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ACCOUNTING AND FINANCE (Accounting Standard)
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Finance and accounting are related to business and organisation. Accounting standards, principles and concepts are made to keep the records in a specific format. Finance management is the branch of managerial accounting helps to operate and manage the different departments of organisation (Christensen, Hail, and Leuz, 2013). International Accounting Standards (IAS and IFRS) and FRS (Financial Reporting Standards) defined in this report. FRS 102 are defined in respect of Non-listed companies in the UK.
Evaluation of IAS and IFRS
International Accounting Standards (IAS) is the authorised board produces the accounting standards and rules for business and organisations. This is considered as IASB which is an independent authorised body of IFRS foundation. IASB was firstly introduced in 1 April, 2001 with the name of International Accounting Standards Committee (IASC). Board is responsible to make the rules and guidelines for emerging the International Financial Reporting Standards (IFRS).
IASC was formed in 1973 to set the international accounting standards and rules. IAS and IFRS rules are followed by the organisation more over in 100 countries. European union and all other countries also adopted the accounting standards and rules given by IASB and IFRS. Objectives of establishing the IASB are to build a well maintained and ethical accounting and financing reporting practice in organisational context. As per the changing trends finacial reporting standards also became change. Transparency and fairness in financial reports become the prime object of business and organisations.
IFRS foundation was incorporated on 6 February, 2001. this is a non profit organisation which works as an individual body produce the rules related to finance reporting and accounting standard. IAS are issued by the IASB and IFRS are the rules related to financial reporting. It helps to maintain the ethical environment and disciplined order to maintain the financial records and financial statements.
GAAP (Generally Accepted Accounting Principle) are the combination of rules and standards which are useful to business and organisation. These rules are adopted at international level. GAAP provides the structures and formats to keep the records and accounting information in systematic manner. Structures and formats helps investors, stakeholders and creditors to understand and compare the financial position of various accounting and financial industries. IFRS and GAAP both are considered legal and advisable accounting standards in respect of business and organisations. IFRS standards are made of basic principles and GAAP are made of financial accounting rules. These are the main elements which bifurcate the nature of international financial reporting standards and generally accepted accounting principles.
Financial reporting standards 102
FRS is known as the financial reporting standards used in the UK and Republic of Ireland. Council was funded in 1 January, 2015 to extend the provisions and section related to fundamental accounting rules and financial reporting standards. These are the accounting standards made for treatment of taxes and provisions (Barth and et. al., 2012). This accounting standards contains the sections, clauses and rules related to making tax provisions and ascertain the tax liability. This authority remain responsible for producing the rules and quality standards subject to corporate governance and reporting standards to foster investment. This helps to maintain the effective accounting and financing practice in organisations. FRS 102 rules are issued by the Financial Reporting Council of the UK and republic of Ireland.
There is a specific procedures and format made to implement the accounting and financial rules and standards to small industries and non listed companies in the UK. FRC approve the rules and standards and then accounting council advise to the FRC to issue the rules of FRS 102. these rules basically helps the financial instruments and hedge accounting. There are some certain criteria are covered in this accounting system like pension obligations, changes and amendments related to small industries and non listed entities.
Some certain rules and standards are made defines the financial reporting structure for small and non listed organisations (Markham, 2014). FRS 100 defines the rules and standards related financial reporting requirements, FRS 101 covers the rules related to reduced disclosure framework, FRS 102 covers the rules related to financial reporting standards in republic of Ireland and the UK (FRS 102 Financial reporting standards, 2015). FRS 103 contains the rules related to Contracts related to insurance and FRS 104 covers the rules related to interim financial reporting. FRS105 is an another concept which defines the rules related to micro entities regime and assist the micro entities and non listed organisations to new micro and listed organisations.
IFRS and FRC implemented in the UK
Financial reporting council helps the organisation to smooth and easy financial reporting standards. It fulfil the reporting requirements to small scale industries and reduce the burden of following the worthless legislations and guidelines. FRS are supported by the IASB to assist the financial structure of small and medium size entities. Financial standards for small business entities and non-listed organisations were issued in 2009.
FRS 102 is introduced to build a transparent financial and accounting structure for those organisation which are not yet constituted as companies and legal business entities. These rules are very helpful for non profit organisations too. It provides wide range of financial accounting needs and requirements for the organisations works as non profit organisation.
Reasons why non listed organisation use the FRS 102 rather than IAS
Many industries and companies used the rules and standards issued by FRC. The organisations which are not companies and listed in the UK stock exchanges adopt the FRS 102. To prevent unauthorised and illegal structure of accounting and financial structure FRS was incorporated to non-listed organisations (Fox and et. al, 2013). FRS rules and legislation related to fair and clear representation of financial informations provides a legal structure to non listed organisation. These rules remain more simple and accessible in comparison to IAS which is one of the major reason FRS rules are adopted by non listed organisation.
This report is designed to explain the IAS, IFRS accounting standards used by the business and organisations. FRS 102 rules related to financial reporting standards applicable to the republic of Ireland and the UK defined here. This assignment help explains the rules and regulations related to accounting and finance management and reporting.
Books and Journals:
Christensen, H. B., Hail, L. and Leuz, C., 2013. Mandatory IFRS reporting and changes in enforcement. Journal of Accounting and Economics. 56(2-3). pp.147-177.
Barth, M. E. and et. al., 2012. Are IFRS-based and US GAAP-based accounting amounts comparable?. Journal of Accounting and Economics. 54(1). pp.68-93.
Fox, A. and et. al, 2013. The costs and benefits of IFRS implementation in the UK and Italy. Journal of Applied Accounting Research. 14(1). pp.86-101.
Markham, A. H., 2014. The Life of Sir Clements R. Markham, KCB, FRS. Cambridge University Press.
FRS 102 Financial reporting standards, 2015. [Online]. Available through<https://frc.org.uk/getattachment/e1d6b167-6cdb-4550-bde3-f94484226fbd/FRS-102-WEB-Ready-2015.pdf>.