Obligation to use IFRS

[Milan]

Hello, could someone please answer my question: In general, is a parent company obliged to use IFRS (instead of, lets say, national accounting system), provided that its subsidiary IS obliged to use IFRS (because of public trading with securities), or isn´t? Thank you very much. Milan

 

[Fidget]

I suppose it depends on your jurisdiction. On account of being in the EU, UK companies trading securities in regulated markets must use IFRS in the *consolidated* financial statements. Since it's the parent that produces consolidated accounts, then the parent must use IFRS.

The subsidiary, on the other other hand *does not* need to use IFRS in its own financial statements despite trading on a regulated market (generally the London stock Exchange). It can use UK GAAP instead if it wants. The parent would still need to apply IFRS to those financial statements though on consolidation, so I'm not sure how common it is for those subsidiaries not to use IFRS as well.

 

[Milan]

I suppose it depends on your jurisdiction. On account of being in the EU, UK companies trading securities in regulated markets must use IFRS in the *consolidated* financial statements. Since it's the parent that produces consolidated accounts, then the parent must use IFRS.

The subsidiary, on the other other hand *does not* need to use IFRS in its own financial statements despite trading on a regulated market (generally the London stock Exchange). It can use UK GAAP instead if it wants. The parent would still need to apply IFRS to those financial statements though on consolidation, so I'm not sure how common it is for those subsidiaries not to use IFRS as well.

Thank you for your answer.