Usachev V. A., Byrsanu A. A.

Donetsk National University of economics and trade named after Michailo

Tugan-Baranovsky

Accounting in Great Britain

In Great Britain system of accounting developed irrespective of the state, proceeding from interests and business requirements. Formation of national system of the account happened under the influence of such factors, as an economic situation in the country, national features and traditions of business, the legal environment, the tax legislation, communication with other countries and accounting and reporting systems. There is one more factor which is of great importance for the British system of accounting. It is influence of the professional accounting organizations. Now 6 largest associations of jury accountants of this country are united in SSAV – Advisory committee of Accounting Councils within which the Committee on Accounting Standards (ASB) – body which develops works and establishes national standards of accounting and the reporting.

Though traditions and the principles of the British accounting have the centuries-old history, occurring in Europe and in the world for the last decades changes couldn't but be reflected and in activity of the British professional accountants. The entry of Great Britain into the European Union caused need of introduction into laws on the companies of the provisions reflecting the corresponding directives of EU. However the authority of the British professional accounting institutes on Europe is so great that they managed to take root into the Directive of EU No. 4, concerning providing accounting data by the European companies, the provisions reflecting one of the main concepts, the system of accounting and the reporting of Great Britain, – "true and fair view" concept – reliable and conscientious (true and impartial) providing data on a financial position of the companies is based. Thus in the country at insistence of the professional accounting organizations the requirement of compliance of the reporting of major companies to accounting standards was entered by the Law on the companies of 1985 and became obligatory norm.

However development of a world financial system and recent trends in reflection of accounting information brought to that, as in Great Britain professional accountants incline to a utilitarian view of character of information opened in accounting reports: the official reporting of the British companies conforms to the demands made by financial and, first of all, by stock markets more and more. In it amplifying influence of the International Committee on standards (IASC) and its documents affects.

However not all professional accountants of Great Britain agree to submit even is international recognized, but to uniform and obligatory rules for all. So, the commission of sir Ronnie Hampela working in 1997 under the auspices of Committee on accounting reports, expressed in the report doubt in need of introduction of the unified forms of accounting reports for the companies which actions are quoted at the London exchange.

The legislative system of Great Britain developed within centuries, however in Great Britain there is no constitution. The case law underlying legal system of the country, is based on acts of parliament and solutions of the British vessels, and also on customs and traditions of business. Accounting activity isn't regulated by the state so in details as it takes place in other countries, including in Russia. Long time the British government didn't consider it necessary to regulate at all conducting accounting and the reporting in the companies, however, having entered the European Community, Great Britain according to Directives of EU included in the Laws on the companies 1985 and 1989 of the instruction concerning forms accounting reports and methods of an assessment of various articles.

The legislation of Great Britain on accounting and the reporting presents to accountants even a big freedom of action, than professional standards. As a whole the legislation, establishing only the basic principles, doesn't strive for detailed instructions of rather everyday accounting practice. And though the British lawyers demand establishment of rigid rules and the unified forms of the reporting, accountants consider that the contents priority over a form is one of the basic principles of the British accounting system. The principle of a priority of the contents over a form means opportunity (and in some cases even need) to recede from the standard and legislative norms and rules of maintaining the account and drawing up accounting reports if these norms and rules don't allow to reflect true situation in the organization.

In the British account the concept of reliable reflection of the facts of economic life and a financial condition of the enterprise is fundamental. The concept of reliable and conscientious reflection of the facts of economic life was included into the legislation of Great Britain (Laws on the companies 1985 and 1989 of years).

The rationality requirement when conducting accounting and drawing up the reporting is characteristic for the British practice.

In Great Britain the professional accounting organizations are engaged in development of rules and standards of accounting activity. As the initiator of development and introduction of such standards I acted in 1969. The institute of Jury accountants of England and Wales (ICAEW), and in a year was developed by SSAP 1 – Rules of standard accounting practice "Subsidiaries".

Committee on the accounting ASB standards and his predecessors developed already some tens of SSAP – rules of the standard accounting practice and FRS – standards of accounting reports. The part from them worked for a number of years, and then many provisions were cancelled because of serious changes in the legislation and a country business environment.

In 1996 of ASB published the Declaration containing the basic principles, underlying accounting standards. Compliance of data containing in them to real position of the organization and their suitability for decision-making on its further activity is called one of the basic principles. Thus, the concept of reliable and conscientious reflection of the facts of economic life occurs through all professional standards and acts on accounting and the reporting.

Now in the country 27 standards of accounting practice and the accounting reports, accepted in 1970 - 1998 work.

Feature of Anglo-American school of accounting consists that it finished excessively one of ideas – possibility of calculation of profit. The proof of was a merit of the American accountants that the profit doesn't reflect the economic contents – the valid result of economic activity. Understanding of it led outstanding American scientists to differentiation of concepts – accounting and economic profit. Accounting defines profit as result of realization of goods or services, economic – as a result – result of work of the capital. Having investigated this accounting category – profit, the American scientists came to a conclusion that the concept of profit can't be unambiguous as there is the whole range of concepts, each of which answers strictly definite purpose.