The accounting standards are principles that guide and standardise accounting practices. The acronym GAAP stands for ‘Generally Accepted Accounting Principles’. It’s a term used to describe the rules generally accepted as being applicable to accounting practices and upheld by the accounting profession.
UK Accounting Standards
From 1 August 1990, all UK accounting standards were issued by the Accounting Standards Board (ASB). On 2 July 2012, however, the Financial Reporting Council (FRC) Board assumed responsibility for setting accounting standards.
With effect from 1 January 2015, the five relevant accounting standards issued by the FRC are Financial Reporting Standards 100 to 104. In addition, the FRC issued FRS 105 for those qualifying as “micro-entities” which was effective from 1 January 2016.
Recent updates to the UK Accounting Standards for January 2017;
- 2017-04 – Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment
- 2017-02 – Not-for-Profit-Entities – Consolidation (Subtopic 958-810): Clarifying When a Not-for-Profit-Entity That Is a General Partner or a Limited Partner Should Consolidate a For-Profit Limited Partnership or Similar Entity.
- 2017-01 – Business Combinations (Topic 805): Clarifying the Definition of a Business
Updates for UK Accounting Standards in 2016 included;
- Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers
- Statements of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)
- Consolidation (Topic 810): Interests Held through Related Parties that are under Common Control
Since 2005, listed groups in the UK have been required to prepare their consolidated financial statements in accordance with International Financial Reporting Standards (IFRSs). Almost all other companies however, have a choice. They can choose to follow IFRSs or UK GAAP.
International Accounting Standards
The International Accounting Standards Board (IASB) is the independent, accounting standard-setting body of the IFRS Foundation. Founded on April 1, 2001, the IASB is responsible for developing International Financial Reporting Standards (IFRS), and promoting the use and application of these standards.
In addition to the (IFRS), most countries have their own accounting standards to which they stick by, as mentioned earlier, the UK have Accounting Standards set by the Financial Reporting Council (FRC). Singapore have their own Accounting Standards Council (ASC) and South Africa have their own Accounting Standards Board (ASB), and so on.
Find out more about the UK’s Financial Reporting Council (FRC) here.