Role of Regulatory and Professional Bodies in Promoting Ethical Standards Presentation PDF

Role of regulatory and professional bodies in promoting ethical standards presented by: Ashima siri srivalli Learning objectives  How the international accountancy professi...

Role of regulatory and professional bodies in promoting ethical standards presented by: Ashima siri srivalli Learning objectives  How the international accountancy profession regulates itself through establishment of reporting standards and their monitoring  Broad consequence of failing to comply with the legal requirements for maintaining and filling accounting records  What are regulatory bodies ? Regulatory bodies  Regulatory bodies is a government department which has been set up to oversee the regulation and accounts of the companies.  In UK, this is known as’ COMPANIES HOUSE ‘  But it has various names in other countries  Why does the companies need to submit their financial statement to these bodies ? So that the interested parties can inspect them. Tax authorities Companies and individuals, are accountable to the tax authorities in the countries they are residing They have to prepare a tax returns each year showing the amount of taxable profits they have earned in a period Businesses’ have to submit returns showing the amount of sales tax (VAT or value added tax) that they owe to the tax authorities. Other authorities  Companies and other organizations may be accountable to other regulatory authorities  Charities have access to public money so the charity commission is a public body that registers all charities and monitor there activities.  FCA (financial conduct authority) and PRA (prudential regulation authority) are public bodies that monitor and control the activities of the organisation within industry to protect against failure organization have to retain their accounting records and information for a minimum period of 7 years. Legislation governing financial statements Companies, legislation covers not only the need to prepare financial statements, but also how they should be prepared – including issues such as frequency and format This helps to ensure that interested parties are able to access the financial statements of the company It is provided in an understandable way. Requirements for financial statements Financial statements are produced to give true and fair view of the position and performance of the company True and fair is not defined in company law but normally means that the financial statements :  Follow all appropriate accounting standards.  Contain information of sufficient quantity to satisfy the expectations of user.  Follow general accepted practice.  Should not contain any material misstatements. Responsibility for financial records Under company legislation, directors are responsible for producing financial statements that are true and fair This is delegated within the company to the Finance Director(FD) or the Chief Finance Officer(CFO) If the FD does not have the silk to prepare the financial statements and external accounting firm will provide assistance Consequences of compliance failure  Failure to keep proper accounting record or to prepare regular financial statement are both criminal offences  The responsibility is that of the directors who can be fined for the failure  There may be problems with tax authority if the records are not found accurate  poor accounts doesn’t show true and fair view  It can damage the reputation of the company  Failure to keep adequate accounting records could mean that the company has insufficient information relating to areas such as receivables and payables  Failure to pay supplier on time may lead to loss of goodwill as well as removal of the company’s credit facilities International regulation of the accountancy profession The accountancy profession is keen to be self regulating This meant that there were a wider range of different accounting standards being applied in different countries It became difficult for international investors to compare the financial statements of companies To deal with this problem , International Financial Reporting Standards (IFRS) foundation was formed to try and harmonise role of Ifrs foundation The IFRS foundation is the supervisory body for the IASB and is responsible for governance issues and ensure the body is properly funded. Their objectives include  Advising the IASB on agenda decisions and priorities in their work  Informing the IASB of the views of the Council with regard t major standard-setting projects  Giving other advice to the IASB or to the Trustees The role of the iasb  The IASB is ab independent standard-setting body which is based in London  It has 14 members from nine countries  The IASB aims are to develop a single set high quality, understanding and enforceable global accounting standards and to co-operate with national accounting standard-setters to achieve convergence in accounting standards around the world  Standards produced by the IASC the forerunner to the IASB are called International Accounting Standards (IASs)  Standards produced by IASB are called as International Financial Reporting Standards(IFRSs)  Nearly 100 countries adopted international standards  A new standard Discussion Paper(DP), to develop a new standard following inputs from the Standards Advisory Council (SAC) Regulation within the uk Accounting standards in the UK are written by the Financial Reporting Council (FRC) The Government has announced that the FRC is to be abolished and replaced with a new regulator , the Audit, Reporting and Governance Authority (ARGA) The FRC plays crucial roles as regulatory in the over sight and development of corporate governance standards in the UK The regulator is supported by various committees which advice then on matters It includes monitoring , oversight, investigative and disciplinary functions. Key take aways  What are regulatory bodies  What are tax authorities  what are the other authorities present  What are financial statements  Need to prepare them  Consequences of the mistakes  Role of IFRS company audit company house checking the reports role of IFRS