Overview
The Statement of Principles, heralding from the distinguished quill of the Accounting Standards Board in 1995, is less of a bedtime story and more of a constitution for UK accounting standards. This document, though not legally binding, provides a robust framework guiding the preparation and presentation of financial statements within the UK. The principles tackle the big existential questions of accounting: What? Why? How? And, in a less metaphysical sense, When?
Development and Structure
Originally issued in the mid-nineties—a time when mobile phones were the size of bricks and the internet was still mostly for the academically inclined—the Statement of Principles underwent several iterations. Discussion drafts fluttered about before the Board finally settled on a final version at the tail end of 1999. This involved copious amounts of tea and probably a fair bit of head-scratching.
The final document is structured into seven scholarly chapters:
- The Objective of Financial Statements: Addressing the ‘why’ behind the statements.
- Qualitative Characteristics of Financial Information: Ensuring the information is as appealing as a well-made pie chart.
- The Elements of Financial Statements: Breaking down the atomic structure of financial reporting.
- The Recognition of Items in Financial Statements: Deciding what makes the cut for the big financial show.
- Measurement in Financial Statements: Handling the measuring tape for financial elements.
- Presentation of Financial Information: Teaching financial information how to strut its stuff.
- The Reporting Entity: Defining who has to obey the rules.
The Current Context
Since its gala premiere, the Statement of Principles has had to make room for the newer, shinier Financial Reporting Standard Applicable in the UK and Republic of Ireland. Specifically, Sections 2 and 3 of this modern tome now carry the torch of conceptual guidance in the UK’s accounting realm. The original Statement, however, still serves as an indispensable historical document, echoing the trials and tribulations of late 20th-century accountants.
Related Terms
- Accounting Standards Board: The former UK body responsible for creating accounting standards. Think of them as the rule-makers of the accounting game.
- Conceptual Framework: A philosophical and practical guide to financial reporting, much like a Sherpa for financial statement preparation.
- Financial Reporting Standard: The current guidelines that accountants need to follow unless they prefer chaos over order.
Suggested Reading
For those insatiably curious minds thirsting for more, consider the following enlightening texts:
- “Principles of Accounting” by Belverd E. Needles, Marian Powers
- “The Conceptual Framework for Financial Reporting: A Critical Analysis” by Bruce Mackenzie
Dive into these readings with the zest of a tax auditor finding a misplaced decimal!
