Editor's Note: Accounting standards are of abiding concern to auditors all over the world. Member SAIs may be interested to know about the ongoing debates for reforms of financial reporting, in the United Kingdom. A news item of 11th October 1990 is reproduced below:
A RADICAL agenda for the reform of financial reporting in the UK will be considered next week by the Accounting Standards Board, the body for setting accountancy standards.
The agenda, if put into effect, would change the way balance sheets are drawn up and require listed companies to publish profits forecasts.
It is the work of the Financial Reporting Action Group, a committee of four technical experts from the English and Scottish institutes of, chartered accountants who are asked last year by the professional bodies to draw up an "action plan" for the reform of British accounting.
The group will present its findings to the Accounting Standards Board (ASB) on Monday next week. It will make five principal recommendations:
The ASB, which took over from the Accounting Standards Committee of the beginning of August, is committed to the fundamental reform of corporate reporting in the UK but is unlikely to proceed with any or part of the package without a period of extensive consultation with industry.
Even so, the ideas are likely to be at the centre of the intensifying debate on how financial reporting can be improved. The UK will be keen to establish a portfolio of authoritative accounting standards at a time when the European Commission is taking a mounting interest in the accounting area. The ECs new "Accounting Advisory Forum" is set to hold its first meeting next month.
Objections from the corporate sector are likely to focus on the recommendations that assets should be carried at current prices, and that companies should produce profits forecasts.
The revaluation process is expensive, requiring a professional assessment of the value of fixed assets every year and increased depreciation charges would reduce reported profits. Companies also regard information on their prospects as confidential.
Editor's Note: The Kautiaya Artitasastra is the oldest and most exhaustive treatise on the governance and administration of a state in India. It lists forty ways of financial improprieties, which is of topical importance even today. An authorised translation of the list from Samskrit is reproduced below.
- Book 2, Chapter 8, Section 20.