Uk and Us Accounting Standards

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In today's unpredictable stock markets, it is extremely important for investors to expand investments to minimize risk and earn reasonable returns on funds. The diversification does not have to be restricted to domestic companies because of opportunities available in foreign markets. On the other hand, securities analysis becomes more complex because of supplementary variables such as foreign exchange risk, political, economic, cultural diversities, etc. that need to be taken into deliberation in making investment judgment. A significant variable in the analysis of foreign securities is various accounting standards. The accounting standard of United States (US) and United Kingdom (UK) and identifies the major differences that materially…show more content…
In contrast the US structure is a fragment more complex than that of the UK. To understand accounting standard setting in the US, one must start with the SEC (Securities and Exchange Commission) which is a regulatory agency established in 1934 by the congress. Previous to this no national system existed to govern the data flow of communication to investors. SEC has been given the statutory power to promulgate accounting principles. Even though it consists of its own policy, it does rely on the private sector in the US to establish financial reporting standards. Its role of standard setting on financial reporting and accountancy principle guidelines is backed with its powerful influence. Another standard setting board is the FSAB with its role to expand accounting standards outside the profession by encouraging. As a result the main source for accounting standards in the US internally is GAAP (Generally Accepted Accounting Principles) which is mounded by authority's pronouncement by the FASB (Financial Accounting Standards Board). The role of the FSAB is to set up financial accounting and reporting standards in the US. The FSAB structure is very significant around the world today as the "IASC's framework and UK statement of principles are clearly
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