Here at Williamson & Croft, we’re made up of talented accountants who help businesses up and down the north-west with their financial accounting needs. From tax, external audit work and advisory services to helping businesses with their reporting processes, accounting practices and financial statements – we do it all.
However, until now, we haven’t really discussed what it is that drives us to do this, what code we abide by that allows us to work to high accounting standards. Well, all of that can be found in something called ‘UK GAAP’, which is short for, Generally Accepted Accounting Practice in the UK. These accounting principles, which we’ll explain in more detail in today’s blog, help guide us over the period of time that we work with a client, and allow us to reach the ultimate goal of making them more successful.
As we mentioned we are committed to the principles of accounting and are excited to see how we can help you. If you’re based in Manchester, Liverpool or the surrounding areas, such as The Wirral, Chester or Salford, and are looking for a professional accounting firm that can help you with a host of different services, to help improve your financial position and accounting records, get in touch with us today.
So, What Are UK Generally Accepted Accounting Practices? (A.K.A. UK GAAP)
UK GAAP is the formal title of the body of accounting standards and other guidance which apply in the United Kingdom. These accounting standards are published by the UK’s Financial Reporting Council, and look to detail the framework by which financial information should be presented, with the last major overhaul having become active on 1st January 2015.
The financial accounting principles are a set of rules that encompasses the key themes that help to clarify the details, complexities and legality of the business, and corporate, accounting universe. Accountants that are UK GAAP compliant are committed to providing accurate, impartial information, and financial statements.
Here at Williamson & Croft, we are UK GAAP compliant and committed to working to the highest possible accounting standards. What follows are the actual principles that financial institutions, who are compliant, work to:
- Economic Entity Assumption – This principle looks to show a clear difference between the transactions carried out by the business and the business owner.
- Monetary Unit Assumption – All records should be recorded in a financial currency (usually that in which the accounts are prepared).
- Time Period Assumption – A business should report their financial statements to a specific time period, this is often called an accounting year.
- Cost Principles – A cost principle refers to the fact that assets should always be initially recorded at their cost.
- Full Disclosure Principle – When presenting financial statements, an entity should disclose all the relevant and necessary information, so stakeholders and potential investors have a full idea of the company’s financial position.
- Going Concern Principle – A fundamental principle, it assumes that a company will complete its plans during, and beyond, the next financial year, and use its assets to meet its financial obligations.
- Matching Principle – Expenses should be recognised in the same accounting period as their related revenues.
- Revenue Recognition Principle – Commonly found in accrual accounting, this principle looks to establish the fact that revenues are recognised in the period that they were earned, not when the cash was received.
Who Enforces UK GAAP And Is It Legally Binding?
In preparing financial statements, achieving a true and fair view is and remains the overriding objective (and legal requirement). In the vast majority of cases, compliance with UK GAAP will result in a true and fair view. However, where compliance with an accounting standard may not achieve that objective, accounting standards expressly provide that that standard may be overridden
The point of these accounting principles is to encourage greater transparency and understanding, improve financial reporting and ensure businesses are being honest. These principles do not mean that mistakes and human error will not occur. When they do, they shouldn’t initially be thought of as malicious; thorough investigations, and questioning, should take place prior to any accusations.
Contact Williamson & Croft Today To Learn More About Our Services
We hope this blog illuminated the topic of what UK GAAP is a little more and helped you further understand the standards that underpin the work we do here at Williamson & Croft. For more information, or to discuss how we can help your business with your accounting processes, get in touch with us today. As we mentioned, we work in the north-west, in areas such as Wakefield, Warrington and St. Helens, and have helped countless organisations enjoy the benefits of proper accounting practices being applied to their business activities.
If you’re interested in hearing more call us on 0161 3990121 if you live in Manchester and 0151 3033112 if you operate in Liverpool.