards are designated IFRS1, IFRS2 and so on or, for those published by the IASC, IAS1, IAS2 and so on.
True and fair view
The IASB Framework, at paragraph 46, says:
‘Financial statements are frequently described as showing a true and fair view of, or as presenting fairly, the financial position, performance and changes in financial position of an enterprise. Although this Framework does not deal directly with such concepts, the application of the principal qualitative characteristics and of appropriate accounting standards normally results in financial statements that convey what is generally understood as a true and fair view of, or as presenting fairly such information.’
As with UK GAAP (BIM31115) you should consult an HMRC compliance accountant for help with the interpretation of particular standards.