Compare and Contrast the Regulatory Frameworks for Financial Reporting in the Uk and the Usa.

Compare and contrast the Regulatory Frameworks for Financial Reporting in the UK and the USA.

1: Introduction: The reason for regulatory requirements

In the unify Kingdom there has been a shift towards international standards. However, British regulatory requirements remain. Mandatory requirements take the form of Statements of Standard history Practice (SSAPs) and Financial Reporting standards (FRSs) issued by the Accounting Standards batting order (Elliot and Elliot 2006). Mandatory standards are take because companies might indispensableness to hire the accounts appear unrealistically favourable. If this were to happen then shareh gagaers would not be obtaining an accurate view of the business. For example, if discretionary expenditure were deferred, such(prenominal) as spending on research and training, then earnings would be artificially improved.
There is a need to make it more difficult to manipulate accounts such as by deferring expenditure.

2: The background in the United Kingdom

In the 1960s say-so was lost in accounting procedures. Shareholders were unaware of hidden problems which were wholly exposed after take all overs or when companies went into administration (Elliot and Elliot 2006)

The GEC takeover of AEI in 1967 exposed inconsistencies in accounting procedures.



The pre-takeover accounts prepared by the old AEI directors, differed materially from the post takeover accounts prepared by the brand-new AEI directors (Elliot and Elliot 2006). AEI produced a £10m profit forecast in 1967, which had the backing of the auditors. However, when GEC took over AEI it forecast a loss of £4.5 million. This was partly due to inconsistencies such as different views over the value of stock. Mandatory standards were needed to resolve this inconsistency and to make the accounts objective. That is, the profit should be the same regardless of who was preparing them. A similar problem occurred with Pergamon promote in 1968. Profits were overstated on the basis of an...If you want to get a full essay, order it on our website: Orderessay



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