What happened in 2016?
On 23 June 2016, the people of the UK voted to leave the EU (Brexit).
• There will be no immediate change to UK financial and corporate reporting requirements.
• Entities will need to monitor events to determine how financial and corporate reporting requirements will be affected over the long term.
• More relevant now to preparers and users of financial statements are the effects reflected in volatility in financial markets, the implications of future actions by governments and any decisions entities make about business and investment strategies. These will, in turn, affect entities’ disclosure of risks and uncertainties, assessments of impairment of goodwill and other assets; and the measurement of financial assets and liabilities.
Why the event is related to accounting?
Entities will need to consider the accounting and financial reporting implications of the United Kingdom (UK) people’s vote to leave the European Union (EU). In addition, entities will need to monitor events in the UK and the EU and consider the accounting and financial reporting implications of both government decisions and any changes they may make to their own operations and/or investment strategies.
The effects on hedge accounting may, in large part, depend on the nature of the agreements that will establish the framework for the UK’s future relationship with the EU. If the renegotiated trade deals between the UK and the EU result in significant changes to entities’ business practices, the impact on hedge accounting could be greater. For example, if there is a need for a UK or EU entity to modify or amend the terms of any existing financial or non-financial contracts that are part of a hedge relationship, this could result in a dedesignation of the hedge or affect whether the relationship is expected to continue to be highly effective in future periods. .
What are the effects of Brexit on the accounting and finance industries?
As the UK moves through Brexit and beyond, accounting professionals and members of the financial industry are faced with uncertainty. A primary example of this, according to Business Insider, is the economic dependence on the financial services industry. In the UK, there are as many as 693,000 people working at law firms and accountancy practices. However, in the coming year, with the sudden legal disruption, Brexit could diminish the UK’s position as a premier financial hub.
What does Brexit mean for the accountants and their clients?
Primarily, accountants will feel the effects of Brexit through their customers. A recent article covers some examples:
Businesses may relocate
Supply chains could be disrupted by customs checks
Possible skill shortages through changes to free movement
The main risk is a hit to the clients’ sense of stability.
Accountants can expect that their clients will be looking for more
advice, assistance with planning, forecasting, and managing working
capital.
What are the implications for financial reporting standards?
Organizations in the UK must comply with the new Financial Reporting Standards (FRS) 101 and 102. Following a Brexit, these standards may change again. A blog by our partner, CaseWare UK, discusses concerns around the change and states that:
It is very unlikely that we will see a retreat back to British accounting standards, regardless of whether we remain in the EU or not. The UK has always been a key advocate of the International Financial Reporting Standards (IFRS) and the Financial Reporting Standards (FRS) were specifically developed by the Financial Reporting Council (FRC) to allow for pre-existing UK legislation such as the Companies Act 2016.
That aside, there are changes in regulations that could come into effect. The blog also provides an example of the Alternative Investment Fund Managers Directive (AIFMD). With Brexit, AIFMD will no longer apply in the UK which could lead to some modified reporting structures.
Discuss what happened in the United Kingdom in June 2016, and why the event is related...
On June 23, 2016 the United Kingdom voted to leave the European Union and give up the special crates deal with other U nations. Two questions one do you think I see it is right that countries who are trading partners are less likely to go to war and number two how might the United Kingdom exit from the EU affect its trade with other European nations? How could it affect peace in Europe?
When did the United Kingdom have its last House of Commons election? What happened?
Consider Brexit. Think back to the time when the Brexit referendum happened in the United Kingdom. What was the impact thereafter on the British pound vis-a-vis the US dollar? Was there increased confidence in the British pound or decreased confidence in the British pound? Explain your answer. Using two graphs of British foreign exchange market, with each graph showing a different possible shift that could occur in that particular forex market, show how the equilibrium exchange rate changed vis-à-vis the...
Should the United Kingdom exit the European Union? Why might Britain not wish to exit?
An article in the Economics noticed that the National Health Service (NHS) in the United Kingdom is "free at the point of delivery." Question: The same article suggested that the views of the average person in the United Kingdom "have made it impossible even to think about boosting NHS revenue by charging patients a nominal sum for visiting the doctor." Briefly discuss what the advantages the NHS might receive if it were allowed to charge patients for doctor's visits, as...
Multiple studies conducted in the United States, Canada, Germany, and the United Kingdom show that the probability of dying in the hospital is higher if you are admitted on the weekend. Why might this be? What factors might contribute to this probability? What could hospitals do to reduce/eliminate this phenomenon?
What is the probability that a "1 in a thousand" event happened sometime in the last 1 thousand days?
Why might the equity risk premium in the United Kingdom have been negative during this period? A. The returns on bonds outpaced the returns on stocks. B. Investors fled to other countries. C. Banks were paying high interest rates on bonds. D. The returns on stocks outpaced the returns on bonds.
In 2016, United Kingdom voted to leave the European Union. On Marsh 29, 2019 the Brexit AKA secession from the Union is schedule to take place. The referendum results and the approaching date of the secession have negatively affected business environment in the UK leading to a growth rate slowdown in the Kingdom. Explain how the Brexit ( and the expectation of the Brexit) affect the U.S. economy. Using all the ISLM and ADAS diagrams illustrate the effect of the...
*Determine the ramifications of each of the following United Kingdom: A. FDI Implications: Discuss the implications for foreign direct investment (FDI) with your country of choice. B. Ethical Impacts: Analyze how legal and ethical considerations may impact FDI decisions. C. Import/Export Requirements: Explain how the import/export requirements of your country will impact the company. D. Tariffs, Subsidies, and Countervail: Identify any and all tariffs, subsidies, and countervail that are relevant to your selected country and their potential impacts on the...