Chapter 7

Financial Reporting in the UK

Influence on Accounting

Major influences on UK financial reporting Company law Professional accountants

Less important influences Stock exchanges Taxation system

Types of Company

Public company limited by shares Private company limited by shares Companies limited by guarantee and unlimite

d companies “Plc.” vs “Ltd.”

Only public companies have the right to make an issue of shares or debentures to the public.

Accounting Requirements of Company Law

Basic requirements All companies shall prepare a B.S and a P/L

account and that each give a true and fair view. A parent or holding company must file group

accounts, although it is then exempted from filing its own P/L account.

The accounting profession Britain was the first country in the world to

develop a private-sector accountancy profession.

4 of the present institutions of the profession in the UK ICAEW / ICAS / ICAI ACCA

2 other groups CIMA & CIPFA

Accounting Standards

Accounting Standards Committee Statements of Standard Accounting Practice (SSAP

s) Accounting Standards Board

Financial Reporting Standards (FRSs) The convergence of UK and IFRS.

Statutory requirements, accounting standards and a true and fair view

Statutory requirements but no recommendations or standards.

Statutory requirements and professional recommendations, but no standards.

Statutory requirements and non-approved standards.

Statutory requirements and legally backed accounting standards.

Legal requirements imposing accounting standards.

Contents of annual reports of listed companies

Annual reports typically include the following: A chairman’s statement An operating and financial review The report of the director A statement on corporate governance The report of the remuneration committee The financial statements (including notes thereto) The auditors’ report, preceded by a statement of the

directors’ responsibilities Shareholding information

Accounting principles and policies

Statement of Principles for Financial Reporting Similar to the conceptual frame work of the FASB,

but more friendly to current values than is the US

conceptual frame work.

Assets

ASB’s Statement of Principle defines assets as: Rights or other access to future economic benefit

s controlled by an entity as a result of past transactions or events.

Liabilities

ASB’s Statement of Principle defines liabilities as: Obligations to transfer benefits as a result of past

transactions or events.

Creative Accounting

Creative Accounting The use of financial reports to mislead rather than

inform.

Differences from IFRS

Similarities The ASB and the IASB largely share the same

conceptual frame work. Primary purpose of financial reporting: to provide

useful information to investors for the prediction of future cash flows.

Asset / Liability view Compliance with IFRS for, at a minimum, the

consolidated financial statements of listed companies from 1 January 2005.

Unlisted companies have the option to apply either IFRS or UK GAAP to all financial statements.

Differences from IFRS英国 国际会计准则

1、后进现出法 不允许 允许（ 2003 年撤销， 2005年生效）

2 、投资性房地产

市场价值 成本或市价

3、买卖和供出售的有价证券

成本或成本市价孰低

公允价值

Differences from IFRS英国 国际会计准则

4、递延所得税的基础

时间性差异，可以贴现

临时性差异，不贴现

5、拟派股利 作为负债 不作为负债

6、发行者的金融工具呈报

建立在法律形式基础上

建立在经济实质基础上，并将工具划分为权益和负债

Differences from IFRS英国 国际会计准则

7、政策变更和基本错误更正

以前年度调整 可以计入收入

8、合资企业 权益法 权益法或者比例合并法

9、现金流量表的核心

现金 现金和现金等价物