B describe roles and desirable attributes of financial reporting standard-setting bodies and regulatory authorities in establishing and enforcing reporting standards, and describe the role of the International Organization of Securities Commissions;

Question 1

What are ‘Standard-setting’ bodies?

Answer 1

Professionals (accts, auditors) that set financial reporting standards

Question 2

What are ‘regulatory authorities’?

Answer 2

Gov Agencies - US SEC, UK FSE

Question 3

The two primary standard setting bodies
IASB = international
FASB = financial

Answer 3

FASB - FINANCIAL accounting standards board = US GAAP

IASB - INTERNATIONAL accounting standards board = IFRS (Int. Fin. Rep. Stndrds)

Question 4

Desirable attributes of standard setters (standard setters are people who are competent and have authority in internaitonal business)

Answer 4

High proff. stndrds, clearly defined

authority, resources, competencies

Standard-setting process = clear, consistent

Well-articulated framework

Independent but seek shareholder input

No special interests

Decisions made in public interest

Question 5

SEC, FSA = regulatory authorities

Answer 5

FSA = Londons SEC

Question 6

Where do most national authorities belong?

Answer 6

To the International Organization of Securities Commissions (IOSCO)

Question 7

3 objectives/IOSCOS role in Fin.Mark.Reg.

Answer 7

Protect investors

Market fairness, efficiency, transparency

Reduce systematic risk

Question 8

SEC Forms and their functions

Answer 8

S-1: prior to new issues [ Fin.Stmts, risk, underwriter ID, estimated amount/use of the offering proceeds]

10-K (40-F Canada)(20-F foreign): Annual [Business and management, audited financial statements and disclosures, disclosures about legal matters]

10-Q (6-K non-US): Updated Fin. Stmnts, unaudited.

DEF-14A: Prior to proxy or shareholder meeting

8-K: ‘Material events’ - Changes to management, acquisitions, disposals, matters related to its accountants

144: Issues to qualified buyers w/o registering to SEC but must inform SEC

3,4,5: Purchases and sales of company securities by corp. insiders

Question 9

IASCO - not a reg. body but it’s members are: Core obj. Prot investors, fair efficient, transparent reporting, reducing systematic risk

Answer 9

No regulatory power at all. Simply a group of international accounting standard bodies.