6. Role of the accountancy profession Flashcards
Define financial reporting
The provision of financial information about an entity to external users that is useful to them in making economic decisions and for assessing the stewardship of the entity’s management
What is the purpose of assurance?
To enhance the confidence of intended users
A professional accountant should maintain control and safeguard assets; what four things should they therefore ensure?
- The recording of transactions is complete, timely and accurate
- The business’s internal controls are sufficient
- The business’s audit committee is properly constituted and has the information and resources that it needs to fulfil its objectives
- The business has non-executive directors who are adequately qualified and resources so that they can fulfil their role
Treating assets the way they ought to be rather than just the way they would legally be treated is known as what?
Substance over form
What are the three international standards applicable for the professional accountant?
IAS
IFRS
IASB
How many a levels must a member of the ICAEW have?
How many days of approved training must an individual have to become ACA qualified?
2
450
To continue membership as a professional accountant, accountants must obey the institute’s _____, pay a ______ fee annually and pay undertake CPD, which stands for _____
Rules, subscription, continuing professional development
What are the four reserved areas that only certain recognised professional regulators can perform?
- Statutory audit
- Investment business
- Insolvency
- Probate
What is the difference between a compliance based approach and ethics based approach?
Compliance: rules
Ethics: principles
What does ACCA stand for?
What does CIPFA stand for?
Association of Chartered Certified Accountants
Chartered Institute of Public Finance and Accountancy
What is the purpose of the Consultative Committee of Accountancy Bodies (CCAB)?
To provide the profession with a unified voice to government
What is the global organisation for the accountancy profession called?
What is its core aim?
International Federation of Accountants (IFAC)
To protect public interest by encouraging high quality practices by the world’s accountants
What is the purpose of regulation of professions?
To provide the public interest with protection and assurance in situations where the issues are too complex for the public to be reasonably expected to look after their own interests
What is an oversight mechanism?
A mechanism that ensures that a body is achieving what it set out to achieve
What are the three methods of regulation?
- Government legislation
- Agency delegated legislation
- Professional self-regulation
What are the three main roles of the Professional Oversight (PO) team, regarding accountancy and audit?
- Independent oversight
- Statutory oversight of the supervision of the auditing profession
- Statutory monitoring of the quality of auditing
On non-audit matters, the PO team does not have ______ powers but can make _______
Statutory, recommendations
Does the ICAEW and CCAB have a commitment to consider, implement and reason for/for not doing PO recommendations?
Yes
What three statutory powers does the PO team have in audit?
- Make amendments to audit procedures
- Make recommendations to the recognised supervisory bodies for appropriate regulatory action
- Where appropriate, refer matters to the Professional Discipline and the Corporate Reporting Review
What activities is the Financial Reporting Council (FRC) involved in? (5 total)
- Setting standards
- Monitoring and review audit quality
- Regulating audit
- Overseeing self-regulation
- Acting as the ultimate disciplinary body for the accountancy and actuarial professions
The FRC is composed of which two key committees?
- Conduct committee
2. Codes and standards committee
As one of the FRC’s six main organs, what does the Accounting and Reporting Policy (ARP) do?
Make amendments and withdraws accounting standards
As one of the FRC’s six main organs, what does the Audit and Assurance (AA) arm do?
Develop standards and ethical standards for audit
As one of the FRC’s six main organs, what does the Corporate Reporting Review (CRR) do?
Enquire into apparent departures from requirements for financial statements of large companies, seek voluntary remedial action and apply to court for an order for remedial action
As one of the FRC’s six main organs, what does the Professional Oversight (PO) team do?
Oversees the audit, accountancy and actuarial profession
As one of the FRC’s six main organs, what does the AUdit Quality Review (AQR) do?
Monitors quality of the auditing function in relation to ‘economically significant entities’
As one of the FRC’s six main organs, what does the Professional Discipline (PD) do?
It’s the independent investigative and disciplinary body for accountants and actuaries in the UK
As one of the FRC’s six main organs, what does the Actuarial Policy do?
To establish and improve actuarial standards
Who are the two ‘twin peaks’ of regulatory regime in the financial services industry?
Prudential Regulation Authority (PRA)
Financial Conduct Authority (FCA)
Why did the UK government set up the Office of Professional Body Anti-Money Laundering Supervision (OPBAS)?
There were concerns that some were not taking sufficient action against firms who breach their money laundering responsibilities
What role does the Financial Ombudsman play?
They settle disputes between providers of financial services and their customers
Which department is responsible for the implementation of the ICAEW’s disciplinary procedures?
The Professional Standards Department (PSD)
What are the three steps for ICAEW complaints?
- Conciliation (try and find a practical solution)
- Investigation
- Discipline
Which five people does an Appeal Committee consist of?
- 3 chartered accountants
- 1 non-accountant
- 1 chairman with legal qualification
Are FRC tribunal hearings open to the public body?
If yes, are there exceptions?
Yes
Yes, if it would not be in the interests of justice
When a complaint is upheld, the FRC tribunal can order the accountant or firm to pay _____ or _____ of the costs of the investigation and hearing
All, part
Can an accountant appeal against the findings of the Disciplinary Tribunal?
Yes
