12. Law and regulation governing accounting

Question 1

The CA2006 in the UK requires that financial statements are produced to be true and fair. This means that financial statements must: (4)

Answer 1

o Follow all appropriate accounting standards
o Contain information of sufficient quality to satisfy the reasonable expectations of their users
o Follow generally-accepted practice
o Not contain any material misstatement.

Question 2

Who is legally responsible for the financial records?

Answer 2

FD / CFO

Question 3

What are the consequences of compliance failure? (3)

Answer 3

• fines
• prosecutions
• business failure

Question 4

What are the main principles of the IFRS Foundation? (4)

Answer 4

o Develop adequate financial statement standards
o Promote the use of these standards
o Take into account financial reporting needs of small and medium enterprises
o Bring about the convergence of national and international financial reporting standards.

Question 5

What is the IASB?

Answer 5

The International Accounting Standards Board is the independent standard setting body of the IFRS Foundation. Its members are responsible for the development and publication of IFRSs and interpretations.

Question 6

What is the IFRS IC?

What is the IFRS AC?

Answer 6

The IFRS Interpretations Committee reviews widespread accounting issues on a timely basis and provides guidance.

The IFRS Advisory Council is the formal body which advises the IASB on agenda and the views of the Council.

Question 7

Accounting standards in the UK are written by the…

This is board is supported by three committees:
What are they called?
What do they do?

Answer 7

Financial Reporting Council (FRC)

• The Codes and Standards Committee: advise the FRC board on matters relating to codes, standards and policy.
• The Executive Committee: advise FRC board on matters related to day-to-day oversight.
• The Conduct Committee: advise the FRC Board on matters relating to conduct activities to promote high-quality corporate reporting.