Chapter 8 - The accountancy profession Flashcards
What is a profession?
Considered as an occupational area e.g. accountancy
What is profession characterised by?
- Mastering specialised skills
- Governance by professional associations
- Compliance with an ethical code
- Process of certification before being allowed to practice
What are attributes that distinguishes professions from other occupations?
- Formal regulatory process
- Great degree of autonomy
- Professional values
- Self regulation
- Coregulation
What is the importance of accountancy profession?
Concerned with the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and other decision makers.
Where do accountants work?
- Public practice
- Business (public or private sector)
What type of services do public practice accountants provide?
- Reserved areas: insolvency, investment, audit and probate
- Other accountancy areas: Accounting, taxation, corporate finance, ICT, management consultancy, forensic accounting, financial management
What types of sectors do accountants work in business?
- Commerce
- Industry
- Service
- Public sector
- Education
- Not for profit e.g. charity
What roles do accountants have in business sectors?
- Transaction recording
- Management accountant
- Financial reporting
- Treasury management
- Administration
- Pension
What are the three basic aspects of the professional accountant’s work?
- Maintain control and safeguarding assets: Seek to ensure that all assets are kept safe through timely and accurate recording
- Financial Management: Management of all processes associated with the raising and use of financial resources in a business
- Financial reporting: Transactions and activities of the business, as represented in its accounting records, must be reported to external stakeholders
How can accountants support organisations for climate change and sustainability?
- Gather information required for mandatory reporting
- Compliance with regulation
- Paid Environmental taxes
- Enable business access green grants that are made available
[Green] Accountants also have the knowledge to assist with
- Accessing and managing any addition risks to business associated with climate change
- Creating strategies based on changes in the external environment
- Assess the impact the business will have on the external environment
- Access finance by making sure the business is sustainable and have sustainable strategies
- Gather and process data related to the business and help with social impact to assist with governance
-KPI
What are the five major accountancy bodies that form CCAB?
- ICAEW
- ICAS
- Chartered Accountants Ireland
- ACCA
- CIPFA
- Provides discussion forum and representative of profession
What is the IFAC?
International Federation of Accountants is an accounting body
- Promote high ideals of standards, ethics and accountancy issues worldwide
What areas can a chartered accountant work that a self claimed accountant cannot
- Audit
- Investment business
- insolvency
- probate
What are the chartered institutes in the UK and Ireland?
- England and wales - ICAEW
- Institute of chartered accountants of scotland (ICAS)
- Institute of chartered accountants in Ireland
What are the other professional bodies in the uk?
- Association of chartered certified accountants ACCA
- The chartered institute of management accountants CIMA
- The chartered institute of public finance and accountancy CIPFA
What are the names of institutions for accounting technicians
Members of the association of accounting technicians ATT act as accounting technicians
Why is regulation in the accounting profession needed?
Ensure that the public interest is protected in areas that are too complex for the public to understand e.g. actuaries, accountants, surveyors and doctors
What are the 4 methods of regulation?
- Direct government regulation via legislation
- Separate government agency via delegated legislation
- Self regulation by the industry/profession
- Combination of above
What is the role of government?
Overall responsibility for the effectiveness for the regulatory framework of accounting profession but delegates certain statutory powers to the financial reporting council FRC
Is the ICAEW self regulated?
Yes - responsible for supervising all members to maintain professional standards and reputation of the profession
What is an oversight mechanism?
- Government
- Regulators
- Members of the profession
- Members of the public
What are the FRC comittees?
- Conduct Committee
- Codes and standards committee
What are the Conduct committee for the FRC responsible for?
- Professional oversight
- Professional discipline
- Corporate reporting review
- Audit quality review
What are the codes and standards committee responsible for?
- Actuarial policy
- Accounting and reporting policy
- Audit and assurance
- Corporate governance
What are the three FRC professional oversight team and their roles?
- Non-statutory oversight of the professional accounting bodies over the regulation of members with regards to matters not relating to statutory audits
- Statutory regulation of the professional accountancy bodies in regards to their responsibilities over the registration, monitoring and discipling of statutory auditors
- Independent monitoring by the Audit quality review team of the quality of the auditing function in relation to major public interest entities e.g. listed companies
What are ethics?
Behaviours acceptable in society that tell us how to behave
What is ethical behaviour
Acting in a manner is acceptable
What are the expectations of an accountant?
- Uphold the ICAEW code of ethics
- Be able to identify likely threats to their principles
- Be able to safeguard against those threats
What are the regulations of the profession?
- Entry and education requirements
- Additional requirements for those practicing audit, investment business and insolvent work
- Professional indemnity insurance (PII) required for those in public practice
- Rigorous complaints investigation procedures
- ICAEW is overseen itself by the financial reporting council (FRC)
How does the ICAEW enable technical competence
- Training and education requirements for the admission to ICAEW
- Requirements for ongoing membership (continuing professional development) (CPD) and for public practice members, PII, practicing certificate, implementing the code of ethics
- If practicing a reserved area - ICAEW has regulatory powers over members (eligibility, conduct, competence)
