The regulatory framework for financial reporting by listed companies Essay

The regulatory framework for financial reporting by listed companies in the UK and the reasons why different accounting practices developed in different countries - Essay Example Although every business is different in some respect from the other, but their accounting procedures are to be performed in some standardized manner in order to have consistency and get an accurate picture. The financial reporting standards perform the function of regulating the business world by laying down the accounting standards and procedures which the limited companies need to follow. This not only helps in getting the financial information about companies on a common base by having standardized policies, but also serves the purpose of providing the users of financial statements with clear, accurate, reliable and relevant information (2005). In the United Kingdom, there are three basic elements of the regulatory framework for all the listed companies. The government has its role in regulating the businesses by way of the Company Law; the accounting professionals perform their duties by preparing, interpreting and implementing the accounting standards being prepared for the financial reporting purpose; and finally the stock exchange keeps a check by having various stock exchange rules for the companies listed in the London Stock Exchange. The Company Law is to be fulfilled by all the limited companies whether public or private, however there are variations depending upon the nature of the entity. It’s the basic regulatory framework introduced by the government in order to keep a record of the companies in the country (Ray Ball, Lakshmanan Shivakumar, 2004). However, this Company Law does not pay much attention to imposing regulations for the standardization and consistency of the accounting standards and policies. It just lays down the general rules and requirements for preparing financial statements, their format and their content. The procedure for finalizing the content is not discussed. The Company Law makes it mandatory that all the listed companies should prepare and