6. Role of the accountancy profession

Question 1

Define financial reporting

Answer 1

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

Question 2

What is the purpose of assurance?

Answer 2

To enhance the confidence of intended users

Question 3

A professional accountant should maintain control and safeguard assets; what four things should they therefore ensure?

Answer 3

1. The recording of transactions is complete, timely and accurate
2. The business’s internal controls are sufficient
3. The business’s audit committee is properly constituted and has the information and resources that it needs to fulfil its objectives
4. The business has non-executive directors who are adequately qualified and resources so that they can fulfil their role

Question 4

Treating assets the way they ought to be rather than just the way they would legally be treated is known as what?

Answer 4

Substance over form

Question 5

What are the three international standards applicable for the professional accountant?

Answer 5

IAS
IFRS
IASB

Question 6

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?

Answer 6

2

450

Question 7

To continue membership as a professional accountant, accountants must obey the institute’s _____, pay a ______ fee annually and pay undertake CPD, which stands for _____

Answer 7

Rules, subscription, continuing professional development

Question 8

What are the four reserved areas that only certain recognised professional regulators can perform?

Answer 8

1. Statutory audit
2. Investment business
3. Insolvency
4. Probate

Question 9

What is the difference between a compliance based approach and ethics based approach?

Answer 9

Compliance: rules

Ethics: principles

Question 10

What does ACCA stand for?

What does CIPFA stand for?

Answer 10

Association of Chartered Certified Accountants

Chartered Institute of Public Finance and Accountancy

Question 11

What is the purpose of the Consultative Committee of Accountancy Bodies (CCAB)?

Answer 11

To provide the profession with a unified voice to government

Question 12

What is the global organisation for the accountancy profession called?

What is its core aim?

Answer 12

International Federation of Accountants (IFAC)

To protect public interest by encouraging high quality practices by the world’s accountants

Question 13

What is the purpose of regulation of professions?

Answer 13

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

Question 14

What is an oversight mechanism?

Answer 14

A mechanism that ensures that a body is achieving what it set out to achieve

Question 15

What are the three methods of regulation?

Answer 15

1. Government legislation
2. Agency delegated legislation
3. Professional self-regulation

Question 16

What are the three main roles of the Professional Oversight (PO) team, regarding accountancy and audit?

Answer 16

1. Independent oversight
2. Statutory oversight of the supervision of the auditing profession
3. Statutory monitoring of the quality of auditing

Question 17

On non-audit matters, the PO team does not have ______ powers but can make _______

Answer 17

Statutory, recommendations

Question 18

Does the ICAEW and CCAB have a commitment to consider, implement and reason for/for not doing PO recommendations?

Answer 18

Yes

Question 19

What three statutory powers does the PO team have in audit?

Answer 19

1. Make amendments to audit procedures
2. Make recommendations to the recognised supervisory bodies for appropriate regulatory action
3. Where appropriate, refer matters to the Professional Discipline and the Corporate Reporting Review

Question 20

What activities is the Financial Reporting Council (FRC) involved in? (5 total)

Answer 20

1. Setting standards
2. Monitoring and review audit quality
3. Regulating audit
4. Overseeing self-regulation
5. Acting as the ultimate disciplinary body for the accountancy and actuarial professions

Question 21

The FRC is composed of which two key committees?

Answer 21

1. Conduct committee

2. Codes and standards committee

Question 22

As one of the FRC’s six main organs, what does the Accounting and Reporting Policy (ARP) do?

Answer 22

Make amendments and withdraws accounting standards

Question 23

As one of the FRC’s six main organs, what does the Audit and Assurance (AA) arm do?

Answer 23

Develop standards and ethical standards for audit

Question 24

As one of the FRC’s six main organs, what does the Corporate Reporting Review (CRR) do?

Answer 24

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

Question 25

As one of the FRC’s six main organs, what does the Professional Oversight (PO) team do?

Answer 25

Oversees the audit, accountancy and actuarial profession

Question 26

As one of the FRC’s six main organs, what does the AUdit Quality Review (AQR) do?

Answer 26

Monitors quality of the auditing function in relation to ‘economically significant entities’

Question 27

As one of the FRC’s six main organs, what does the Professional Discipline (PD) do?

Answer 27

It’s the independent investigative and disciplinary body for accountants and actuaries in the UK

Question 28

As one of the FRC’s six main organs, what does the Actuarial Policy do?

Answer 28

To establish and improve actuarial standards

Question 29

Who are the two ‘twin peaks’ of regulatory regime in the financial services industry?

Answer 29

Prudential Regulation Authority (PRA)

Financial Conduct Authority (FCA)

Question 30

Why did the UK government set up the Office of Professional Body Anti-Money Laundering Supervision (OPBAS)?

Answer 30

There were concerns that some were not taking sufficient action against firms who breach their money laundering responsibilities

Question 31

What role does the Financial Ombudsman play?

Answer 31

They settle disputes between providers of financial services and their customers

Question 32

Which department is responsible for the implementation of the ICAEW’s disciplinary procedures?

Answer 32

The Professional Standards Department (PSD)

Question 33

What are the three steps for ICAEW complaints?

Answer 33

1. Conciliation (try and find a practical solution)
2. Investigation
3. Discipline

Question 34

Which five people does an Appeal Committee consist of?

Answer 34

1. 3 chartered accountants
2. 1 non-accountant
3. 1 chairman with legal qualification

Question 35

Are FRC tribunal hearings open to the public body?

If yes, are there exceptions?

Answer 35

Yes

Yes, if it would not be in the interests of justice

Question 36

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

Answer 36

All, part

Question 37

Can an accountant appeal against the findings of the Disciplinary Tribunal?

Answer 37

Yes