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Why Management Sees No Merit in CCA Changeover

Article Abstract:

Statement of Standard Accounting Practice (SSAP) No. 16 on current cost accounting (CCA) in the United Kingdom has been criticized (now that inflation has fallen back) due to its complexity. Complexity, in itself, is not a valid argument for non-use as the benefits may outweigh the level of complexity. The relative values of historic versus current cost accounting need to be examined in light of internal and external reporting and levying taxes on the company. There are large relevant differences in figures based on historic and current cost bases that are used in computing payout. Management prefers reporting favorable data. Public accountants appear to be unsupportive of CCA. The government is supportive, but has not implemented it. Financial analysts prefer historical cost bases because they are less apt to be volatile. There is disagreement among academics. These positions leave one with no incentive to change especially when change would mean more work, more training and no support. Without incentives, there will be no change.

Accounting and auditing, Inflation (Finance), Inflation (Economics), Cost Accounting

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Accounting for tangible fixed assets

Article Abstract:

The area of fixed assets is often included in the examinations for the Final Auditing and Financial Reporting Paper. One reason for this is because students are expected to know how to correctly identify alternative accounting methods, determine how such alternatives influence the financial statement being prepared and decide which of the alternatives are most relevant for a given scenario. Because the area of tangible fixed assets does not yet have a specific accounting standard, alternatives for this are well-developed, particularly for cases which are not covered by a historical cost basis. As such, the area of tangible fixed assets is very examinable in the Final Paper. Students should therefore be familiar with the issues associated with such assets, their implications and all possible remedies for them.

Assets (Accounting)

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When the laws of the jungle apply

Article Abstract:

Standard costing, budgetary control, and variance analysis are techniques that no longer adequately reflect the true nature of 'cost'. These techniques treat 'cost' as a fact instead of a statement or an opinion which leads to confusion as to whether marginal or absorption costing is providing the true cost. Depreciation and overhead absorption are two areas that can alter the cost scenario.

United Kingdom, Accounting, Great Britain

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