fr and ao regulation
DESCRIPTION
Jon Cooper on Financial Reporting and Audit RegulationTRANSCRIPT
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Jon HooperHead of Communications and
International RelationsUK Financial Reporting Council
Regulation of Financial Reporting and Auditing
– an international perspective
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What I will coverWhat I will cover What Financial Reporting and Auditing Regulation is International regulatory models and organisations US Case German case UK Case Questions and Discussion
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What is FR and A regulation?What is FR and A regulation?
Setting rules for financial reporting by companies
Enforcing those rules
Setting rules for the auditing of companies’ financial information
Enforcing those rules
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International models of FR and International models of FR and A regulationA regulation
Directly by government only
Government and agency
Government and professional body
Government, agency and professional body (preferred by 8th Directive) – Best Practice?
FR and A – unified or separate regulation
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International organisationsInternational organisations
FR - IASB, NSS, WSS, IOSCO, BCBS, IAIS, FSB, EC, EFRAG, CESR
A - IFIAR, IOSCO, EGAOB
IFAC – IAASB, IESBA, IAESB
FEE
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US Case - Overall regulatory US Case - Overall regulatory frameworkframework
Financial Reporting for listed companies regulated by SEC
FR standards set by FASB, enforced by SEC
Auditing standards set and enforced by PCAOB
FR and A for non-listed companies regulated by state law
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German Case - Overall German Case - Overall regulatory frameworkregulatory framework
FR standards for listed companies set by IASB, enforced by Financial Reporting Enforcement Panel
FR standards for non-listed set by various sources – law, common practice etc. Not enforced in practice
Auditing standards set by professional body (IDW)
Auditing standards enforced by Chamber of Auditors, overseen by APAK/AOC
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UK Case - Overall regulatory UK Case - Overall regulatory frameworkframework
FR standards for listed companies set by IASB, enforced by FRC (FRRP)
FR standards for non-listed set by FRC (ASB)
Auditing standards set by FRC (ISA+)Auditing standards enforced by FRC for
audits of listed companies, professional bodies for other audits
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UK Case – In more detailUK Case – In more detail
FR and A are regulated by EU Company Law Directives – 4th, 7th and 8th
UK Companies Act (CA) implements the EU requirements
CA sets out financial reporting requirements for all companies and regulates statutory auditors – it does not regulate accountants!
Financial Reporting Council regulates financial reporting by companies
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UK Case - Regulatory frameworkUK Case - Regulatory framework
UK GovernmentUK Government
Insolvency service
Pensions regulator
Public sector accounting and audit (e.g. NAO)
FSAFSA
Professional BodiesProfessional Bodies
ICAEW, ACCA, ICAS, ICAI, ICAEW, ACCA, ICAS, ICAI, CIMA, CIPFACIMA, CIPFA
10,000 Auditors
FRCFRC
270,000 Accountants
Stock Stock Exchanges Exchanges (LSE, AIM)(LSE, AIM)
BanksInsurersFinancial advisers
Listed companiesBonds etc
European UnionEuropean Union
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UK Case - Financial Reporting UK Case - Financial Reporting Council , UKCouncil , UK
FRCFRC
AIU AUDIT
INSPECTION UNIT
AADB ACCOUNTANCY &
ACTUARIAL DISCIPLINE
APB AUDITING
STANDARD SETTING
ASBASBACCOUNTING ACCOUNTING STANDARDS STANDARDS
BOARDBOARD
POBPROFESSIONAL
OVERSIGHT BOARD
FRRPFRRPFINANCIAL FINANCIAL
REPORTING REPORTING REVIEW PANELREVIEW PANEL
Professional BodiesProfessional Bodies
Independent audit
regulators
Professional body regulators
Auditors Public Interest
Auditors Non Public Interest
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UK Case - FRC FundingUK Case - FRC Funding
FRC is funded from three sources:
professional accounting bodies
listed companies via FSA
government budget (reducing)
FRC sets its own strategy and work plan that is reviewed by the FRC Board.
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UK Professional Organisations UK Professional Organisations of Auditors and Accountantsof Auditors and Accountants
Institute of Chartered Accountants in England & Wales – 111,000 UK members
Association of Chartered Certified Accountants – 61,000Institute of Chartered Accountants of Ireland – 14,000
Institute of Chartered Accountants of Scotland – 15,000Chartered Institute of Management Accountants – 56,000Chartered Institute of Public Finance and Accounting –
13,000
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Professional OrganisationsProfessional OrganisationsInvolvement in Audit Regulation Involvement in Audit Regulation
Still responsible for: Education and training of auditors Registration of auditors – firms and individuals Inspection of audit firms - but not auditors of
“public interest entities” Investigation and disciplining of auditors – but
not cases which raise serious public interest issues