Accounting for deferred tax: an overhaul

Article Abstract:

The Accounting Standards Board (ASB) has published a report entitled 'Accounting for Tax' that serves as the initial step in a long-awaited review of tax accounting procedures in the UK. These tax procedures are still covered by the provisions of Statement of Standards of Accounting Principles (SSAP) 15, which was released by the ASB in 1978, when economic conditions and the tax regime were markedly different from those prevailing in the 1995 fiscal year. The changes that have occurred in the two decades since SSAP 15's release now mandate a review of its provisions, particularly in the area of deferred tax. A change is needed in this area because SSAP 15's provisions require that such deferred taxes be recognized only when they are not expected to become a permanent component of a company's balance sheet, a rule that is inconsistent with the rules set in other standards released by the ASB.

Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors, Accounting Services Regulation, Column, Accounting services, Accounting law

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A mandate for green reporting

Article Abstract:

Social accounting entails the corporate disclosure of costs incurred in compliance with anti-pollution, safety and health requirements, and the impact of the business on society and the environment. Social accounting in a broad sense is an attempt to make corporations understand their responsibilities to the environment. The 1975 Corporate Report of the UK Boothman Committee did not require social accounting but urged companies to disclose their expenditures relating to environmental protection. Requiring companies to report on the negative impact of their operations on the environment would force many to improve their environmental record. Wider disclosure of environmental information would decrease the prevalence of corporate damage to the environment.

Analysis, Accounting, Environmental aspects, Industry, Industries, Social accounting

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Accounting for deferred tax

Article Abstract:

The Accounting Standards Board (ASB) has asked accounting experts to review eight accounting standards that are proving to be problematical when applied. One of the standards being reassessed is Statement of Standard Accounting Practice 15 (Revised), entitled 'Accounting for Deferred Tax.' Deferred tax accounting aims to compute the tax charge according to the relationship between the tax charge and pre-tax profit. This may be done using the full provision basis, but the partial provision basis results in mismatched costs and benefits. There are accounting professionals who believe that discounting should be applied in the treatment of deferred tax. The ASB recognizes the need to address discounting in relation to deferred tax accounting.

Tax accounting

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