GAAPs in the UK have seen a greater movement towards the principles of the IFRS, and this standardisation has meant the differences between the two have been greatly reduced. Another aspect of the Companies Act is that it requires limited companies to file their accounts and financial statements with Registrar of Companies, who in turn make them publicly available. This act has integrated European law, which since 2005 has required that all listed European companies adopt the IFRSs. In the UK it is the Companies Act 2006 that is the primary legislation when it comes to financial reporting. Although their overall purpose is to improve the transparency of financial statements, they do not actually guarantee that the aforementioned statements are error-free, or indeed that they are not purposely missing certain information. Since 2005, all listed and grouped companies within the EU have been required to use the IFRS something which then extends to all listed companies in the UK. The idea behind this is that these financial statements are able to be understood internationally. Some countries have local, country-specific accounting principles that are then applied to regular companies, while larger and/or listed companies are expected to conform to IFRS. Small and medium-sized enterprises will sometimes lean towards following more simplified standards, in addition to any specific requirements advocated by their respective lenders and/or shareholders. These were established by the International Accounting Standards Board (IASB) and continue to be maintained by this organisation. It is for this reason that the International Financial Reporting Standards (IFRS) have emerged. Growing globalisation means there is a need for a common language to allow company accounts to be interpreted and understood all around the world, regardless of one’s business or accounting background. Globally there is a push to bring about greater uniformity when it comes to financial statements.
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