How And To What Extent The ing Should Be Regulated 2i136n

How and to what extent the ing should be regulated? Introduction: There is a need for regulation in financial reporting because of a number of reasons. There are several major groups of financial reporting, some of which include equity investor groups, employee groups, analyst adviser group, the government, the public and other stakeholders. These different stakeholders however, need to be able to interpret and use financial information in a systematic way in order to make the necessary financial decisions.

Explanation: Active regulatory oversight of many of these elements, such as registrants' financial reporting, private sector standard-setting processes and self-regulatory activities undertaken by the ing profession. Each of these elements is essential to the success of a high quality financial reporting framework. This oversight reinforces the development of high quality ing and auditing standards and focuses them on the needs of investors. It provides unbiased third party scrutiny of self-regulatory activities. Regulatory oversight also reinforces the application of ing standards by registrants and their auditors in a rigorous and consistent manner and assists in ensuring a high quality audit function. Main ing regulatory bodies are: 1. International ing Standards Board (IASB). “Our mission is to develop, in the public interest, a single set of high quality, understandable and international financial reporting standards.

2. Security and Exchange Commission (SEC). Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. SEC’s job to interpret the laws that congress es and assist companies in implementing these laws. While Congress makes modifications to laws it is this companies job to also make all companies aware of these changes and help them to make a smooth transition into using the newly amended law. 3. Financial ing Standards Board (FASB). The FASB was designed with the purpose of creating financial ing and reporting standards for the public. FASB in which they are to protect the public from fraud and misleading information from the company. 4. Financial Reporting Council (FRC). Financial Reporting Council (FRC) responsible for promoting high quality corporate governance and reporting.

Summary: Arguments in favour and against ing regulation: Against Argument:  It's costly for businesses. Regulation creates increased compliance costs for the business with the need to engage expensive specifically trained personnel to regularly interpret and apply the regulations to the financial affairs of a business  It's anti-value creation for the business.

Regulation can divert the focus of some of the most valuable business resources.

 It can be politically charged. Regulations can be coloured or be bias towards a particular prevailing political point of view  Enforcement is both difficult and costly. Regulations are of limited value if they are not capable of being enforced. It could be argued that these resources could be better invested in value-adding activities for our societies.  It doesn't always value s appropriately. Regulation takes a one-size-fits-all approach which sometimes limits the ability of exception-case business from reporting the real value of its business activities or specific s.

Argument in favour:  It allows for greater comparability. Businesses using similar standards to prepare financial statements can more accurately compare with each other.  It is beneficial to new and small investors.

Help new and small investors by making reporting standards to have better quality and become simpler, putting these investors in a similar position with professional investors

 It creates more flexibility. Using a philosophy that is based on principles, instead of rules, this set of standards will have the goal of arriving at a reasonable valuation with various ways to accomplish tasks.

References: http://www.markedbyteachers.com/gcse/business-studies/discuss-the-need-for-regulation-infinancial-reporting-1.html http://www.123helpme.com/ing-regulatory-bodies-paper-view.asp?id=163531 https://www.icaew.com/about-icaew/what-is-chartered-ancy/regulation-of-theancy-profession https://www.sec.gov/rules/concept/34-42430.htm https://www.quora.com/What-are-the-arguments-against-ing-regulation

http://connectusfund.org/6-advantages-and-disadvantages-of-adopting-ifrs