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Preparing for a no-deal Brexit - Financial Reporting

Niamh Meenan Niamh Meenan

Key messages

  • Consider available information on the impact of Brexit, including a no-deal scenario in your assessment of going concern
  • For the valuation of financial assets and liabilities review the potential impact of Brexit on unobservable inputs under IFRS 13 and loss provisions under IFRS 9
  • Consider potential changes to impairment or recovery on financial and non-financial assets
  • Consider the impact on tax and deferred tax provisions including contingent liabilities If UK companies lose EU tax exemption and reliefs
  • Monitor and update these areas as the position becomes clearer

As we approach the 31 October 2019 deadline and the possibility of a no deal Brexit, some of the key challenges stem from the effect this could have on the regulatory and economic environment for entities that are impacted.  What will happen to UK companies with cross border operations in the EU (and vice-versa) should there be no deal? Areas which can be expected to be most affected by this uncertainty are those which rely on management’s ability to forecast and areas of significant estimation and judgement. These will need to be monitored and updated and the final position becomes clearer.

Key areas to be considered include:

  • the fair value of financial assets and liabilities where there are unobservable inputs,
  • impairment reviews for financial assets including loss provisions under IFRS 9
  • impairment of non-financial assets and recoverable amounts
  • potential implications of the loss of tax exemptions and reliefs and the likelihood of contingent liabilities and deferred tax liabilities

having considered all available information does the potential impact of a no-deal Brexit impact on the assessment of going concern