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Sources of Authority

Sources of Authority

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Published by hamarshi2010

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Published by: hamarshi2010 on Dec 23, 2009
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12/12/2010

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Chapter 2Sources Of Authority
 
Legislation
There is a large and increasing body of rules with whichaccountants need to be familiar when preparing or interpreting a set of financial statements. In some countriesmost of the rules are laid down in the law while, in other countries, the law contains principles only with the major rules being laid down in accounting standards.Companies must comply with both the relevant law andapplicable accounting Standards , although the sanctions thatwill be applied for non-compliance with each may differ.Companies that have their shares publicly traded on a Stock Exchange must also comply with the rules of that Stock Exchange.
 
In Chapter 1 we explained that there is no general theory of accounting in existence to guide us in the preparation of financialstatements. We explored the attempts of several bodies to buildconceptual frameworks of accounting and concentrated on the work of the ASB in developing its
Statement of Principles for Financial  Reporting 
. In spite of the lack of theory, there are many rules whichgovern the preparation of financial statements.Rule setters affecting the United Kingdom come in three main forms,each of which has different powers and sanctions available to it:
1- Government
at both the United Kingdom and European Unionlevels. These operate through legislation.

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