7.1 Terminology

The terms "International Financial Reporting Standards" (IFRS) and "International Accounting Standards" (IAS) are effectively interchangeable. The Companies Act 1985 and the relevant tax legislation refer to "IAS". However, the more widely used (and modern) term IFRS and is used in this book.

7.2 Recap

• Fully listed groups are required to adopt International Financial Reporting Standards (IFRS) in their consolidated accounts for accounts periods commencing on or after 1 January 2005. The European Regulation is mandatory for the consolidated accounts only;

• Companies listed on the Alternative Investment Market (AIM) are required by the London Stock Exchange to adopt IFRS for accounts periods commencing on or after 1 January 2007 (but may adopt earlier if they so choose);

• All other categories of companies are permitted ( but not required) to adopt IFRS for accounts periods commencing on or after 1 January 2005, but may but may not adopt earlier.

7.3 Options for Members of a Group

The directors must ensure that the individual accounts of the parent company and each of its subsidiary undertakings are all prepared using the same financial reporting framework, except to the extent that in their opinion there are good reasons for not doing so.

This seemingly innocuous statement allows a number of possible combinations including:

• Consolidated accounts, parent company accounts and all UK subsidiaries prepared under IFRS;

• Consolidated accounts under IFRS; parent company and all UK subsidiaries prepared under UK GAAP;

• Consolidated accounts and parent company accounts under IFRS and all UK...