Brexit: what does it mean for your financial statements?

Irvine Spowart

Irvine Spowart

Audit Partner

The decision of the U.K to leave the EU has led to a large number of questions to which no one has a definitive answer.

However some of the short term considerations for your financial statements are:

  • Should the impact of the referendum result be included as an item of principal risks and uncertainties in your strategic report?

  • Should additional information be included as part of your going-concern disclosure? For example; to state that the directors have assumed no adverse impact on the business.

  • Businesses which prepare financial statements using International Financial Reporting Standards (IFRS) will be required to adopt IFRS as endorsed by the EU until Britain leaves the Union. 

  • If the value of the reported assets and liabilities at the period end have changed as a result of the uncertainty caused by the result of the post year end movements in the exchange rates, the estimated effects of should be disclosed as a subsequent event note. 

In the medium term, assuming this period of uncertainty continues, some of the business’ projects may be put on hold, asset values, such as investments in listed shares or properties, may decrease.

The variation in values and any provisions against development projects should be recognised in the accounts. Disclosing the reasons behind decreases will help to put the figures in context for readers, ensuring that the financial statements are true and fair.

If you have any questions, please contact your usual Johnston Carmichael adviser.