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Disclosure of off balance sheet arrangements and Standards in the UK

The U. K standards demand that the preparation of accounts to be done in accordance with the companies act. Financial reports may also be prepared according to the U. K accounting principles as well as the International Financial Reporting Standards. The European Union directive (2006/46/EC) was the first to recognize off balance sheet requirement disclosures in the U. K. The derivative denotes that off-balance-sheet arrangements are transactions that companies can be used by companies as entities.

There has not been clear definition of off balance sheet finance by the U. K derivative and the company’s Act. Accounts can only be disclosed by considering the type of entries given by the European Union concerning the disclosure of such transactions (Engel et al 1999, p. 258). The derivative describes off balance sheet as having unincorporated agreements. It does not give the importance of disclosing the material risks and benefits that come with off balance sheet entries.

Off balance sheet transactions should be reported as foot notes at the bottom of the balance sheet. The disclosure only need to an extend that is necessary for enabling the financial position of the company to be assessed. In addition some of the financial reporting standards are required

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to disclose items that are not necessarily incorporated in the balance sheet. Accordingly, companies are also required to give some disclosures that are related to off balance sheet agreements.

In the UK derivative, the disclosure only enables the financial position of the company to be assessed. In addition some of the financial reporting standards are required

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to disclose items that are not necessarily incorporated in the balance sheet. Accordingly, companies are also required to give some disclosures that are related to off balance sheet agreements (Cuccia et al 1995, p. 245).

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