5.7 Professor Myddleton argues that financial reporting standards should be limited to disclosure requirements and should not impose rules on companies as to how to measure particular items in the financial statements. He states:

The volume of accounting instructions is already high. If things go on like this, where will we be in 20 or 30 years’ time? On balance I conclude we would be better off without any standards on accounting measurement. There could still be some disclosure requirements for listed companies, though probably less than now.

Do you agree with this idea? Discuss.

5.8 You have overheard the following statements:

(a) ‘The role of independent auditors is to prepare the financial statements of the company.’

(b) ‘International Accounting Standards (IASs) apply to all UK companies, but London Stock Exchange listed companies must also adhere to International Financial Reporting Standards (IFRSs).’

(c) ‘All listed companies in the European Union states must follow IASs and IFRS Standards.’

(d) ‘According to IAS 1, companies’ financial statements must show an “accurate representation”

of what they purport to show.’

(e) ‘IAS 1 leaves it to individual companies to decide the format that they use in the statement of financial position.’

(f) ‘The statement of changes in equity deals with unrealised profits and gains, for example an upward revaluation of a non-current asset.’

Critically comment on each of these statements.