Regulation of financial reporting by large listed companies in the UK Essay

Regulation of financial reporting by large listed companies in the UK - Essay Example Let us start with interpretation of Standards. Different companies have interpreted the standards in different ways; and it appears that this interpretation aspect is the major cause of inconsistency or lack of uniformity appearing the implementation of IFRS among companies. Uniformity and creditability are highly essential for financial reporting and its regulation ensures that directors and auditors provide reports that are credible by giving them guidance to point out instance relevant rules when certain policies are considered appropriate.(Barry Elliot and James Elliot, 2005)4 IFRS is considered a principal- based system. â€Å"The advantage of a principle based system is that it offers the accountant possibilities to adapt the reporting of transactions to their unique economic settings. A high portion or flexibility increases the possibility to provide a fair presentation of transactions†. (Wyatt, 2005)19. But this advantage is coupled with limitation of different interpretations in order to achieve fair presentation as far as possible, and thereby the inconsistency creeps in affecting the comparability. If a review is made of notes to financial statements of large companies, it will be revealed that most of these are either declaration of accounting principles and policies or other necessary disclosures required to be made under IFRS. Out of such detailed and It would be sufficient if companies make only one line declaration that policies and procedures have been followed as laid down in IFRS manual, except for the principles and procedures detailed in the notes. In other words notes to financial statements of larger companies should contain disclosure of those policies and procedures that have not been followed by the company knowingly or otherwise. Matez Bosnak12, partner of Ernest & Young in Slovakia has, while assessing the first year implementation of IAS, rightly stated that â€Å"typically, IFRS financial