The accounting framework within the united kingdom, as in other countries just like the us, is becoming increasingly regulated. In the UK, these requirements are contained in:
– Financial reporting standards (FRSs).
– Corporate governance reports.
– The exchange Listing Rules (rules applying to ‘listed’ companies
– those whose shares are quoted on the London Stock Exchange).
– International Accounting Standards.
– Generally Accepted Accounting Principles (GAAP).
The 1985 Companies Act states that financial statements must show a ‘true and fair’ view. It also states that five accounting concepts underlie their preparation; these are:
– accruals; and
– the separate valuation of assets and liabilities.
They will be explained in additional detail in later chapters.
The 1989 Companies Act introduced a replacement requirement. Companies now must state whether the financial statements are prepared in line with the relevant accounting standards and details must run of any variations from the standards and also the explanations for them.
The 1985 Act consolidated much previous legislation and it absolutely was amended by the 1989 Act which contained most of the necessities to bring the uk into line with EEC practice.