Rules Governing Accounting Flashcards
How were accounting standards and rules set before January 2005?
They were set by :
Accounting standards boards (ASB)
Company law
Stock exchange rules - imposed by FSA
How were accounting rules set after January 2005?
- All EU listed companies should use IASs/IFRSs
- Other (not listed) UK companies can follow international standards or UK GAAP
What are the sources of accounting rules?
EC: European Committee
All EU listed companies should use IFRSs/IASs starting from the year ending 31 December 2005
IASs & IFRSs are issued by international accounting standards board (IASB)
What are the sources of accounting rules since brexit?
- after 31/12/2020 : uk firms have prepared UK adopted international accounting standards
- no change for UK incorporated companies that use GAAP
Who are responsible for financial reporting?
Management
Audit committee
Financial reporting council
What role does the management team play in financial reporting?
Creation of financial reports
What role does the audit committee play in financial reporting?
Oversee the management’s process
What role do the auditors play in financial reporting?
Express opinion on whether reports present a true and fair view of the company and are prepared in accordance to IFRS
What role does the Financial reporting council play in financial reporting?
They are the oversight body
What are the 4 types of financial statements?
- Statement of financial position : SOFP (balance sheet)
- Income statement (IS)
- Cash flow statement
- Statement of changes in equity
What does the statement of financial position show?
Lists all the resources and obligations of the company
What does the Income statement show?
Revenues - expenses
Profitability of the company
What does the cash flow statement show?
Sources and uses of cash
What does the statement of changes in equity show?
Changes in stockholders’ equity
