Questions

1. Murphy comments on the different theories of accounting under IFRS and UK GAAP. What are the differences and why is IFRS deemed inappropriate for local authorities?

2. Based upon the arguments by Murphy should we have different accounting svstems? For local authorities? For different countries?

3. What approach is Murphy using when he addresses the question of accounting for local authorities?

4. Why do you think IFRS has been adopted for local authorities? Is it scientific or unscientific?

ned to produce what the ASB call decision information You can call that cynical INTERNATIONAL IFRS is a Big Four gravy train by Richard Murphy It's been announced that Interational Financial Reporting Standards are to be used by UK kocal authorities from April 2010 for the preparation of their accounts Now, Intially one of those who goes around supporting the public sector is wasting money, Laydy because when all is said and done it seems to me no more prone to the frailty of human fallibility than the private sector, where have witnessed waste on the most colossal scale. But on this occasionin going to and Im going to point a finger at these imposing the IFRS are completely and enly inappropriate for use by local authorities. The reasons rease in this case The ASB defines decision useful information as that needed by an investor to decide whether to buy or sell shares in an entity. They do not consider there to be any other reason for financial reporting. That is why the entire focus of IFRS shitted from that in the previous UK GAP which was sporting profit, toned reporting changes in balance sheet value This is no minor issue: UK GW was actuals accounting and sought to match transactions in a period to provide a measure of what had happened in that time scale.Balance sheets are a residual measure in that process. So this Gw was about stewardship, financial performance, delivery value for money and action over time. PARTI Acthy Pre on the other hand is about measuring value at a point of time and comparing that with value at another point of time. The difference is the result for the period. So the balance sheet is predominant and the profit and loss account secondary because it s assumed that the investor in the entity will have a short time scale for involvement (usually less than a yow - the UK stock exchange changes hands entirely well over once a year now. on average) and is therefore wholly uninterested in stewardship, performance over time or even delivery of results. The RS belief is that the only issue of concem to the investors, who they believe to be the Now, let's get down to some basic facts here. No one invest in a local authority, They're not for sale. They do not provide an investment return. With rare exceptions and regretthis) they do not even issue bonds to finance their capital projects So the use of the financial statements at FRS asume to meet are not present in the case of local authorities. There were investors. And the use for which the financial statements that FRS assumes to exist being the decision to buy and sell shares, does not exist in the case of This alone, at this most obvious and basic level, makes it abundantly obvious that FRS is the wrong accounting system for local authorities as it is for any unquoted company is worse than that though IFRS will not require accounting for stewardship of public funds entrusted, or for the supply of services, both of which are come to the management of local authorities. And we know that a failure to measure almost always means a failure to deliver in management forme. This means we have a potential disaster on our hands And whose fault is this? Well firstly, the Ase's. They do not act in the public interest, after all. They are a private cartel designed by and promoted for in no small part, the benefit of for biggest sponsors - who are the Big 4 forms of accountants. Second, those firms have much to answer for They have just made a fortune from the FRS transition for first tier listed companies, now they ve persuaded the professional bodies which he dominate to move IASB into local What really hate is when people say the public sector is inefficient when the entire reason is that the public sector was sold a completely dud product by the private sector. That's true of most of the IT debacles, for example. It will be true here Someone needs to wake up smell the coffee and realise that UK local authorities are being sold a dud reporting system designed from the outset to be unfit for their needs. This project must be cancelled now before it is too late This is not just a waste of money. This is a straightforward con I am angry. And so should allocal authority tax payers in the UK, We're going to be taken for a ride unless we protest now Bounce To Fearch UK. Richard Murphy on tax and corporate accountabi, www wchong Questions 1. Murphy comments on the different theories of accounting under Fre and UK GAAP. What are the differences and why PRS doomed inappropriate for local authorities? 2. Based upon the arguments by Murphy should we have different accounting systems for local authorities for different countries? 3. What approach is Murphy using when he addresses the question of accounting for local authorities? 4 Why do you think FS has been adopted for local authorities? Is it scientific or unscientific