8: The accountancy profession Flashcards
What is meant by a professional accountant in the textbook?
A member of the ICAEW
What is a professional?
A person who:
- accepts responsibility to operate in public interest
- ‘professes’ to have skill resulting from a coherent course of study and training based on professional values
- continues to develop and enhance those skills by continuing professional education
What is financial reporting?
The provision of financial information about an entity to external users that is useful to them in making decisions and for assessing the stewardship of the entity’s management
The work of the accountancy profession supports which two ideas?
- the effective working of capital markets
- the public interest
Accountants must apply which three following attributes to their work according to the ICAEW?
- professional scepticism
- critical thinking
- professional judgement
Solutions based on regulation and intervention include the following five:
- Mandatory reporting requirements
- Regulations
- Taxes and tariffs
- Grants
- Compliance audits
Name the challenges regarding sustainability and climate change which market forces encourage organisations to take on: (6)
- Risk management
- Strategy
- Finance
- Governance
- Metrics and targets
- Supply chain management
What are the two limitations to the role of the accountant in relation to sustainability and climate change?
- campaigners responsible for persuading directors of a company to improve their behaviour
- scentists reponsible for analysing the causes and implications of climate change
Who can call themselves accountants in the UK?
There is no legal requirement in the UK for an accountant to be a paid-up member of any professional body
The term ‘accountant’ holds no special position in English law
Anyone who offers full accounting services must be supervised for money laundering purposes by one of a wide range of supervisory bodes such as ICAEW or other CCAB bodies
What should regulation NOT do?
- protected vested interests from competiton
- be for personal gain
- be disproportionate to the benefit gained
- distort competiton
What are the four common methods of regulation?
- government legislation
- seperate agencies (delegated legislation)
- by the profession (self-regulation)
- combination of these methods
Self regulation only works if: (4)
- the regime does not seem to act against public interest
- regulatory guidance and its importance are both understood and enforced
- members of the profession ‘buy in’ to the process
- there is no unjustifable self-protecting regulation
What is the FRC and what does the it do?
FRC stands for Financial Reporting Council
The FRC acts as the UK’s independent regulator for corporate reporting and governance
The goal of the FRC is to foster a climate in which investment can flourish
What is the FRC engaged in? (5)
- setting standards for corporate governance
- monitoring quality of audit and financial reporting
- regulating the audit profession
- overseeing self-regulation
- acting as the ultimate disciplinary body
What is the role of the government regarding accounting?
The government is responsible for the legislative elements of the regulatory framework
The FRC acts as an adviser to the government on neccessary legislative changes
The government delegates certain powers to the FRC but remains responsible via these powers
What is the role of self-regulating bodies in the accounting profession and give an example
Self-regulating bodies, such as ICAEW, have a primary responsibility for regulation of their members acting in a professional capacity
What is the role of ICAEW?
- entry and education
- eligibility to engage in public practice
- professional conduct requirements
- dealing with professional misconduct
- supervising members with money-laundering regulations
What is the FRC’s oversight mechanism?
The FRC Professional Oversight team has three main roles regarding the oversight of audit and accounting:
- non-statutory oversight of professional bodies
- statutory oversight of regulation of statutory auditors
- independent monitoring of the quality of auditing function
What qualities with regard to accounting does the FRC NOT have statutory powers but can investigate and make recommendations on?
- education
- training
- standards
- ethics
- professional conduct
- professional discipline
- registration
- monitoring
What is meant by professional ethics?
Ethics: principles that say ‘how to behave’
Professional ethics is identifying ethical dilemmas and understanding the implications and behaving appropriately in line of what is generally accepted among fellow professionals
List the standards of professional ethics regulation by ICAEW
- Rigorous entry and education
- Specific additonal requirements for audit
- Professional accountants to hold indemnity insurance
- Oversight regulation of ICAEW by FRC
- Rigorous disciplinary involving ICAEW and FRC
What are ICAEW’s entry and education requirements? (3)
- commitment to training and education
- acquiring knowledge and understanding that underline what accountants do
- developing skills and abilities to perform accounting tasks
- building personal commitment and ethics
To continue in the ICAEW membership, professional accountants must do what? (7)
- obey rules
- pay subscription fee annually
- undertake professional development CPD
MEMBERS IN PUBLIC PRACTICE MUST ALSO:
- hold a practice cert
- implement ethics code of conduct
- covered by indemnity insurance
- comply with ICAEW money laundering regulation
Most activities carried out by accountants are open to all
Which four are known as ‘reserved areas’ and require legislation by professional regulators?
- statutory audit
- investment business
- insolvency
- probate
