Preview

The Impact of the Current Changeover from Uk Gaap to Ifrs on the Performance and Financial Position of Kingfisher Plc.

Better Essays
Open Document
Open Document
2721 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
The Impact of the Current Changeover from Uk Gaap to Ifrs on the Performance and Financial Position of Kingfisher Plc.
This year 's preliminary results season has been something of a landmark. Last year was to be the last reporting period where listed companies presented their results according to UK generally accepted accounting principles (GAAP). After that, they would be required to use international financial reporting standards (IFRS) to prepare their consolidated financial statements for accounting periods commencing on or after 1st January 2005 (http://search.ft.com, 2004). The requirement to adopt IFRS applies only to those companies that are active direct participants in the capital market (i.e. those that have securities that are publicly traded on recognised stock markets). There are estimated to be about 7,000 such companies in the EU, of whom 2,500 are in the UK (www.accountancyage.com, 2004).

The rules are changing for two main reasons. The investors chronicle seeks to explain this first by suggesting that ‘in the wake of accounting scandals in both Europe and the US, regulators want greater convergence between standards. Listed company accounts in the UK and US exist primarily for the benefit of shareholders. Conversely, in parts of Europe, the banking system has historically been the main provider of finance to industry, so company accounts have evolved with creditors in mind. In some European countries it will bring fundamental change, particularly where medium-sized companies have traditionally had closer relationships with their banks than with their shareholders. As a result, their financial statements have tended to be more conservative, and placed greater emphasis on assets. Harmonising the two systems so that there is greater convergence between European and non-European conventions is what IFRS is partly about. ' (http://search.ft.com/, 2004) The other aim is to keep abreast of the growing popularity of options and derivatives. Current accounting practices originated in the 16th century, and were significantly updated in the 19th century. Things were


References: Accountancy Age (May 27th 2004) ‘International Accounting Standards - the basics ' http://www.accountancyage.com/features/1137212, downloaded as at 6th April 2005. CIPFA (2004) ‘Accounting Panel ' http://www.cipfa.org.uk/panels/accounting/show.cfm?news_id=20148, downloaded as at 18th Feb 2005. Investors Chronicle (November 5th 2004) ‘Raising the standard ' http://search.ft.com/search/article.html, downloaded as at 3rd April 2005. Margerison, J. (2005) Lecture Notes, Financial Reporting; Nottingham University Business School. Margerison, J. (2005) The International Accounting Standards –What 's it all about? '; Nottingham University Business School. Mazars (2004) ‘ias-ifrs: united kingdom ' http://www.mazars.com/news/ias_ifrs_uk.php, downloaded as at 17th Feb 2005. Reuters UK (March 17th 2005) ‘Kingfisher PLC - IFRS Impact ' http://investing.reuters.co.uk/stocks/QuoteCompanyNewsArticle.aspx?view=PR&symbol=KGF.L&storyID=120935+17-Mar-2005+RNS, downloaded as at 5th April 2005. The Economist (December 28th 2004) ‘all together now ' http://economist.com/agenda/displayStory.cfm?story_id=3493407, downloaded as at 17th Feb 2005.
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Good Essays

    Week 2 Assignment Xuelian Li
    • 892 Words
    • 3 Pages

    Week 2 Assignment Xuelian Li

    IFRS is a set of accounting standards promulgated by the International Accounting Standards Board (IASB), an international standard-setting body based in London. It was designed as a common global language for business affairs so that company accounts are comparable and understandable across international boundaries (Ghosh, 2010). In June 2002, the European Union (EU) adopted an IAS Regulation requiring European companies listed in an EU/European Economic Area (EEA) securities market to prepare their consolidated financial statements in accordance with IFRS starting in 2005 (United Kingdom).…

    • 892 Words
    • 3 Pages
    Good Essays
    Read More
  • Powerful Essays

    Where Does the Us Stand on the Adoption of Ifrs?
    • 1356 Words
    • 6 Pages

    Where Does the Us Stand on the Adoption of Ifrs?

    The globalization of markets over the past 50 years has led to the demand for increasingly comparable financial statements across countries. In response to this demand, the International Accounting Standards Board (IASB) was formed with the purpose of developing a set of high quality global accounting standards. Although a majority of developed markets have adopted the international standards, the United States has not. One reason for the delay in adoption is that many of the standards are very similar. However, there are also several key differences between the two. Presently, the United States Financial Accounting Standards Board (FASB) and the IASB have committed to work together to develop future standards jointly (FASB, 2011). Nonetheless, the key differences will have to be resolved and many believe the FASB will ultimately adopt international standards completely. This report seeks to discuss the US situation on the adoption of IFRS (International Financial Reporting Standards, as prescribed by IASB) and the possible effect of adoption on non-public businesses and the public?…

    • 1356 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Better Essays

    Ifrs vs Gaap
    • 1357 Words
    • 6 Pages

    Ifrs vs Gaap

    Over a decade ago, it was believed that the whole world would likely adopt the Generally Accepted Accounting Principles (GAAP). At the point in time, the International Financial reporting Standards (IFRS) was only about ten years old. In the last decade, the IFRS has been adopted in many growing countries. Currently, it is anticipated that the U.S. will converge its GAAP with the international IFRS, leaving behind only a modified IFRS. This may occur as early as 2014.…

    • 1357 Words
    • 6 Pages
    Better Essays
    Read More
  • Good Essays

    Comparing IFRS to GAAP
    • 889 Words
    • 3 Pages

    Comparing IFRS to GAAP

    In the Accounting industry, there are various principles and guidelines by which financial accountants, analysts, and organizations need to abide by. The International Accounting Standards Board (IASB) issues standards (IFRS) that have been adopted by the United States and several countries outside of the U.S. (Kimmel, Weygandt & Kieso, 2010). The IFRS along with Generally Accepted Accounting Principles (GAAP), professionals in the accounting industry use these guidelines as a baseline on which accounting practices are built upon. These standards are governed by the Securities and Exchange Commission (SEC) which ultimately oversees U.S. financial markets and accounting standard-setting bodies. Moving forward, the elements of IFRS and GAAP will be discussed to illustrate the similarities and differences and how it relates to Accounting and used in business practice.…

    • 889 Words
    • 3 Pages
    Good Essays
    Read More
  • Best Essays

    U.S. GAAP vs IFRS
    • 3430 Words
    • 14 Pages

    U.S. GAAP vs IFRS

    The United States is coarsely going through a big dilemma. It is deciding whether to adopt International Financial Reporting Standards (IFRS), or to stay with the current U.S Generally Accepted Accounting Principles (GAAP). Since this is such a serious decision, now would be an opportune time to take a look at what the advantages and disadvantages would be of switching to the new way of financial reporting, and doing so, shows the beliefs of the costs being too high to adopt a new set of reporting standards. People who support switching from GAAP to IFRS argue that IFRS will offer a general reporting language and consistent financial reporting for companies with global operations to make financial reporting more meaningful across borders. And. Supporters also believe that one common reporting system will cut costs for companies and make it easier for investors to compare the financial statements of companies from different countries (Diamond and Herrmann, August 2008). From the problem that the switch to IFRS would be exceedingly costly, to the fact that IFRS leaves more room for interpretation and lacks bright line rules, I will discuss all the reasons why switching to IFRS soon would not be the right decision for the U.S.…

    • 3430 Words
    • 14 Pages
    Best Essays
    Read More
  • Powerful Essays

    Gaap vs Ifrs
    • 6672 Words
    • 27 Pages

    Gaap vs Ifrs

    The generally accepted accounting principal (GAAP) and international financial reporting standard (IFRS) are standards governing how economic events are reported. In the United States, the Securities and Exchange Commission (SEC) relies on the FASB, the accounting standard-setting body of the US, to develop accounting standards that public companies must follow when publishing financial statements. On the other hand, many countries outside of the Unite States have adopted the International Financial Reporting Standard (IFRS) which is issued by the International Accounting Standard Board (IASB). In recent years, the FASB and IASB have worked closely to try to minimize the differences in their standards and principals and to merge the two systems in the future.…

    • 6672 Words
    • 27 Pages
    Powerful Essays
    Read More
  • Better Essays

    Financial Statements Ifrs vs. Gaap
    • 1606 Words
    • 7 Pages

    Financial Statements Ifrs vs. Gaap

    For those in the business world, particularly in the accounting field, a major issue has surfaced in recent years relating to the differences between Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS). Currently, the majority of countries in the world follow International Financial Reporting Standards guidelines; however, the United States still uses GAAP. This topic has been a main focus because there is a plan for convergence between the two frameworks in the near future. The United States accounting system will undergo drastic changes when this occurs, but in the long-run the idea is to simplify the accounting procedures around the world. “Through these projects, some covering major components of the financial statements, the boards intend to improve financial reporting information for investors while also aligning US and international accounting standards. These projects are a significant move toward achieving a common accounting framework, a necessary step in the globalization of business and investment” (PriceWaterhouseCoopers LLP, 2011). The main difference between GAAP and IFRS is that GAAP is considerably rule-based, whereas IFRS is more principal-based which means IFRS has room for interpretation. The specific differences are far too many to cover in a short presentation, however, an explanation of some major differences are mentioned below.…

    • 1606 Words
    • 7 Pages
    Better Essays
    Read More
  • Best Essays

    Norwalk Pharmaceutical Division
    • 2244 Words
    • 9 Pages

    Norwalk Pharmaceutical Division

    Social and professional expectations have been undergone a major shift as the global moves to adopt International Financial Reporting Standards (IFRS) which is a set of accounting standards, developed by the International Accounting Standards Board(IASB) as the global standard for the preparation of public company financial statements. To date, industry focus has been mainly on the technical aspects of IFRS adoption; however, IFRS also is likely to impact the ethical aspect of accountants’ professional judgment, because IFRS requires the use of a more “principled” approach to accounting standards than previously required a rules-based system General Accepted Accounting Practices (GAAP).…

    • 2244 Words
    • 9 Pages
    Best Essays
    Read More
  • Good Essays

    MODONNELL IFRS Conversion Challenges WEEK 2 ACG5135

    • 693 Words
    • 3 Pages

    MODONNELL IFRS Conversion Challenges WEEK 2 ACG5135

    The talk of convergence between the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) has been ongoing since 2002. Since 2002 there have been objections by accounting professionals opposing the convergence. At this point, the naysayers seem to be victorious. The total adoption of IFRS by the United States has been shelved for the time being, but here is still a responsibility for US CPAs to keep abreast with IFRS updates. This is “based on a proposed timetable the U.S. Securities & Exchange Commission (SEC) developed, acceptance of IFRS in the U.S. could come as early as 2015, so understanding the standards is critically important to management accountants, auditors, financial analysts, corporate executives, and others involved with financial reporting.” (Smith, 2012)…

    • 693 Words
    • 3 Pages
    Good Essays
    Read More
  • Best Essays

    IFRS vs GAAP
    • 2624 Words
    • 11 Pages

    IFRS vs GAAP

    Ciesielski, J. (2008). IFRS & GAAP: The Urge to Converge. The analyst’s iiiiiaccounting observer, 17.…

    • 2624 Words
    • 11 Pages
    Best Essays
    Read More
  • Better Essays

    Relationship Between the Ifrs and the Fasb
    • 1230 Words
    • 5 Pages

    Relationship Between the Ifrs and the Fasb

    The principle of accounting dates backs thousands of years to a time where those in positions of governance wanted to make others aware of their growth and progress. Shift forward, and now the principles of accounting have moved towards an interest in investments and creating wealth for all those who hold stock within the company. This has led to the creation of standards and guidelines by which these accounting principles adhere to, producing financial statements which follow the four qualitative characteristics (reliable, relevant, comparable, and understandable). The Financial Accounting Standards Board (FASB), under the guidance of the Securities Exchange Commission (SEC) established the GAAP which governs US companies with their application of accounting principles to the presentation of their financial statements. The IASB has created the IFRS which serves the same purpose but for the global financial community. A convergence of these two entities began in 2002 with the IASB and FASB coordinating together to produce accounting standards in a world where accounting standards are often amended. With ever-increasing changes in the realm of accounting it becomes important to for those in the profession of accounting to be aware of these changes and the impact they have on the reporting of a company’s financial outlook. The Masters of Accountancy program is designed to provide a comprehensive background of the creation of the FASB and the IASB, the relationship between their accounting standards, and how their standards measure up to one another.…

    • 1230 Words
    • 5 Pages
    Better Essays
    Read More
  • Satisfactory Essays

    Internation Writing Assignment
    • 485 Words
    • 2 Pages

    Internation Writing Assignment

    Switching to IFRS will help companies compare their financial statements easier. If every country has a different set of financial standards, it is difficult to compare how each company stands because there is one thing lacking and that is consistency. Also without one set of global standards it will be more difficult to compare their competitors due to extra finances and more time used. When you switch over to using IFRS, granted it will be a change, and a costly one at that. Once it is all set in stone and known by everyone, it will work to our advantage to all be on the same page and be using the same set of guidelines as our international partner’s/companies are.…

    • 485 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    accounting standards board
    • 1566 Words
    • 7 Pages

    accounting standards board

    Increased globalization in the business world has brought to fore some of the issues and challenges that multinational businesses face in financial recording and reporting of foreign based operations. With operations based in different countries that operate under different accounting principles and with varying currencies, there has been a need for the accounting principles and standards to be converged. This has in the past nine years seen the accounting policy making suggesting a complete overhaul in the way financial statements are reported and a convergence between the US's generally accepted accounting principles (US GAAP) and the International Financial Reporting Standards (IFRS). This has been through various meetings between the International Accounting Standards Board (IASB) and US Financial Accounting Standards Board (FASB), two boards which determine these accounting standards. This paper therefore evaluates the history of the two boards and their relationship and looks at IASB equivalents to FASB original pronouncements. It also describes how a Master of Science in Accounting would prepare a student for an accounting profession.…

    • 1566 Words
    • 7 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Uniform Accounting Standards
    • 1544 Words
    • 7 Pages

    Uniform Accounting Standards

    In an increasingly interconnected world, the operations of international corporations are transnational. In addition, more and more investing takes place on a global level. Historically, different countries have developed their own national accounting standards. Before the introduction of the IFRS, the accounting principles of neighbouring countries were similar in many respects but used different financial reporting standards. Numerous accounting standards can lead to confusion and large complications for preparers and users of financial statements. Financial statements prepared under different countries’ financial accounting rules are often…

    • 1544 Words
    • 7 Pages
    Powerful Essays
    Read More
  • Best Essays

    Business
    • 1761 Words
    • 8 Pages

    Business

    The purpose of this report is to provide relevant background information of the United States’ convergence to International Financial Reporting Standards (IFRSs), and hence the current developments in the relationship between the United States’ Securities and Exchange Commission (SEC), the Financial Accounting Standards Board (FASB), the International Accounting Standards Board (IASB). This report focuses on the current situation of the convergence process and the obstacles of U.S. IFRSs.…

    • 1761 Words
    • 8 Pages
    Best Essays
    Read More

Related Topics