The Fair Presentation Requirements of International Accounting Standard 1 will Undermine the UK’s View of True and Fair During the last 20/30 years there has been an increase in trade and communication. It is easier for people to do business across the world as the new technology allows this to be possible. The problem with this is that different countries have different ways of accounting standards, and therefore there is a problem on how to account standards. Hence, during the last years the debate on whether to use Fair presentation or the True and fair View is becoming a major concern. Fair presentation and the true and fair concept may seem as a similar concept, however, they do differ as well. While the former is the concept for United States, the latter is used in the UK, EU, Singapore, Australia and New Zealand. The IASB job is to prepare a “high quality global accounting standard that requires transparent and comparable information in general purposes financial statements”. According to the International Accounting Standard Board (IASB) the fair presentation is the concept which should be used, while the UK’s company act believe it’s the true and fair view ( TFV). The latest version of International accounting standard (IAS1) was brought into action from July 1998. This adopted both concepts, and it “required fair presentation and disclosure of compliance with IAS and a limited true and fair view override if compliance is misleading” . Fair presentation comes from the word GAAP (Generally accepted accounting principles) and first appeared in 1939. “Fair presentation requires the faithful representation of the effects of transactions, other events, in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the framework.” and can be defined as “ Presenting information, including accounting policies, in a manner which provides relevant, reliable, comparable and understandable information”. On the other hand TFV was first introduced in the UK in 1947, and since then no one knows its exact definition as the term can be said to be dynamic, however, during the years different people have come up with different definitions The TFV from 1947, until 1970 didn’t be a major issue, however, once it was introduced into he fourth EU company law directive it started gaining interest. The TFV concept was used in other countries; hence each country would define TFV in accordance to their language and culture, which makes TFV distinct in each country.
occasions, but this was the first time it had been used in the UK. By
one simple reason for why it was introduced. It was not a new idea as
The schemes had to change in a PAYG scheme after the Second World War. This was due to the
of a sort were introduced around this time, though not in the manner we are
In conclusion, appropriate principles could lead to clearer interaction and more comparable financial reporting standards without the need of the current rules. The NZ Framework has provided parts of clear and appropriate underlying principles to lead the application of NZ GAAP and other financial reporting standards. However the standards setting movement from ‘rule-driven’ approach to ‘principle-based’ approach is still half-way in New Zealand. How could principles be sufficiently clearly portrayed and put into practice require the profession to think and support. Just as Tweedie (2007, p.7) states, a principle based system will only work if preparers, auditors, users and regulators wish to make it work.
Proverbs 10:9 states: “People with integrity walk safely, but those who follow crooked paths will slip and fall” (New Living Translation).” This Scripture suggests that individuals who do not walk in integrity follow “crooked paths.” They walk in ways that are not morally sound, pure, and honest—but in ways that are corrupt. Clients want accountants with integrity. Thus, integrity is critical to the public trust. As a matter of fact, one of the general definitions of integrity provided by the AICPA Code is that it is a quality from which the public trust derives. Also, it is an element of character fundamental to professional recognition, and it requires members to be (among other things) honest and candid within the constraints of confidentiality (Duska, Duska & Ragatz, 2011). Integrity in the accounting profession involves adhering to the rules and principles of the profession. This includes remaining free of conflicts of interest and maintaining client relationships in which the accountant can remain objective in discharging his or her responsibilities. This requires independence in fact and in appearance as mandated under section 1.200.001.01, Independence Rule the AICPA Code. In other words, no one should be able to view the accountant as being biased with respect to a client’s financial reporting due to an improper client relationship. Lack of integrity in accounting practices has been, and continues to be, a key element in the downfall of many institutions which has hurt the public trust in the accounting
The ‘deficient standards gap’ refers to situations when the auditors are not required by the standards to report certain issues, whilst its counterpart refers to situations when auditors have not complied with the existing standards. This dissection is particularly important when I look at each of the problems separately later on and look for the respective solutions. The beginning Since the early 1970s, the auditing profession has been under increased pressure and scrutiny by government and users of audit reports. The phrase, ‘Audit Expectations Gap’ was first coined when the AICPA put the Cohen Commission together in 1974 to investigate whether the ‘expectations gap’ existed. However, the history of the expectation gap goes right back to the start of company auditing in the nineteenth century (Humphrey and Turley 1992).
The International Federation of Accountants (IFAC) is a global body that sets professional standards for the accounting profession. IFAC has an Ethics Committee which released a new code of ethics, effective from June 2006 (George, 2005), and updated this code, effective from January 2011. There are five fundamental principles in this code of ethics, objectivity, integrity, professional competence and due care, confidentiality and professional behaviour. Objectivity implies that an accountant should not allow bias, conflict of interest or undue influence of others to override professional or business judgements (George, 2005). Accountants must be honest, straightforward and act with integrity in all business relationships. The principle of professional competence and due care requires accountants to act diligently and in accordance with current technical, professional and legislative requiremen...
Private and public accounting has long been discussed and disputed in regards to financial reporting. Since the Financial Accounting Standards Board (FASB) was created in 1973, accountants have called for different accounting regulations for private and public accounting sectors, as private companies do not have the resources to meet the complex requirements of public companies. Private companies currently are not required by law to issue annual or quarterly financial statements (James, 2012). Private companies do, however, have the option to apply the U.S. Generally Accepted Accounting Principles (GAAP), cash basis, or accrual accounting to their financial statements (James, 2012).
My job includes performing tax returns, audit engagements, and bookkeeping services for clients. The firm’s clients consist of retail, manufacturing, oil and gas, financial services, real estate, construction, and legal companies. One specific duty I perform is the preparation of financial statements for clients which assist them in making critical and strategic business decisions. The work I do for them will have a direct impact on the profitability and solvency of their company; so, I must make every effort to ensure our work reflects honesty and is in accordance with generally accepted accounting principles (GAAP). Work that is performed with a high standard of integrity and professionalism enhances the reputation of Smith Carney, but also increases the likelihood of client loyalty for future years to
One of the most debatable topics in the accounting industry today is the extent in which we should make the financial statements understandable to the general population. The FASB currently gears its reporting standards toward...
AASB, Australian Accounting Standards Board, Statement of Accounting Concepts SAC4 ‘Definition and recognition of the elements of financial stat
The globalization of business has resulted in the need for compatible accounting standards that can be used internationally for financial reporting. As a result, the International Financial Reporting Standards (IFRS) were developed by the International Accounting Standards Board (IASB) to unify the various financial reporting methods and create a single accounting standard which can be applied to any financial statement worldwide (Byatt). The global standardization of financial reporting will increase the readability and enhance comparability of globally traded companies’ financial statements, without the need of conversion or translation. There are a few main differences between the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (U.S GAAP). The increasing recognition and acceptance of the International Financial Reporting Standards by accounting professionals in the United States, will affect the way in which the U.S will record financial statements in the future.
The main objective of the IASC was the development of International Accounting Standards, in an effort to reduce the differences in accounting practices across countries. Harmonization is the name given to the process of reducing differences in financial reporting practices and increasing comparability of financial statements in various countries. As such the intent of the IASC was to create a set of accounting rules that would be relevant and consistent to all countries ...
The Financial Accounting Standards Boards (FASB) defined conceptual framework as a consistent of underlying concepts and the ideas that describe the nature and general purpose of financial reporting which may lead to consistent standard in accounting (Deegan 2010). The role of the conceptual framework is to ensure that financial statements in accounting are free from bias and to provide useful information that is useful for user’s decision making. The standard-setting board also formulated a range of perceptions and theories related to accounting to trigger the objectives of financial reporting. The standard-setting board keeps issuing the conceptual framework over time to ensure that the conceptual framework’s objectives are improving to provide useful financial information. The innovative work on conceptual framework was embraced in the United States by the FASB in the early 1970s. The FASB accomplished disappointment in attempting to generate a standard that at the outset might not appear to present, especially testing theoretical issues. Regardless, while attempting to achieve concession on Statement of Financial Accounting Standard, tending to the theoretical issues produced critical matter for the board members. In this manner, throughout the outset the FASB understood the requirement for an obvious conceptual framework. Based on Hines’s argument, the conceptual framework is mean to provide the ability to increase self-regulate of a profession in order to neutralizing government interference from arising. Whether this argument has been accepted or not will be discussed in more detail with supported evidence to clarify the main point about Hines’s argument. Further details about this argument will discuss below.