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This informal report endeavours to examine the current accounting environment that exists in the UK. A combination of both desk and primary research shall be conducted prior to the final compilation and conclusion of the piece of work.

Extracts from this document...

Introduction

HND HOSPITALITY MANAGEMENT INVESTIGATION OF THE ACOUNTING ENVIRONMENT 1.0 INTRODUCTION 1.1 This informal report endeavours to examine the current accounting environment that exists in the UK. A combination of both desk and primary research shall be conducted prior to the final compilation and conclusion of the piece of work. 1.2 Specifically, this report will identify the authoritative accounting bodies that exist within the UK. In addition to the roles and missions of these bodies, the standards they create and maintain will also be identified and discussed in terms of their relation to the preparation of the final accounts for J.Browns Catering Ltd. 1.3 The bodies to be examined in this report are: * The Accounting Standards Board * The Financial Reporting Council * The Financial Reporting Review Panel 1.4 The underlying motivation catalysing formation of the aforementioned bodies will be identified, and the primary advantages for their existence related. 1.3 The piece will be concluded and sources identified, with any supplementary information provided in appendices. 2.1 ORIGIN OF AUTHORITATIVE BODIES 2.1.1 The time line below identifies the history and background surrounding accounting bodies. 1947 * Companies Act 1947 stipulates that all financial statements prepared public distribution should be "true & fair". 1948 - 1968 * Companies Act policies were slowly recognised as being overly vague, resulting in variegation of reporting methods used in published accounts. * Lack of suitable legislate leads to gross inconsistencies of accounting practices. * Accurate and reliable assessment of companies' value and performance became extremely difficult. * High profile cases1 underscore the defective nature of current regulations governing accounting and the need for augmented directives. ...read more.

Middle

2.4.2 The respective companies, must by law state in their accounts whether or not they have been prepared in accordance with applicable standards, and to provide justifications for any departures, or for changing their reporting policies for any reason. The FRRP does not monitor the activities of companies; instead it will examine cases which are brought to its attention in ways such as: * Through qualified audit reports or disclosed non-compliance with accounting standards or other requirements; * By individuals or corporate bodies * Through press comment 2.4.3 When the FRRP feels there is good reason to question the practice of a company, it will give companies a fair hearing to argue its case. If the review panel does not accept the company's defence, then it is able under the Companies Act 1989 to apply to the court for an order on the grounds that the accounts do not show a true and fair view, forcing them to prepare revised accounts and circulate them to all persons who were likely to have relied on the original accounts. 2.4.4 Since the panel's inception, 378 cases have been brought to its attention, 142 of which were not pursued beyond initial examination and 181 were resolved without the intervention of the courts, and without the issue of a press notice. 2.5 SYNOPSIS OF STANDARDS IN ISSUE 2.5.1 What follows are examples some standards which are currently in operation in the UK, both FRS's & SSAPs. For a comprehensive listing, see appendices 2. 2.5.2.1 SSAP 12 - Accounting for Depreciation - Issued December 1977 - Withdrawn February 1999 SSAP 12 sets out the rules for depreciating tangible fixed assets such as property and machinery. ...read more.

Conclusion

The FRS also sets out the manner in which consolidated financial statements are to be prepared. 2.5.9.1 - FRS 1 - Cash Flow Statements Issued September 1991 Revised October 1996 FRS 1 requires reporting entities within its scope to prepare a cash flow statement in the manner set out in the FRS. Cash flows are increases or decreases in amounts of cash, and cash is cash in hand and deposits repayable on demand at any qualifying institution less overdrafts from any qualifying institution repayable on demand. An entity's cash flow statement should list its cash flows for the period classified under the following standard headings: * Operating activities * Returns on investments and servicing of finance * Taxation * Capital expenditure and financial investment * Acquisitions and disposals * Equity dividends paid * Management of liquid resources * Financing 3.0 CONCLUSION 3.1 The UK accounting environment has evolved immensely over the past fifty years to benefit the users, preparers and auditors of financial information. Since the inception of the standards agencies the protocol, and indeed the agencies themselves have developed to reflect the needs of the companies and the general business accounting environ. 3.2 The standards identified in this report are in place to ensure that uniformity, honesty, and accuracy prevail in the accountancy profession enhancing clarity and reliability of information. All of the standards specifically mentioned, (as well as those identified in the appendices) must be taken into consideration when the final accounts for J.Browns Catering Ltd are being prepared. Ensuring this will result in more faith in the company from shareholders, and it will limit the possibility of adverse legal implications. ...read more.

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