Knowledge guide to UK accounting standards
An overview of the history and development of UK accounting standards and information on how you can obtain the current standards.
Looking for information about a specific FRS, SSAP or SORP? Check our list of accounting standards to find UK accounting standards by number or title for summaries, updates and guides.
Contents of this guide
History and development
This timeline highlights some of the key dates in the development of UK accounting standards from the 1940s to the present. To find out more, take a look at our suggestions for further reading.
The Taxation and Financial Relations (T&FR) Committee of the ICAEW was established in 1942 and was asked by the council of the ICAEW to ‘consider and make recommendations to [the council] on certain aspects of the accounts of companies’ and to publish ‘approved recommendations for the information of members’ (The Accountant, 12 December 1942).
The first ‘Recommendations on Accounting Principles’ were published in December 1942 on the subjects of Tax Reserve Certificates and War Damage Contributions, Premiums and Claims. These recommendations, and those that followed, provided members of ICAEW with early guidance on accounting practice.
Initially the recommendations were published in The Accountant. The first collected edition of the recommendations was published in book form by Gee & Co in 1944 and the recommendations later appeared in the Members' Handbook. Most had been withdrawn by the time Technical Release 391 was published in 1980.
At a press conference on 11 December 1969 the ICAEW released a ‘Statement of Intent on Accounting Standards in the 1970s’ which expressed the determination of the council to advance accounting standards, setting out the steps the institute felt would be necessary to achieve this. The Accountant (‘Recte Numerare in the 70s’, 18 December 1969) commented that the importance of this development could be ‘likened only to the inauguration of the Institute's series of recommendations a quarter of a century ago.’
The ICAEW established the Accounting Standards Steering Committee in January 1970 with ‘the object of developing definitive standards for financial reporting’ (‘History of the Accounting Standards Committee’, Accounting Standards).
The Irish and Scottish institutes became members of the Accounting Standards Steering Committee in the same year, followed by the Association of Certified Accountants (now the ACCA) and the Institute of Cost and Management Accountants (now CIMA) in 1971.
On 29 April 1970 the ICAEW published the Survey of Published Accounts, 1968-69 which highlighted the continuing degree of variation in accounting treatments in use at this time.
The President used this opportunity to re-state the ICAEW's aim to implement the statement of intent. This was reported in The Accountant (‘Precept and Practice’, 30 April 1970 and ‘Institute's Approach to Accounting Standards’, 7 May 1970)
The first Statement of Standard Accounting Practice (SSAP) on Accounting for the results of associated companies (SSAP 1) was issued in January 1971. A total of 34 statements (or revised statements) were released between 1971 and 1990.
Initially the SSAPs sat alongside the ‘Recommendations on Accounting Principles’ issued by the ICAEW. The explanatory foreword to the 1977 edition of Accounting Standards stated:
In so far as they are not replaced by Statements of Standard Accounting Practice, the Council's ‘Recommendations on Accounting Principles’ will continue in effect as guidance statements and indicators of best practice. They are persuasive in intent and departures from them do not necessarily require disclosure as do departures from accounting standards
CIPFA joined the Accounting Standards Steering Committee.
In 1976 the name of the Accounting Standards Steering Committee (ASSC) was shortened to the Accounting Standards Committee (ASC) and its constitution was revised. The ASC became a ‘joint committee of the six member bodies who then acted collectively through the Consultative Committee of Accountancy Bodies’ (Introduction, Accounting Standards 2006/07). Later, in 1985, the ASC became a committee of the CCAB.
In November 1987 the CCAB appointed Sir Ron Dearing to review the standard setting process. The final report The making of accounting standards: Report of the Review Committee (published in September 1988) recommended the establishment of the Financial Reporting Council, the Accounting Standards Board and the Review Panel.
In 1990 the government announced the establishment of a new Financial Reporting Council (FRC). The FRC was charged with promoting good financial reporting through two subsidiary bodies: the Accounting Standards Board, which replaced the ASC on 1 August 1990, and the Financial Reporting Review Panel (FRRP).
On its creation, the Accounting Standards Board (ASB) adopted a number of SSAPs that had been issued by the ASC so that they were brought within the legal definition of accounting standards according to the Companies Act 1985. All accounting standards developed by the ASB from 1990 were issued as Financial Reporting Standards (FRS).
The newly established ASB was assisted by an Urgent Issues Task Force (UITF) which held its first meeting in 1991.
The Urgent Issues Task Force (UITF) was established to investigate areas where conflicts or unsatisfactory interpretation of an accounting standard or Companies Act provision exists or may develop in the future.
The first abstract issued by the UITF was ‘Convertible bonds – supplemental interest/premium’ which was released on 24 July 1991.
In 2004 the government took the decision to strengthen the regulatory system in the UK following the major corporate collapses in the US. This led to the FRC's role being extended to become the single independent regulator of the accounting and auditing profession as well as being responsible for issuing accounting standards and dealing with their enforcement.
The present FRC and its subsidiary bodies are funded jointly by the accountancy profession, the financial community and the government.
Reforms were carried out in July 2012 to enable the FRC to operate as a unified regulatory body with enhanced independence. A new structure was implemented to ensure effective governance of all of the FRC's regulatory activities under ultimate responsibility of the FRC Board.
As part of the reforms, the Codes and Standards Committee was established to advise the FRC Board on maintaining an effective framework of UK codes and standards. The Accounting Council also replaced the Accounting Standards Board (ASB), assuming an advisory role to the Codes & Standards Committee and the FRC Board. The UITF was also disbanded as a result of the reforms.
Whereas accounting standards were previously set by the ASB, this became the responsibility of the FRC Board on 2 July 2012.
The FRC issued the following new standards as part of a new UK GAAP framework:
- FRS 100: Application of Financial Reporting Requirements
- FRS 101: Reduced disclosure framework
The FRC published a further standard in March 2013 setting out new accounting and reporting requirements for unlisted entities:
- FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland
The FRC issued another standard in March 2014 to form part of the new UK GAAP:
- FRS 103: Insurance contracts
The financial reporting standards FRS 100, 101, 102 and 103 (known as new UK GAAP) are effective from 1 January 2015. These FRSs replace existing financial reporting standards issued by the FRC for reporting periods starting on or after 1 January 2015.
The FRC issued two more standards:
- FRS 104: Interim financial reporting (March 2015)
- FRS 105: The Financial Reporting Standard applicable to the micro-entities regime (July 2015)
UK accounting standards
Financial Reporting Standards (FRSs) and Financial Reporting Exposure Drafts (FREDs)
From 1 August 1990, all UK accounting standards were issued by the Accounting Standards Board (ASB). On 2 July 2012, however, the FRC Board assumed responsibility for setting accounting standards.
All accounting standards developed and issued by the ASB are known as Financial Reporting Standards (FRSs). The standards include the FRSSE (Financial Reporting Standard for Smaller Entities). FRSs are first usually issued as Exposure Drafts for consultation that are known as Financial Reporting Exposure Drafts (FREDs).
Comments received on discussion papers and exposure drafts are available for public inspection in the Library by arrangement.
Statements of Standard Accounting Practice (SSAPs)
SSAPs were the previous generation of accounting standards approved and issued by the ICAEW and other accountancy bodies following recommendations from the ASC.
One of the first decisions of the newly formed ASB was to adopt a number of the SSAPs issued by the ASC so that they were brought within the legal definition of accounting standards according to the Companies Act 1985. Consequently some SSAPs are still in force today.
Statements of Recommended Practice (SORPs)
The ASC developed the first SORPs. These are specialist standards for particular industries or sectors.
Today the FRC recognises other bodies' power to develop SORPs in order to provide guidance on the application of accounting standards to specific industries or sectors. SORPs are issued by and available from appropriate bodies for those industries or sectors; for example, the charity SORP is issued by the Charity Commission.
SORPs are usually first issued for consultation as Exposure Drafts. The FRC does not approve such SORPs. However, if they are developed in accordance with certain guidelines it issues a 'negative assurance statement' to be appended to the SORP that confirms that it does not contain any provision inconsistent with FRC principles and policy.
Urgent Issues Task Force (UITF) abstracts
The UITF was part of the previous standard setting arrangements and assisted the ASB by investigating areas where conflicts or unsatisfactory interpretation of an accounting standard or Companies Act provision existed or may have developed in the future. In order for accounts to present a true and fair view, they must comply with UITF Abstracts. UITF Information Sheets were available from the FRC website but have now been removed. Please contact the library on 020 79208620 to request copies.
The UITF was disbanded on 2 July 2012 as a result of reforms to the Financial Reporting Council (FRC). Its role and responsibilities were transferred to the Accounting Council.
Generally Accepted Accounting Practice (GAAP)
The acronym GAAP stands for ‘Generally Accepted Accounting Practice’ or alternatively ‘Generally Accepted Accounting Principles’ or ‘Generally Accepted Accounting Policies’. GAAP is a term used to describe the rules generally accepted as being applicable to accounting practices as laid down by standards, legislation or upheld by the accounting profession.
How to obtain UK accounting standards and SORPs
Croner-i are publishers of books, manuals, electronic publications and subscription products in the key areas of accountancy, audit, taxation, financial reporting and business.
The Croner-i titles include the annual edition of ‘Accounting Standards’ which includes the complete texts of all UK Statements of Standard Accounting Practice and Financial Reporting Standards extant at 30 April of the current year.
Financial Reporting Council (FRC)
The FRC website provides summaries and full text of most standards in issue and information on current consultations. The Urgent Issues Task Force section of the website has now been removed but the full text of UITF abstracts and information sheets are available on request from the library. You can subscribe to receive the FRC stakeholder newsletter.
SORP issuing bodies
Information on SORPS is available on the FRC website.
To find out how to get access to individual SORPs take a look at our Accounting by industry pages.
ICAEW Library & Information Service
We provide an enquiry service for ICAEW members, students and other entitled users. As part of this service we can loan books and supply documents from our collection by email, fax and post.
In addition, logged-in ICAEW members and students can access premium online content. Check our pages on:
Taxation and Financial Relations (T&FR) Committee
The Taxation and Financial Relations (T&FR) Committee was renamed Taxation and Research (T&R) Committee in 1949 and the Technical Advisory Committee (TAC) in 1964. The committee's powers were transferred to other Institute Committees in May 1967. The committee books from 1942-1950 are held at Guildhall Library in London.
Accounting Standards Committee
You can read the book ‘Financial Reporting in the UK: A History of the Accounting Standards Committee, 1969-1990’ online. This title is available to ICAEW members, students and other entitled users through our collection of eBooks.
We have a number of publications, including comments received on discussion papers and exposure drafts, from the ASC in the Library collection:
The John Rylands University Library holds a special collection of ASC and ASSC papers (1952–1990) in its Accounting Standards Committee Archives.
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