A picture of current practice

Article Abstract:

Statement of Auditing Standards (SAS) No. 600 'Auditors' Reports on Financial Statements' has significantly altered audit reporting in the UK. The standard holds that all issues that generate uncertainty should be reflected in the financial statements, but they do not merit a qualification since they have no adverse effects on the true and fair value view. A qualification is only warranted if there are grounds for disagreement and if the scope of the auditing work has been restricted. The most important effect of SAS 600 is the dramatic decline in the number of non-standard reports submitted. Two surveys of 460 public and private companies reveal that only two in the latter group had qualified reports. This low number may be explained by the close assistance provided by auditors to their clients and the auditors' acceptance of the 'true and fair override' in certain situations.

Financial statements, Corporation reports, Company reports

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Financial Reporting Standard 15: Tangible Fixed Assets

Article Abstract:

The 10 members of the UK Accounting Standards Board has approved the issuance of the Financial Reporting Standard (FRS) 15, 'Tangible Fixed Assets.' The new standard provides accounting guidelines for tangible fixed assets other than investment properties with respect to initial measurement, valuation and depreciation. It seeks to ensure the consistency of financial reporting for these assets and to ensure that reevaluations are updated where a revaluation policy is adopted. FRS 15 requires that tangible fixed assets, whether acquired or self-constructed, be measured initially at its cost. It also requires the systematic recognition of the depreciable amount of such assets in the profit and loss account in a way that reflects in a fair manner the pattern of the entity's consumption of the asset's economic benefits.

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A simple solution to a tangible problem

Article Abstract:

The UK's Accounting Standards Board (ASB) has released a discussion paper outlining its proposals for the accounting of tangible fixed assets. The proposed new Financial Reporting Standard, as explained in the document titled 'Measurement of Tangible Fixed Assets,' is intended to replace the current methodology prescribed by SSAP 12. However, it is argued that the proposed standard would make accounting for such a basic issue as tangible fixed assets unnecessarily complicated instead of simplifying it. Aside from its complexity, the standard's sheer length and strictness could result in financial reports that contain less relevant information than those produced using the existing accounting approach. The cost of compliance could also increase.

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