Module 12 Regulatory Framework Flashcards
What is the role of the financial reporting council?
The UK’s independent regulator for corporate reporting and governance
What does the FRC set out?
They set out International Standards on Auditing for the UK this is based on the ISA set out by the International auditing and assurance standards board (IAASB)
They also set
Ethical standards
Practice Notes
Bulletins
International Standard on Quality Control (UK) 1
International Standard on review engagements (UK & Ireland) 2410
Standards for investment reporting
Standards for providing assurance on client assets to the FCA
What are international standards on auditing?
ISAs set out the basic principle and essential procedures with which external auditors in the UK are required to comply
What is the standard setting process of the FRC?
Development
Consultation
Governance and voting - 2/3 of vote required
Publication
What is the audit enforcement procedure (AEP)?
- Case examiner - initial assessment
- Decision to investigate
- Investigation
- Allegations - document served on the party being investigated
- Enforcement action - decision by executive counsel to pursue enforcement and final allegations are served
- Determination
- Sanctions
What is the International Accounting Standards Board (IASB)?
The independent standard setting body of the IFRS foundation. Consisting of 14 experts with responsiblity for the development and publication of International Financial Reporting Standards (IFRS) and for approving interpretations of IFRS as developed by the IFRS interpretations committee
What are the IFRS issued by the IASB used to do?
To improve and harmonise financial reporting around the world, it is used:
- As national requirements, often after a national process
- As the basis for some/all national requirements
- As an international benchmark for domestic and foreign companies
- by regulatory authorities for domestic and foreign companies
- by companies themselves
What are the barrier to global adoptation of IFRS?
The difference between US accounting standards and International standards
Concern that international standards are overly onerous to small businesses
What is the standard setting process of IASB?
- Publish a discussion paper (not mandatory)
- Publication of an exposure draft (mandatory)
- Publication of an IFRS
Can IASB enforce IFRS?
IASB has no means of directly enforcing the adoption of IFRS instead they must be adopted by:
- Governments
- Individual standard setters (Ie, FRC)
- Particular companies
What does the IFRS interpretation committee do?
They are the interpretative body of IASB and help support the application of IASB standards. The committee responds to questions about the applications of the standards and other work at request by IASB
What does the International Auditing and Assurance Standards Board (IAASB) do?
They set out the international standards on auditing (ISAs), the current leader for global auditing standards
Who does the IAASB belong to?
They belong to the International Federation of Accountants (IFAC) - the global organisation for the accountancy profession
They appoint the members to IAASB
Who oversees the IFAC?
The public interest oversight board (PIOB) - established to oversee the public interest activities of IFAC. They aim to increase investor confidence and of other interested parties
How does IAASB develop standards?
- Research and consultation
- Transparent debate
- Exposure for public comment
- Considerations of comments received on exposure
- Affirmative approval
