SSAP 16 - ASC Please Note

Article Abstract:

Statement of Standard Accounting Practice No.16 of the United Kingdom concerning cost accounting has caused controversy. The Association of Certified Accountants issued a questionnaire survey which showed a slight majority in favor of some form of accounting with adjustments for inflation. However, nearly a majority (forty-three per cent) felt that the SSAP 16 costs rarely or never were outweighed by its benefits. The survey also proved invalid the belief that users who had experience with the standard were in support of it while those inexperienced were not. Actually, the opposite proved true - more unfamiliar folk favoring the standard. There was a strong organizational influence on amount of support for the standard with the financial sector strongly in favor and those in public practice very weak in its support. The majority preferred historical cost accounting as primary with SSAP No.16 used as supplementary to give a 'true and fair view'. Users of the accounts answered that they used historic accounts primarily.

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Standardizing SSAP 10

Article Abstract:

Statement of Standard Accounting Practice (SSAP), No.10 in the United Kingdom, issued in July 1975, as designed to require a minium level of disclosure by providing a source and applications of funds statement. This standard has been complied with according to the surveys. However, the lack of standardization of form makes it difficult to compare its meaning. The Accounting Standards Committee (ASC) should make a clear statement of the desired focal point. A cash flow statement may provide more useful information than a funds statement concerning the margin of solvency. Problems occur in difference of handling tax, minority interests and extraordinary items. There are not precise disclosure requirements in handling subsidiaries and exchange differences in SSAP No.10. Preventing losses presents another problem, particularly when the company has earned profits in the most recent year. The standard needs to be rewritten, now that minimum compliance has been achieved, with more emphasis on cash flows.

Accounting and auditing, Financial statements

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The ASC on CCA-SSAP 16 II?

Article Abstract:

The Accounting Standards Committee (ASC) believes there is a clear need for company accounts to reflect the impact of inflation. There is a decline in SSAP 16 compliance since the publication of the Neville Report. ASC has decided to commission further research. Under the new standard, HC accounts will show in the notes the amount of profit available on CCA principles after the maintenance of operating capability. Substantial changes are also made in valuation of assets. An exposure draft is expected in April and the standard in December. Criticisms will focus on application of inflation accounting to both large and small accounts and on the treatment of CC figures as secondary information in the notes.

Valuation

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