[...]... recommended that accounting standards should be issued by a new, totally independent body to be called the Accounting Standards Board (ASB) It was to supersede the Accounting Standards Committee which had issued standard statements of accounting practice (SSAPs) on topics such as accounting for stocks and VAT The Financial Reporting Council was also created to provide guidance to the new Accounting Standards... current UK accounting standard-setting system is summarized in Figure 1.1 Figure 1.1 The UK accounting standard-setting system The comparable body to the Accounting Standards Board in the United States is the Financial Accounting Standards Board, set up in 1973 There are now over 130 US accounting standards! Internationally, the International Accounting Standards Committee produced its framework for the... contentious departures from accounting standards by large companies The Accounting Standards Board, the Financial Reporting Council, and the Review Panel were set up in 1990 The Accounting Standards Board goes through a wide consultative process and issues exposure drafts called FREDs! These are Financial Reporting Exposure Drafts They come out before financial reporting standards are issued By October... statements give a true and fair view of the state of affairs of the group at 31 March 1998 they have been properly prepared in accordance with the Companies Act 1985 Generally Accepted Accounting Principles (GAAP) In the UK, the mandatory elements of GAAP are the 1985 Companies Act, Accounting Standards, abstracts issued by the Accounting Standard Board’s Urgent Issues Task Force and, for listed companies,... reporting environment Investment analysts and professional advisers – the financial press, ‘the City’ and financial advisers need access to and need to be able to understand financial information to advise their readers and clients Business partners – suppliers, customers and competitors are all interested in an organization’s financial performance, its reputation and its future prospects Government –... company Lenders – both existing and potential lenders need to assess the risks involved – the possibility of default They will be concerned to judge the ability of the borrower to service interest charges and to repay current and future amounts outstanding Employees – individuals and their representatives need financial information to assess job security and job prospects and to support collective bargaining... accruals; and the separate valuation of assets and liabilities Financial reporting 7 They will be explained in more detail in later chapters The 1989 Companies Act introduced a new requirement Companies now have to state whether the financial statements have been prepared according to the relevant accounting standards and details have to be given of any variations from the standards and the reasons for. .. fixed assets) and to what extent has it had to rely on bank borrowings and further contributions from shareholders? A cash flow statement focuses on these matters by presenting information from both the balance sheet and the profit and loss account in a different way The objective is to explain how cash, bank balances and borrowings have changed during a particular period and to understand the reasons... requires the disclosure of certain financial information The general public – information supplied, for example, to shareholders and business partners helps to inform employment and wealth creation issues Given the diverse needs of these various stakeholder groups, we need to take a brief look at the current regulatory framework THE REGULATORY FRAMEWORK The accounting framework in the UK, as in other... sectors such as the accounting requirements contained in legislation for banks and charities There are also statements of recommended practice that are not mandatory They are issued by organizations such as the Oil Industry Accounting Committee and the Association of British Insurers What is the practical effect of all these developments? The cynics would say ‘A great deal of paper’! For example, the . a straightforward but thorough introduction to accounting and finance for executives and managers who are studying these subjects, formally, for the first. accountancy and audit, tax and management consultancy. It is the world’s largest professional services practice. Accounting and Finance for Managers John