The importance of accounting standards
A PricewaterhouseCoopers case study

Page 1: Introduction

PricewaterhouseCoopers was created in July 1998 by the merger of two firms - Price Waterhouse and Coopers & Lybrand - each with historical roots going back some 150 years and originating in London. PricewaterhouseCoopers, the world’s largest professional services organisation, helps its clients build value, manage risk and improve their performance. Drawing on the talents of more than...
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Page 2: An integrated team approach

Until recently, professional services were recognised as distinct areas that were separate entities with little room for overlap or sharing of information. Now the boundaries between activities such as tax, audit and management consultancy are becoming blurred. They provide a fully integrated team to tackle a company’s diverse problems. At PricewaterhouseCoopers, there are six service...
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Page 3: Auditing

In order that shareholders and other interested parties can make informed judgements as to the financial health of a company, it is a legal requirement that all companies have their financial facts and figures checked. This is known as an audit and must be performed by an independent registered firm of auditors. The auditors use guidance from the Accounting Standards Board to state whether in...
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Page 4: Accounting standards

Several of the SSAPs and FRSs are detailed in the context of a fictional oil company (Global Oil). Further FRSs are expected as business becomes more complex. How these different standards are applied varies with the type of business conducted by a company. As for any company the shareholders’ interests must be protected. The following examples of SSAPs and FRSs demonstrate the consideration...
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Page 5: Accounting standards continued

FRS 3 Reporting financial performance This is a highly complicated standard. Essentially FRS 3 serves to make sure the information presented in a set of accounts is clear. Companies must issue a report stating the financial performance for review by its shareholders. Consistency and ease of understanding these reports allows the reader to compare the data for similar companies. This would allow...
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Page 6: Conclusion

The example of Global Oil demonstrates the financial reporting standards that must be considered when preparing a company’s accounts. More standards are expected as the complexities of business transactions grow and accounting practice adapts to keep up with these changes. Such changes already observed in business are the use of derivatives and financial ‘instruments’. At...
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