All the listed companies were asked to follow these accounting standards for maintaining their accounting transaction and developing financial reports. These accounting standards were introduced to enhance credibility and reliability of the financial statement developed by the listed companies of a nation. These accounting standards assisted the accountants and auditors to resolve different controversies related to different accounting practices. Even the managers consider these accounting policies while developing various strategies and policies to be followed by the company.
Like other developed nation, the accounting standards were formulated in UK in early 1980s. People identified the necessity of a well structured accounting standard that assures “relevance, reliability, comparability and understand-ability” in the financial report that is developed by the listed companies (Kirk, 2005, p.9).
In UK, the accounting standards are popularly known as Financial Reporting Standards (FRS). These FRS were developed by Accounting Standards Boards (ASB) and all the listed companies are required to adhere to these standards so that a true and fair picture of the companies’ financial condition can be represented.
Prior to 1990, the accounting standards were developed by Accounting Standards Committee (ASC) which was later replaced with Accounting Standards Boards (ASB). In the first meeting of ASB, it formally accepted all the accounting standards prevailing in UK GAAP. With time, this board introduced few new standards and modified many existing standards.
In UK, the four main constituents responsible for development and maintenance of accounting standards are Financial Reporting council (FRC), The Accounting Standards Board (ASB), Urgent Issues Task Force (UITF) and The Financial Reporting Review Panel (FRRP). FRC is