The UK Endorsement Board (UKEB), which decides whether International Financial Reporting Standards (IFRS) should be adopted in the UK, has been celebrating its fifth anniversary. Glasses were raised after the 26 March board meeting, the date of the UKEB’s official establishment in 2021.
Born of the EU Exit regulations, the UKEB has a statutory basis that its host, the Financial Reporting Council, lacks. But it has had to work hard to establish itself amid post-Brexit concerns that the UK would either be a minnow on the world standard-setting stage or fall prey to pressure to set UK standards that diverged from international norms. Or both.
It was a big ask to exit the EU and re-establish international credibility
Future plans
Neither lamb nor lone wolf
So far, it has managed to carve out a reputation as an effective influencer of the International Accounting Standards Board (IASB), which sets IFRS Accounting Standards, without approving any carve-outs for UK companies from those standards.
It could be accused of simply rubberstamping the standards, including the controversial ones on insurance (IFRS 17) and performance reporting (IFRS 18), but who would accuse it? Investors are in favour of harmonised standards to aid comparison of international companies, while preparers do not want to produce different sets of accounts for each jurisdiction they operate in. The international nature of UK companies and capital markets adds to this logic.
Ironically, harmonised regulation acts in the same way as deregulation in reducing reporting burdens. So far, the UKEB has avoided political pressure to deregulate, although reducing the cost of implementation is an important practical goal.
Outsize influence
But how has the UKEB minnow – the UK is one of 169 jurisdictions that use IFRS Accounting Standards – managed to stand out from the shoal? It is partly a matter of history.
The UK Accounting Standards Board under David Tweedie, who became the first chair of the IASB, blazed a trail in standard-setting. Along with others in the ‘Anglo-Saxon’ tradition, including Canada and Australia, the UK has continued to punch above its weight. But it was still a big ask to emerge from the EU bloc to re-establish international credibility directly, underpinned by a strong research capability.
Domestically, the UKEB has had to demonstrate that the views of stakeholders are systematically considered, via advisory groups and public board meetings. This has, in turn, provided evidence about the impact of proposed standards that has influenced the IASB to make changes – rate-regulated activities (common in utilities) is one example.
The UKEB may have dodged a bullet on sustainability standards
Thought leadership is one of the UKEB’s four guiding principles (transparency, accountability and independence are the others). This means producing innovative and evidence-based reports. One example has the uncatchy title of An Approach to Estimating Capital Market Effects, but its conclusion is fundamental: the cost of implementing a new standard can be offset by a quantifiable reduction in the cost of capital.
The UKEB has an obligation to act in the public good, which is defined as ensuring ‘the efficient allocation of capital, including the smooth functioning of capital markets in the UK’. So, no EU-style double materiality or triple bottom lines (people, planet, profit). Indeed, the UKEB may have dodged a bullet by not having to endorse international sustainability standards.
Coming challenges
Over the next five years, the tests will come in the form of a post-implementation review of IFRS 17, which the UKEB must carry out ahead of the IASB. This offers an opportunity to gather evidence about how the standard has worked and to suggest ways to smooth rough edges.
Outside financial services, two topics that have long concerned users of accounts are cashflow statements and intangible assets. The UKEB has staked a claim to be a thought leader on these subjects, but how far can its influence go in prompting tangible improvements?
A verdict on the first five years might be ‘so far, so good’. The challenge for the next five is easy to say but hard to do: press for changes to standards that make a clear difference to investors while minimising burdens on companies.
Parting thoughts
Pauline Wallace was the inaugural chair of the UKEB until September 2025. She says:
- Rubberstamping: ‘Talk to the IASB and they will tell you that we do not. On occasions we have been a thorn in their flesh.
- Influencing the IASB: ‘The way you can tell that influencing has worked is if the endorsement process is really easy – problems have been surfaced and discussed at an early stage. This is so important for UK capital markets that I would like to see us never get to the stage where we can’t endorse.’
- The next five years: ‘The main challenge facing the IASB is it has to decide what its function is. I’d push for a strategic review about what it can do best to help capital markets beyond care and maintenance. There is room to be more ambitious.’
