• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Report of the Review Committee under the Chairmanship of Sir Ron Dearing CB, published in September 1988 - By tradition, company law has provided a general framework of rules.

Extracts from this document...

Introduction

"A lack of a conceptual framework is a handicap to those involved in setting standards as well as to those applying them. ... We believe that work in this area will assist standard-setters in formulating their thinking on particular accounting issues, facilitate judgments on the sufficiency of the disclosures required to give a true and fair view, and assist preparers and auditors in interpreting accounting standards and in resolving accounting issues not dealt with by specific standards." Report of the Review Committee under the Chairmanship of Sir Ron Dearing CB, published in September 1988 By tradition, company law has provided a general framework of rules. In the mid-nineteenth century an Act of Parliament made possible the separation of management from ownership. According to this separation came the need for directors to provide the company's published accounts to shareholders in order to show the performance and financial position of the company. In those published accounts it was required to determine what should be included in those accounts and how they should be prepared. At that particular moment in time law did not give emphasis, and allowed the specification and the contents of those accounts to be determined by contract between the shareholders and directors or even allowed the flexibility for directors in deciding what information was relevant in any particular circumstances. ...read more.

Middle

Concussive examples who have led the most criticism were those of GEC/AEI and Pergamon/Leasco affairs who anticipated profit in their final accounts but actually this situation was due to judgment regarding accounting principles and bases. According to the need of standardization and the problem of superfluous flexibility in the choice of accounting policies, ICAEW issued the "Statement of Intent on Accounting Standards in the 1970's" where they set out their strategy for the development of standards. As a result, the Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants of Scotland and the Institute of Chartered Accountants in Ireland set up the Accounting Standard Steering Committee. In 1971 the Chartered Association of Certified Accountants and the Chartered Institute of Management Accountants joined the committee as well as the Chartered Institute of Public Finance and Accountancy in 1976. From the 1st of February 1976 the Committee became the Accounting Standard Committee (ASC) and was reconstituted as a joint committee of the six accountancy bodies performing now through the Consultative Committee of Accountancy Bodies (CCAB). The objectives of the ASC were the continuation of the 'Statement of Intent on Accounting Standards in 1970's created by the ICAEW. ...read more.

Conclusion

As Dopuch and Sunder (1980) and Gaa (1988) have pointed out 'the concept of an objective is unclear when applied to an activity (i.e. financial reporting) rather than to individuals. People have goals and objectives motivating them to perform their activities; but the activities themselves do not have goals or objectives'. A similar comment could be made concerning the attribution of objectives financial statements. However the purpose of an activity or an artefact reflects the objectives of its designer in designing it for a specific purpose. In that sense a set of financial statements and notes (a 'financial reporting package') could have a purpose; this will reflect the objective of the package's designers. But this raises the question of how conceptual framework could serve in guiding the design of such a 'package' and its components. From my point of view it is questionable whether the ASB's conceptual framework be will successful in meeting its objectives. It may take more time and effort but if the ASB wish to use a conceptual framework as a basis for developing accounting standards, then it is essential that the conceptual framework is itself soundly based . At the present, these accounting bodies are in danger of building a house of accounting standards on shaky foundation 1 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Accounting & Finance section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Accounting & Finance essays

  1. Accounting Concepts and Conventions

    The fact that expenses consists of the assets used up in a particular period in obtaining the revenues of that period, and that cash paid in a period and expenses of a period are usually different. Example: A Profit of �100 was computed matching the revenue of �200 earned from

  2. This report has been produced as evidence for Unit 9 - 'Financial Services' - ...

    The FTSE 100 Index (the listing of the 100 largest British companies) was launched in January 1984 at a base of 1,000 and has increased to a level which had been in excess of 6,000 - until recent declines pegged it back closer to 4,000.

  1. Complete Report on Askari Commercial Bank

    Muhammad Afzal Munif Director * Mr. Tariq lqbal Khan Director (NIT Nominee) Company Secretary * Mr. Saleem Anwar Audit Committee * Brig (R) Asmat Ullah Khan Niazi Chairman * Brig (R) Muhammad Shiraz Baig Member * Mr. Kashif Mateen Ansari Member Auditors * A.F.Ferguson & Co.

  2. International reporting Standards.

    Accounts are also prepared to meet requirements of tax authorities so these authorities are seen as the people who determine what should be on the accounts as the views of the tax authority are highly influential. The capital is traditionally provided by the banking sector with the reported profits being

  1. Compare the final accounts of two organisations explaining the similarities and differences.

    be careful about apportioning what is for the business and what is for private use for example he utilities bill. It's good for a sole trader to keep a log book to keep detailing the business; these records will be useful when filling in tax return.

  2. Harmonisation of accounting standards in Europe

    The greatest benefits come from harmonisation among countries where there are companies that publish financial statements and that have foreign interest. Despite, the effectiveness of the IASB in promoting harmonisation of accounting standards can be argued, particularly because the IASB has no authority of its own to impose its standards on companies.

  1. The Purpose of Keeping Accurate Accounts

    The income and expenditure account allows for three things, prepayments, accruals, and depreciation for fixed assets are allowed. Social clubs have other forms of revenue such as the bar: raffles: restaurants: membership fees: shops for goods: and fund-raising activities. These things are done to burst membership.

  2. Identifying and describing the main financial service needs for a student starting at university

    call into any branch and they can usually give you an instant answer. An arranged overdraft of up to �100- totally free. So if you slip into the red line there are no extras to pay. You can apply for an overdraft of up to �750 at the same time as you open your current account.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work