2005 has arrived. For accounting periods beginning on of after 1 January 2005, listed companies in the UK and Republic of Ireland must use EU-adopted international accounting standards in their group financial statements.

Of the 36 international accounting standards which are mandatory from 1 January, all but two have now been adopted without amendment for use in Europe. The two exceptions are:

• IAS 39 ’Financial Instruments: Recognition and Measurement’ - as reported in Inside Track 41, the EU has adopted a version of IAS 39 that has been amended by the European Commission from the version published by the International Accounting Standards Board (IASB). The EU-amended IAS 39 has ’carve outs’ that affect two parts of IAS 39: the hedge accounting requirements and the socalled ’fair value option’. The ASB has issued guidance on the EUamended IAS 39 (see page 4). The Commission has also yet to consider the adoption for use in the EU of the amendments to IAS 39 ’Transition and Initial Recognition of Financial Assets and Financial Liabilities’ which were published by the IASB in December.
  
  
• IFRS 2 ’Share-based Payment’ - at the time of writing, IFRS 2 has yet to be formally adopted by the Commission, but it will do so very soon. At its meeting in December, the Accounting Regulatory Committee, which advises the Commission on the adoption of international accounting standards in Europe, voted to make IFRS 2 mandatory in the EU. Under the adoption process, the European Parliament has one month to consider the issue before a Commission Regulation on IFRS 2 can be finalised.

In addition, the Commission has yet to consider the adoption in the EU of the amendments to IAS 19 recently published by the IASB (see page 6). Although most of the amendments only become effective for 2006, the one of most importance to the ASB, the immediate recognition of actuarial gains and losses, may be applied for accounting periods ending on or after 16 December 2004.

As well as the standards, there are also 14 interpretations that are mandatory for 2005. Of these, 12 have so far been adopted for use in Europe. The Commission has yet to consider the adoption of two recent IFRIC interpretations: IFRIC 2 ’Members’ Shares in Co-operative Entities’, which is effective from January 2005, and IFRIC 3 ’Emission Rights’, which is effective from March 2005. EFRAG has recommended adoption of IFRIC 2. As we went to press, EFRAG was considering its endorsement advice on IFRIC 3.

In the UK, the Government has now passed legislation giving the option for:

• all companies (with defined exceptions) to prepare their individual accounts; and
  
  
• non-listed companies to prepare their consolidated accounts

using EU-adopted international accounting standards rather than UK GAAP.

Apology

The ASB moved offices in early December 2004. There were some IT and telecommunications problems during the move and we know that people had difficulty contacting us for a number of days. We apologise for the disruption. As a reminder, our new address and contact details are set out on page 8.