Financial Accounting Regulation in the United Kingdom

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In the U.K., the ?®statement of intent on accounting standards?? was issued in 1969 by the council of the ICAEW. The statement announced that standards would be produced in thefuture, 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 example, extraordinary items and research and development expenditure. The need for this type of standard arises because the treatment of these items varied so much in the past. Type 4 standard relates to the problem of income measurement and asset valuation. The current cost accounting standard clearly falls into this category. There are standards that in fact could be said to be of more than one type, for example, the extraordinary item standard. 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 …