Alternative accounting rules (UK)
The 1981 Companics Act provided that as the overriding obligation upon companies and their auditors is to give a true and fair view, then a certain flexibihty should be permitted in the accounting conventions employed in the preparation of annual accounts. It is now permissible to prepare accounts on either (1) a historical cost basis or (2) a current cost basis or (3) a historical cost basis but subject to the revaluation of certain selected assets. The overriding obligation is for the basis chosen to be indicated and to be applied consistently. However, the Act provides that where a basis other than historical cost is selected. the historical figures, or the amount by which these differ from the revised figures. must also be given either in the accounts or by way of note.
Reference: The Penguin Business Dictionary, 3rd edt.