Small, but imperfectly formed

Article Abstract:

The new Financial Reporting Standard for Smaller Entities (FRSSE) aims to synthesize all the guidance needed in preparing the accounts of small companies into one document. However, in formulating the FRSSE, the Accounting Standards Board has isolated itself from the realities of the daily existence of small companies. Unlike large listed firms, small businesses have a different purpose for using their accounts while the relationships among their stakeholders are also different from large firms. Instead of focusing on the 'big generally accepted accounting principle (GAAP), little GAAP' debate, the Board should have established a set of small entity GAAP that is flexible, communicated properly to stakeholders, reflective of the nature of small entity owners' investment and cognizant of the weak bargaining position of small entities in forming contracts.

Accounting Methods, Accounting and auditing, Small business

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The first season of goodwill

Article Abstract:

Arthur Andersen and Co conducted a survey to review how companies are reporting FRS's 10 requirements. The poll covered 100 companies with December 1998 year-ends and firms that adopted the standards early. Survey results show that only 3% of the surveyed companies believe that goodwill has an indefinite life while 63% of them think that the useful economic life of goodwill can be limited to 20 years in their accounting policy notes. It was also found that 35% of companies highlighted goodwill amortization on the face of the profit and loss account. Furthermore, the Arthur Andersen and Co survey revealed that 9% of companies have reinstated previously written-off goodwill because of potential benefits.

Management Consulting Services, Business & Mgmt Consulting, Accounting Methods NEC, Surveys, Business consultants, Management consultants, Consulting services, Goodwill (Business), Arthur Andersen and Co.

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Now is the time to be more critical

Article Abstract:

The Accounting Standards Board should espouse good stewardship as the objective of financial statements. The concept that financial reporting functions to furnish information vital to economic decision-making is insufficient because it does not provide a basis for setting standards, it does not explain present accounting practices, and it does not allow financial statements to be used in the assumed manner. Focus should be placed on accounting's control function to facilitate highly effective standards of accounting, and more resilient and efficient financial systems.

Financial statements

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