Podcast
Questions and Answers
What is the primary role of regulatory bodies in relation to companies?
What is the primary role of regulatory bodies in relation to companies?
What is a consequence of failing to maintain and file accounting records as required by law?
What is a consequence of failing to maintain and file accounting records as required by law?
Why must companies submit their financial statements to regulatory bodies?
Why must companies submit their financial statements to regulatory bodies?
What is one of the organizations monitoring the activities within the financial industry in the UK?
What is one of the organizations monitoring the activities within the financial industry in the UK?
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How long must organizations retain their accounting records according to legislation?
How long must organizations retain their accounting records according to legislation?
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What does legislation governing financial statements require from companies?
What does legislation governing financial statements require from companies?
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Which of the following is a responsibility of tax authorities regarding businesses?
Which of the following is a responsibility of tax authorities regarding businesses?
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What might companies be required to submit regarding their sales tax?
What might companies be required to submit regarding their sales tax?
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What is the primary aim of the IASB?
What is the primary aim of the IASB?
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How many members are there in the IASB and from how many countries do they come?
How many members are there in the IASB and from how many countries do they come?
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Which of the following is a primary role of the Financial Reporting Council (FRC) in the UK?
Which of the following is a primary role of the Financial Reporting Council (FRC) in the UK?
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What is the previous standard-setting organization before the IASB called?
What is the previous standard-setting organization before the IASB called?
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What is the new regulator that will replace the Financial Reporting Council (FRC) in the UK?
What is the new regulator that will replace the Financial Reporting Council (FRC) in the UK?
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What is the primary purpose of financial statements?
What is the primary purpose of financial statements?
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Who is primarily responsible for the preparation of financial statements within a company?
Who is primarily responsible for the preparation of financial statements within a company?
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What could be the consequence of failing to prepare regular financial statements?
What could be the consequence of failing to prepare regular financial statements?
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What is a potential issue resulting from inadequate accounting records?
What is a potential issue resulting from inadequate accounting records?
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What motivated the formation of the IFRS foundation?
What motivated the formation of the IFRS foundation?
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Which of the following is not a characteristic of financial statements described in the content?
Which of the following is not a characteristic of financial statements described in the content?
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What effect can poor financial records have on a company?
What effect can poor financial records have on a company?
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What role does the IFRS foundation have?
What role does the IFRS foundation have?
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Study Notes
Role of Regulatory and Professional Bodies
- Regulatory bodies are government departments overseeing company regulations and accounts.
- In the UK, this is known as Companies House.
- Other countries may have different names for similar bodies.
Learning Objectives
- The international accountancy profession self-regulates through reporting standards and monitoring.
- Non-compliance with legal requirements for maintaining and filing accounting records has serious consequences.
- Regulatory bodies were discussed.
Regulatory Bodies
- Regulatory bodies are government departments responsible for overseeing the regulation and accounts of companies.
- Companies House is the UK equivalent.
- Names differ in other countries.
Tax Authorities
- Companies and individuals are accountable to tax authorities in their respective countries.
- Necessary tax returns are filed annually.
- Returns detail taxable profits and any sales tax (VAT) owed.
Other Authorities
- Companies and organizations may also be accountable to other regulatory bodies.
- Charities, overseen by the charity commission, have access to and are responsible for public funding.
- The FCA (Financial Conduct Authority) and PRA (Prudential Regulation Authority) monitor and regulate financial organizations.
- Organizations must maintain accounting records for at least 7 years.
Legislation Governing Financial Statements
- Legislation outlines requirements for preparing financial statements.
- This includes frequency, format, and ensuring that interested parties can understand these statements easily.
Requirements for Financial Statements
- Financial statements aim to provide a true and fair view of a company's position and performance.
- While not rigidly defined, true and fair views often entail complying with accounting standards.
- Information presented should be sufficient to meet user expectations.
- Statements should adhere to generally accepted accounting practices.
- Statements should not contain any material misstatements.
Responsibility for Financial Records
- Company directors are responsible for accurate financial statements, a responsibility often delegated to the Finance Director (FD) or Chief Finance Officer (CFO).
- External accounting firms may assist if necessary.
Consequences of Compliance Failure
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Failure to maintain proper accounting records or prepare annual financial statements is a criminal offense.
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Directors can be held liable and potentially face fines.
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Inaccurate records can result in disputes or issues with tax authorities.
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Poor accounts provide an untrue and unfair view.
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Compliance failure can damage a company's reputation.
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Failure to keep adequate records can result in insufficient information on aspects such as receivables and payables.
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Late payments to suppliers can damage a company's reputation and credit standing.
International Regulation of the Accountancy Profession
- The accountancy profession promotes self-regulation, but different countries use various accounting standards.
- This creates a challenge for comparing statements from different countries.
- International Financial Reporting Standards (IFRS) were established to harmonize these standards internationally.
Role of IFRS Foundation
- The IFRS Foundation is the IASB's supervisory body ensuring the body's proper functioning.
- Objectives include advising the IASB on decisions.
- Supporting the IASB in its major standard-setting projects.
- Offering other guidance as needed.
Role of the IASB
- The IASB is an independent standard-setting body based in London.
- It consists of 14 members from various countries.
- Its aim is to create high-quality, understandable, uniform, and enforceable international accounting standards.
- It collaborates with national accounting standard-setters around the world to promote convergence.
Standards Produced by the IASC/IASB
- The IASC produced standards called International Accounting Standards (IASs).
- The IASB succeeded the IASC and produces standards called International Financial Reporting Standards (IFRSs).
- Nearly 100 countries have adopted international accounting standards.
Regulation within the UK
- Accounting standards in the UK are governed by the Financial Reporting Council (FRC).
- The FRC is planned to be replaced by a new entity called Audit, Reporting, and Governance Authority (ARGA).
- The FRC performs crucial oversight and development duties regarding corporate standards.
- The FRC is supported by different committees providing advice.
Key Takeaways
- The presentation covered regulatory bodies, tax authorities, other authorities, financial statements, their preparation, potential issues, and the role of IFRS.
Company Audit and Company House (Illustration)
- A representation of company audit process and a view of checking of reports.
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Description
This quiz explores the role of regulatory and professional bodies in accounting, focusing on their structure and significance. It highlights the function of entities like Companies House in the UK and discusses the responsibilities of tax authorities. Understanding these regulatory frameworks is crucial for maintaining compliance in accounting practices.
