Financial Accounting Regulation in the United Kingdom
In the U.K., the cstatement of intent on accounting standards' was issued in 1969 by the council of the ICAEW. The statement announced that standards would be produced in the future, with four objectives. Firstly, to narrow the difference and variety in accounting principles. Secondly, to disclosure the accounting bases. The third one is the disclosure of departure from established standards and the finally, is the wider exposure for major new accounting proposals.To this end, the Accounting Standards Steering Committee ( ASSC ) [ Later the name was changed to the Accounting Standards Committee (ASC) ] was set up by the ICAW to improve accounting disclosure. Since 1971, recommendations from professional accounting bodies have been in the form of Statement of Standard Accounting Practice ( SSAPs). Edey points out that the standards that have been produced fall into four types. Type 1 standards is one that states companies must tell the user what they are doing, that states that companies must disclose their accounting policies. Type 2 standard seeks uniformity of presentation, for example, it is concerned with uniform treatment of associated companies. Type 3 standard relates to the disclosure of specific items, for ex
The 1948 Act introduced the requirement for auditors to report on whether the accounts give a true and fair view of the company's financial position at the end of an accounting period and of its profit or loss for that period. On 1 August 1990 the ASC was replaced by the Accounting Standard Board (ASB) and twenty-two SSAPs were then extant were adopted by the ASB. These concepts are of great practical importance in the development of accounting standards in the U. Examples of these are publication of interim reports and a statement that shows how much of a company's bank loans and other borrowings are repayable within one year, between one and two years, between two and five years and in excess of five years. The objective of FRS 5, which is drafted in term of general principles rather than a series of rules, is to ensure that the substance of an entity's financial transactions is reported in its financial statements. The four concepts are the going concern concept; the accruals concept; the consistency concept and prudence concept. The current cost accounting standard clearly falls into this category. they are used by ASC, when preparing a new standard to aid its choice between alternative accounting methods. Listed companies are also expected to comply with the companies are required to give reasons for any significant departures from standard accounting practice. The standards issued in September 1991, by the ASB are called Financial Reporting Standards ( FRSs ). The advantage of dividing standards up according to their roles is that it becomes clear that some standards clearly satisfy their objectives while other standards do seem to fail on the grounds that could have been predicted by the critics of the standards setting process. Because the provisions of the 1981 and earlier acts are now consolidated into the Companies Act 1985 ( as amended by the Companies Act 1989 ). It requires that the published financial statement of listed companies contain certain types of information. In 1975, the Accounting Standards Steering Committee ( ASSC ) produced a discussion document in which it advocated the production of an increased series of reports and statements.
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