1. Discuss the differences between the US and UK "opinion" paragraphs of the auditors reports. What practical effects might these differences have?In general the standard form that audit reports take in the US in comparison to that of the UK is very similar. In both countries the audit report seeks to give a second opinion as to the fairness of the financial statements and in both cases will state the auditors opinion regarding the fairness of these within the context of the accepted accounting standards within that particular country.The two opinion paragraphs from the Caterpillar financial report 2002 and the Marks and Spencer 2002 at first read seem to state similar objectives which h ...view middle of the document...
The reference to generally accepted accounting procedure (GAAP) in the US audit refers to the US equivalent of the ASB. In comparison with UK this could be interpreted as the US being more reliant than the UK on actual guidelines which have been published by various sources which of course include the standards that have been set by that countries governing body. In The UK the dominating theme of accounting is that of true and fair, to go into the usage of true and fair in detail here and of its position would be unhelpful but it is sufficient to say that the usage of 'true and fair' in UK accounting is one of the paramount themes present in all of financial reporting. The true and fair view may clash with several aspects of company law over certain issues but where it does so, true and fair will take priority over take of the 1985 act. This is to say that the UK seems to rely less on direct literature, standards and requirements in their presentation of financial reports. This is also not to say that they are less 'accurate' or valid in any way but simply that this is what is required of UK audits. An example in the Marks and Spencer report of the true and fair view overriding standards can be found on page 29 paragraph 5 in section 1 where there has been a clash with company standards over an acquisition.The differences between the US and UK audit position have been noted but their differences do not make them as fire and water. They have been set out to accurately portray the financial status of the company at that period and in doing so have simply used a slightly different set of ideals , neither may be consider to be 'better than the other' simply due to this slight difference in wording. It would take a detailed examination of court cases in order to exactly ascertain just what the exact difference would be interpreted as.2. Contrast the three balance sheets (two Caterpillar and one marks and Spencer) are these typical of their countries? What differences are there?The balance sheets from Caterpillar from 2002 and 1987 at first seem to be a very different creature from that of the UK company Marks and Spencer. Caterpillars balance sheets are known by a different name even though they represent the same financial information. Two other terms are used in the US apart from balance sheet ; statement of financial position, and statement of financial condition. Caterpillars is known as Consolidated Financial position, perhaps the most uncommon term in the US. However it is still recognised as to its purpose leaving no question as to its identity. Caterpillar's balance sheets thus give us a good idea of a typical balance sheet in the US format. The Marks and Spencer Balance sheet follows company law format with the items prescribed all being in their correct place allowing us to make an accurate comparison of two typical balance sheets from large companies.The format of the balance sheet is slightly different as well. The current assets ...
