1. Introduction
Financial reporting now concerns all listed companies in the EU. By the year 2005 all of them will be reporting according to the International Accounting Standards that are uniform throughout the EU.
This is quite a radical change from the past. For continental Europe IAS is very much an Anglo-Saxon inspired reporting model. Applying and understanding IAS in other European countries requires considerable effort in getting to know the new concepts and the approach of the standard setters. On the other hand, there is virtually no UK listed company yet that already applies IAS. (Alexander et al, 2003)
Although the requirement to apply IAS does not extend to small and medium sized companies (at least not as an EU requirement), many member states of the EU will, as a result of the modernization of their Accounting Directives, amend their national accounting legislation in a manner which brings it closer to IAS.
2. A little excursion around the basic requirements of modern financial reporting
Broadly speaking, accounting is about the provision of figures to people about their resources.
It can be seen mainly as technical manipulation of figures characterizing various points of interest. In accounting much of the emphasis is likely to be on ‘doing things with figures’. But the question arises as to which figure or figures should actually be built into the system. Or more fundamentally, how is one going to decide which figures to put in?
In general terms, we can answer this question by going back to the original definition of accounting. The figures the accountants should provide to people are the figures that they need to know for their own practical purposes. This raises questions about the users of accounting informatio ...