If the UK were to follow that path, it would be adhering to International Financial Reporting Standards, but sitting outside EU jurisdiction.

The institute is calling on the country to learn from the experience of the EU and other IFRS jurisdictions and develop a new national endorsement mechanism that is smoother and faster than the current EU process, which has been criticised for its complexity.

Other options include continuing to apply EU-adopted IFRS by UK listed companies and the UK continuing to participate in EFRAG decision making or requiring UK listed companies to use IFRS as issued by IASB, without any mechanism for rejecting new standards.

To ensure the endorsement process is robust and transparent, the ICAEW has suggested the UK government to consults on key features of the new arrangements, including accountability, governance and related issues.

Alongside these considerations, the institute argues that if the UK wants to continue to be a major player at international level then, among other things, UK authorities will need to make the case for UK participation in both the IFRS Foundation Monitoring Board and the Accounting Standards Advisory Forum.

Dr Nigel Sleigh-Johnson, ICAEW head of financial reporting, said: ‘The UK government and other stakeholders should recognise the economic importance of financial reporting in considering the policy implications of Brexit. If UK standards are aligned with, but not identical to IFRS following Brexit, it is likely to make the UK a less attractive market for international investors.

‘As a global financial centre, the UK should continue to adhere to internationally-accepted standards. It should also develop a much simpler and more cost-effective mechanism for the legal endorsement of new and amended IFRS requirements, while seeking to avoid duplication of effort and divergence in the outcome of the UK and EU processes.’

The ICAEW report Brexit: implications for financial reporting can be read here.

Report by Calum Fuller