PDF file: Annual Report 2002/2003 - Scottish Crop Research Institute

Director’s Report
Standards Committee. In 2002, the ASB announced
its intention to align UK accounting standards with
international accounting standards wherever practicable.
The ASB has a rôle in the development and issue
of statements of recommended practice (SORPs) for
specific specialised areas such as parts of the public
sector and the financial sector. There is a likelihood
that the remit of the Financial Reporting Council will
be extended to audit and the Auditing Practices
Board. For the central government sector (government
departments, executive agencies, trading funds,
and non-departmental public bodies – NDPBs)
responsibility for determining accounting and financial
reporting requirements lies with the Scottish
Executive in Scotland, and the Treasury in England
and Wales. For NDPBs and like bodies (SCRI was an
NDPB until April 2003), this responsibility is derived
indirectly through the requirement for accounts directions
to be issued by individual sponsoring departments
(such as the Scottish Executive Environment
and Rural Affairs Department) with Treasury
approval. The main source of guidance is the Resource
Accounting Manual which sets common standards
consistent with UK generally accepted accounting
practice (GAAP) to the extent that it is meaningful
and appropriate in the public-sector context. Further
and higher education institutions represent a specialist
grouping that focus on teaching and research but they
vary greatly in their size, complexity, background,
basis of establishment, resource base, and pension
costs. The SORP Accounting for Further and Higher
Education issued for 1999-2000 was under review in
2002-2003.
Supported by the Resource Accounting Manual, processes
are in place for the introduction of consolidated
financial statements covering the whole of the UK
public sector, to be audited and based on UK GAAP –
the Whole of Government Accounts (WGA).
Australia and New Zealand successfully introduced
WGA several years ago, and other countries have stated
their intention to produce WGA.
In 2001, the International Accounting Standards
Committee (IASC) gave way to the International
Accounting Standards Board (IASB) as the major
vehicle to develop and issue what were IASC
International Accounting Standards, now referred to
as IASB International Financial Reporting Standards.
The IASB is governed and monitored by the trustees
of the IASC Foundation, itself intended to be representative
of the global capital markets, and is assisted
by the International Financial Reporting
Interpretations Committee and the Standards
Advisory Council. From 2005 at the latest, all EU
companies listed on the regulated market will be
required to produce consolidated accounts according
to International Accounting Standards/International
Financial Reporting Standards. A European Financial
Reporting Advisory Group has been established to
contribute to the work of the IASB in Europe.
Reinforcing the IASB and accountancy generally is the
International Federation of Accountants comprising
156 member bodies in 114 countries. It has several
boards and committees, one of which, the
International Auditing and Assurance Standards
Board, is responsible for the development and issue of
international standards on auditing. The IFAC
Public Sector Committee, is responsible for the development
and issue of international public-sector
accounting standards (IPSASs) which aim to deliver
consistent financial reporting by governments and
their sub-sets, using both cash and accrual bases of
accounting. The UK has not agreed to adopt IPSASs
or to harmonise with them, but has stated its intention
to keep them under close review. In addition to
IFAC, there is the Fédération des Experts Compatbles
Européens that represents 38 professional bodies from
26 European countries, including all the 15 EU
Member States and the three main member countries
of the European Free Trade Association.
For public-sector groups worldwide, there are challenges
about (a) the nature of the accounting principles
to be applied and their relationship to the private
sector; (b) differential treatment of accounts, with no
generally agreed way to demonstrate proper stewardship
of public funds; (c) problems over accounting for
cost of capital, current value and depreciation, infrastructure
assets, pension liabilities, private finance initiatives,
non-exchange revenues and social policy
obligations, and heritage assets. Coincidently, the
IASB recently published proposals requiring companies
to identify and value separately newly acquired
intangible assets such as patents, databases, and trade
secrets, rather than aggregating these with goodwill or
its equivalent. For R&D-based or brand-based organisations
this will present considerable difficulties.
Auditing standards in the Republic of Ireland and the
UK are derived from the Auditing Practices Board
(APB), formerly a subsidiary of the Financial
Reporting Council in 2003. The APB issues statements
of auditing standards (SASs) relating to the
conduct of audits of financial statements, practice
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