Introduction The aim of accounting systems is to offer useful information to stakeholders that can enable them make proper economic decisions. Stakeholders may include the government, the society or shareholders of a company. The accounting systems therefore reflect the needs and interests of the stakeholders. Accounting systems and practices have characteristically taken different patterns in various parts of the world. National systems of accounting have usually been influenced by environmental factors. Environmental factors have always determined the accounting policies, systems, regulations, financial reporting among many others. The accounting systems and practices in a country are determined by the political and economic system, the ownership patterns, legal and taxation system as well as the cultural values. The UK accounting systems and practices has also been considerably influenced by these factors. The UK legal system The country has a limited statute law that guides its commercial system (Day 2000). For example, in dividend cases, courts have to form their own judgments on indefinable concepts of capital as well as income taking case-by-case basis. In the UK, professional accounting as well as company law plays key function in the UK financial reporting. The state regulates accounting as well as financial reporting of businesses within the country through the Companies Act and other legislations. It also uses professional pronouncements and also maintains the requirements for stock exchange listings. The regulations are implemented by the Accounting Standards Board as well as the London Stock Exchange. The Financial Reporting Council is generally in charge of policy control particularly in the processes of standards setting. The Accounting Standards Board together with the Financial Reporting Review Panel are in charge of reviewing the financial reports of companies so as to ensure accurate reporting of information. According to Day (2000) cases of violations of accounting standards set by the Accounting Standards Board are also reviewed by the Review Panel. The Review Panel could also take the matter to court for court action against the company for not complying with the standards. The court rulings are made according to the accounting principles. The directors of the company have to be responsible for the costs. The London Stock Exchange on the other hand issues to companies the listing requirements. It requires that companies publish their semiannual interim reports and also disclose information on corporate governance as well as the director’s remuneration (Day 2000). UK taxation systems The UK taxation system is highly affected by the objectives of the government. The taxation system has little control in financial reporting in the UK. However, the accounting standards in the UK have been set to reflect the taxation system and the tax authorities in the country are adapting approaches that respond to the accounting standards (Cuzdriorean, Fekete & Sucala 2010, 97). In the UK, public accounting reports provide the basis under which tax liabilities are determined. The published accounting reports are as such adjusted so as to be used for determining tax charges (Cuzdriorean, Fekete & Suc