Introduction to Accounting Regulation eReserve - Accounting and Finance Assignment Help

Assignment Task:

Task:

At the end of each (planer. half-year and financial year firms arc busy preparing then accounts and (at least at year-end) having them audited by an independent auditor Finns lodge their accounts with gowmment agencies and listed films provide reports and other information for their stock exchange. Firms Issue press releases for investors and advisers. To what extent can theory help as to understand why these activities occur? Can theory explain why private woof bodies and governments and their agencies take an active role in the financial reporting process? ibis chapter addresses thew questions. firm we consider a number of theories that are relevant to the practice of accounting and auditing We discuss the theory of efficient markets and agency theory to understand the setting in which financial reporting occurs. We consider three specific theories of regulation, which have been proposed to explain regulation In capital markets The theories are public interest. regulatory capture and private interest theory. In the next section. we consider how the three theories apply in practice. Consider the case where a government changes financial reporting requirements or introduces more oversight 01 auditors following a major corporate collapse (e.g as occulted in the United Stales with the 5a:banes-Oxley An in 2002). Can public interest theory explain this intervention in the market place, or it private interest theory more applicable? If a illajor industry group is able to ensure production of an accounting standard which aligns with its preferences for accounting measurement and disclosure. has the group captured the standard settee We consider the extent to which each of the three theories is helpful in undetstanding these and similar events. In this chapter we identify many different parties that are involved In the prepatation and regulation of financial reporting In the third 'tenon we present a description of the regulator)• haulm-or% and discuss the elements which are likely to comprise a 'proforma' (or example) framework The elements Considered are: statutow requirements: corporate governance, auditors and oversight, and independent enforcement bodies. We explore how these elements influence the output of the financial reporting process, that is. the financial statements. Finally. we describe the international standard setting process. Accounting standards can be viewed as a key pan of the regulatory flank-work as they influence the behaviour of preparen and auditors and thus the information provided for users of financial reports. Since accounting tianda ids involve wealth transfers, many parties areconcerned about their content and have become involved In their formulation In recent year% standard setting has nuwed to the international arena, with the standards developed by the I ondon-based International Accounting Standard.. Board (IASI° used in MUM than 100 countries goal of harmonisation of financial reporting has led the IASB .
 

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