RESEARCH PROPOSAL

Research Proposal

Table of Contents

CHAPTER 1: INTRODUCTION3

Background of the study3

Research Problem4

Research Objectives5

Research Questions5

Motivation for the study5

CHAPTER 2: LITERATURE REVIEW8

Elements Of A High Quality Global Financial Reporting Structure9

Auditing Standards10

Audit Firms with Effective Quality Controls10

Profession-Wide Quality Assurance12

Active Regulatory Oversight13

International Accounting Standards14

EU and IAS14

CHAPTER 3: METHODOLOGY17

REFERENCES19

Research Proposal

Chapter 1: Introduction

In the UK, the last twelve years have brought steady improvement in the quality of financial reporting. Following this period of relative stability and progress, the UK regulatory framework is now the subject of significant change. One key change is the Regulation introduced by the EU in 2002 (European Union 2002a pp.45-49 ) requiring all listed companies in the EU to adopt International Accounting Standards (IAS)1 for consolidated accounts for financial years beginning on or after 1 January 2005.  This is part of the initiative from the European Commission (European Commission 2000 pp.67-72) to strengthen capital markets in the EU by creating common standards of reporting. It is also proposed that audits should follow International Standards of Auditing (ISAs) (Co-ordinating Group on Audit and Accounting Issues 2002 pp.78-89 ). The objective of this paper is to explore the attitudes of UK regulators, audit partners and company directors to the introduction of IAS in the UK. The research is going to be carried out by means of literature search and semi structured interviews. 

Background of the study

Research Problem

In the UK, all domestic companies are required to comply with company law, and most provisions apply to all UK companies, regardless of size. All companies must prepare financial statements for their shareholders(Fearnley, Macve, 2001 p.110). Except for very small companies, accounts must be audited by a UK registered auditor. Accounts are the legal responsibility of directors, and must comply with UK accounting requirements, which are found in company law and accounting standards. The 1985 Companies Act includes a requirement for accounts to show a true and fair view. The true and fair view can be used, where it can be justified, to override other legal requirements and accounting standards5. The Financial Reporting Council (FRC), set up in 1990, is responsible for setting accounting standards in the UK. It is an independent private sector body funded by the accountancy profession, the Department of Trade and Industry (DTI) and City institutions. The FRC has three subsidiary bodies: the Accounting Standards Board (ASB), responsible for the promulgation of accounting standards; the Urgent Issues Task  Force (UITF) which provides authoritative guidance on emerging accounting issues for which no standards exist; and the Financial Reporting Review Panel (FRRP) which is responsible for enforcement of compliance(Fearnley, Hines McBride, Brandt, 2000 pp.45-49 ). 

Research Objectives

In June 2002 the EU Council of Ministers approved a Regulation requiring all listed companies within the EU to use International Accounting Standards (IAS) for consolidated accounts for periods starting on or after 1 January 2005. This report attempts to explore the attitudes of key players at this time to implementing IAS in the UK(europa.eu.int ). 

Research Questions

Is the introduction of common accounting standards within the EU by 2005 desirable?

How does IAS compare with UK GAAP?

Does the loss of influence for UK regarding standard setting in an international context matter?

What are the key issues in the transitional process?

What is the future for ...