The Accounting Professsion Flashcards
Profession definition
Occupational area involving prolonged training leading to formal qualification
Profession characterised by what factors
- Mastering of specialised skills
- Governance by professional association
- Compliance with an ethical code
- Process of certification before being allowed to practise
Profession common attributes
- Formal regulatory process
- Great degree of autonomy
- Professional values
- Self-regulation
- Co-regulation
What is the accountancy profession concerned with
The measurement, disclosure, or provision of assurance about financial information that helps managers, investors, tax authorities and other decision makers make resource allocations decisions
Accountancy profession helpful to maintain
- Working of capital markets
- Upholding of public interest (via confidence)
Two main accountancy roles
- Public practice
- Business (public or private sector)
Public practice
Firm of accountants providing services
Two types of public practice areas
- Reserved areas
- Other accountancy areas
Reserved areas examples
Insolvency
Investment business
Audit
Probate
Other accountancy areas examples
Accounting
Taxation
Corporate finance
ICT
Management consultancy
Forensic accounting
Financial management
Business accountancy roles examples
- Transaction recording
- Management accounting
- Financial reporting
- Treasury management
- Administration
- Pensions
Are business accountants still expected to uphold professional principles?
Yes
Esp professional competence and due care
Three basic aspects of professional accountant’s work
- Maintaining control and safeguarding assets
- Financial management
- Financial reporting
Maintaining controls and safeguarding assets
Through complete, timely and accurate recording of transactions
Financial reporting must be reported to…
External stakeholders
Underlying principals for high quality financial reporting
- Professional ethics
- Accounting principals
UK accounting professional body
Consultative committee of accountancy bodies (CCAB)
(5 joined together in 1974)
CCAB member of what international body?
International federation of accountants (IFAC)
What CCAB provides
Discussion forum
Representative of profession (e.g. to gov)
Who can call themselves an accountant?
Anyone
Except for protected areas
CIPFA
Chartered institute of public finance and accountancy
Why is regulation of professions needed?
Public interest protection
(Too complex for public to reasonably understand)
Methods of regulation
- Direct gov (legislation)
- Separate gov agency (delegated legislation)
- Self-regulation
Role of the gov in regulating the accountancy profession
Overall responsibility for effectiveness of regulatory framework
But delegates certain statutory powers to the financial reporting council (FRC)
Is accountancy self-regulated?
Yes
ICAEW responsible for supervising all members to maintain professional l standards and reputation of profession
ICAEW (via CCAB) is also a ‘recognised professional regulator’ over reserved areas
People likely to be involved in an effective oversight mechanism
Government
Regulators
Profession members
Public members
The 2 FRC committees
- Conduct committee
- Codes and standards committee
Conduct committee responsibilities
- Professional oversight
- Professional discipline
- Corporate reporting review
- Audit quality review
Codes and standards committee responsibilities
- Actuarial policy
- Accounting and reporting policy
- Audit and assurance
- Corporate governance
FRC professional oversight team has what 3 main roles
- Non-statutory
- Statutory regulation
- Independent monitoring
FRC professional oversight team role: non-statutory
Overseeing accountancy bodies regulation of members regarding anything not related to statutory audits
FRC professional oversight team role: Statutory regulation
Regulation of accountancy bodies regarding registering, monitoring and disciplining just statutory auditors
FRC Professional oversight team: independent monitoring role
Reviewing quality of auditing function for major public interest entities (e.g. listed companies)
Who is FRC independent monitoring done by?
The audit quality review team
Ethics
Behaviours acceptable in a society that tell us how we should behave
Ethical behaviour
Acting in a manner that is acceptable
What is crucial to accounting professional ethics?
Public trust
Professional ethics involves…
- Identifying ethical issues
- Understanding them
- Behaving in line with a code of behaviour accepted by other precessional
3 ethical expectations of the profession
- Uphold ICAEW code of ethics
- Identify likely threats to their principles
- Safeguard against those threats
How ICAEW regulates own members
Entry/education requirements
Additional requirements for reserved areas
Professional indemnity insurance (PII) required for public practice
Rigorous complaints investigation procedures
ICAEW overseen by FRC
How is technical competence ensured
Admission requirements e.g. exams
Ongoing membership requirements (CPD) for public practice members
Regulatory powers over reserved areas (eligibility, conduct, competence)
