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Watchdogs or Straw Dogs? A Critical Appraisal of the UK Regulatory Framework with Respect to (Non‐)Compliance with Financial Reporting Standard No. 1
Author(s) -
Jupe Robert E.,
Rutherford Brian A.
Publication year - 1997
Publication title -
international journal of auditing
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.583
H-Index - 21
eISSN - 1099-1123
pISSN - 1090-6738
DOI - 10.1111/1099-1123.00024
Subject(s) - audit , accounting , compliance (psychology) , business , statutory law , cash flow , audit evidence , audit plan , finance , joint audit , internal audit , political science , psychology , social psychology , law
The objective of this paper is to appraise the UK regulatory framework by focusing on the statutory financial audit and its role in testing companies' (non‐)compliance with a new financial reporting standard (FRS1). The analysis is based on a large‐scale survey of the cash flow statements required by FRS1 in company accounts along with the audit reports of each company. The survey reveals that significant variations in the standard format for cash flow statements were allowed without any audit comment. The study concludes by raising causes for concern about the UK regulatory framework, and arguing that the objective of FRS1 was not fully achieved because of the wide variations in the standard format produced by companies. It suggests that a solution to the concerns raised is to increase the use of comments in audit reports by restoring the ‘emphasis of matter’ principle.