Monday, May 6, 2019

Professional Accountant assignment Essay Example | Topics and Well Written Essays - 2250 words

Professional Accountant assignment - Essay ExampleThe method is highly structured, punitive and paternal. The tendency of the Act is to ascertain that the process of financial reporting is do effectively. It in any case seeks to reorient accountants back to good ways. Furthermore, the approach focuses on maintaining corporate regime at the top. A principles-based approach is the domain of the UK. The Cadbury report defines the UKs method of corporate governance. It states that corporate governance is a mechanism for directing and controlling companies (Cadbury, 1992). This document was later followed by others like the Combined Code. In essence, all these reports seek to place corporate governance responsibilities in the hands of company boards. An institution must alter corporate governance issues in accordance with their context. Furthermore, one-on-ones atomic number 18 expected to make their choices known to their shareholders. Therefore, in the rules-based approach, as setd in the United States, parties answer to external bodies while in the principles-based approach, institutions answer to their shareholders (Tricker, 2008). While the United Kingdom places the responsibility of oversight on individual firms, the United States has an accounting oversight board which acts independently and ensures compliance. The US even has rules governing how the external listener needs to behave. Conflict of interest is prohibited while appointment of new auditors is done under hard-and-fast rules. The manner in which those audit reports are reported is also stipulated in law. Financial reporting is stringently enforced in the rules-based approach. Here, almost all parties have responsibilities under the law. Executive members must ensure the true and promptness of financial reports. Managers need to create internal controls for reporting while accountants must act aboveboard when reporting. Cases of alteration, falsification or concealment of information are all severely punished. In certain respects, penalisation may be institution-wide. Here companies that do not ascribe to rules laid down by the Securities transfigure Commission will be delisted (SEC, 2003). Conversely in the United Kingdom, after a board has colonized on a particular principle, it must comply with it or explain to its shareholders why it has not done so. Usually, the principles selected may emanate from the Cadbury Report, the Combined Code or general governance practice. The main reasoning butt this strategy is that corporate governance is not something to be policed. Instead, it should be done proactively by businesses. This demonstrates faith in organisations and their ability to practice these principles. The most glaring difference between these two systems is that in one penalisation is clear. It is handled by specific bodies and the process by which oversight authorities come up with those punishments is well documented. These consequences also happe n speedily, especially after non compliance in the US. Conversely, the effects of poor corporate governance are ambiguous in the principles-based approach. It is assumed that exposure of these unhealthy practices would damage the credibility of an organisation and hence its tenacious term viability. Therefore, results may manifest after relatively long periods of time, and may not always be predictable. One key failure in the rules-based system is the tendency to establish very low standards of practice (McNamara & Banff, 2012). In order to ensure that members of the corporate community abide by rules in the US governance system, members have to agree on certain standards. In an effort to obtain consensus, these standards may be similarly low for concerned

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.