International Finacial Analysis Case Study Example | Topics and Well Written Essays - 2250 words

International Finacial Analysis - Case Study Example The accounting and financial reporting standards in the United Kingdom are the responsibility of Financial Reporting Council (FRC). It is an independent professional entity consisting of three auxiliaries viz. the Accounting Standards Board (ASB), the Urgent Issues Task Force (UITF), and the Financial Reporting Review Panel (FRRP). In the year 2000, the European Commission advised all the European Union listed companies to prepare their financial statements in full compliance with the IFRS for the financial years starting on or after January 2005, so as to enhance the comparability and transparency of financial statements (European Commission, 2000). Ever since then, all the companies in UK are required to prepare the financial statements under the standards issued by International Accounting Standards Board. In the United States, the accounting standards are issued mainly by the Financial Accounting Standards Board (FASB). These standards are known as Generally Accepted Accounting Principles on the basis of which, companies in United States are required to prepare the financial statements (Nobes et al., 1997). ... These rules are produced both by the SEC itself and through SEC oversight of private standards-setting bodies such as the Financial Accounting Standards Board and the Emerging Issues Task Force". There happens to be considerable divergence between the US GAAP and International Accounting Standards, however FASB and IASB are collaborating to minimise the discrepancies (Malthus, 2004). The FASB has been continuously working for the improvements in the accounting standards prevalent in the United States. This importance to disclosure and transparency of information has helped on the way of harmonising the US GAAP with the IFRS. In the year 2002, it provided its support to IASB and both the boards signed an agreement to act united in the pursuit of harmonisation of accounting standards and thus the FASB has taken a leadership role second to IASB in the internationalisation of financial reporting standards (Halliday, 2003). Classification Of Accounting Systems Both these countries i.e., the United Kingdom and the United States belong to the Anglo-American model as proposed by Nobes and Parker (1998; 2000) (Wolk et al., 2001). The standards issued by International Accounting Standards Board (IASB) also come into the category of Anglo-American model. The six important factors of international differences with respect to accounting practices as proposed by Nobes and Parker (1998; 2000), both the countries have legal system based on common law, UK and US have strong equity system with greater shareholder influence, greater significance of stock exchange, both the countries have staunch power of accounting profession (Wolk et al., 2001) and both the countries demand