Reading 23 (p1)

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Section 1

Question Answer
THE OBJECTIVE OF FINANCIAL REPORTINGThe objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders, and other creditors in making decisions about providing resources to the entity. Those decisions involve buying, selling or holding equity and debt instruments, and providing or settling loans and other forms of credit
STANDARD-SETTING BODIES AND REGULATORY AUTHORITIESStandard-setting bodies, such as the IASB and FASB, are typically private sector, self-regulated organizations with board members who are experienced accountants, auditors, users of financial statements, and academics
Regulatory authorities Accounting and Corporate Regulatory Authority in Singapore, the Securities and Exchange Commission (SEC) in the United States, and the Securities and Exchange Commission in Brazil
difference between std setting and reg bodiesstandard-setting bodies set the standards and regulatory authorities recognise and enforce the standards.
International Accounting Standards Boardindependent standard-setting body of the IFRS Foundation,5 an independent, not-for-profit private sector organization. The Trustees of the IFRS Foundation reflect a diversity of geographical and professional backgrounds.
principle objectives of the IFRS FoundationIFRS Foundation are to develop and promote the use and adoption of a single set of high quality financial standards; to ensure the standards result in transparent, comparable, and decision-useful information while taking into account the needs of a range of sizes and types of entities in diverse economic settings; and to promote the convergence of national accounting standards and IFRS. The Trustees are responsible for ensuring that the IASB is and is perceived as independent.
IASB processAn issue is identified as a priority for consideration and placed on the IASB’s agenda in consultation with the Advisory Council. After considering an issue, which may include soliciting advice from others including national standard-setters, the IASB may publish an exposure draft for public comment.
Financial Accounting Standards Board issuing financial reporting standards in the United States since the 1930s. The FASB operates within a structure similar to that of the IASB. The Financial Accounting Foundation oversees, administers, and finances the organization. The Foundation ensures the independence of the standard-setting process and appoints members to the FASB and related entities including the Financial Accounting Standards Advisory Council.
US GAAP, as established by the FASB,recognized as authoritative by the SEC (Financial Reporting Release No. 1, Section 101, and reaffirmed in the April 2003 Policy Statement). However, the SEC retains the authority to establish standards. Although it has rarely overruled the FASB, the SEC does issue authoritative financial reporting guidance including Staff Accounting Bulletins
Desirable Attributes of Accounting Standards Boardsshould observe high professional standards, including standards of ethics and confidentiality. The organization should have adequate authority, resources, and competencies to fulfill its responsibilities. The processes that guide the organization and the formation of standards should be clear and consistent. The accounting standards board should be guided by a well-articulated framework with a clearly stated objective. The accounting standards board should operate independently, seeking and considering input from stakeholders but making decisions that are consistent with the stated objective of the framework. The decision-setting process should not be compromised by pressure from external forces and should not be influenced by self- or special interests. The decisions and resulting standards should be in the public interest, and culminate in a set of high quality standards that will be recognised and adopted by regulatory authorities.

Section 2

Question Answer
International Organization of Securities Commissionsnot a regulatory authority but its members regulate a significant portion of the world’s financial capital markets. This organization has established objectives and principles to guide securities and capital market regulation
principles of securities regulation are based upon three core objectivesprotecting investors; ensuring that markets are fair, efficient, and transparent; and reducing systemic risk.
principles relate directly to financial reportingThere should be full, accurate, and timely disclosure of financial results, risk, and other information which is material to investors’ decisions. Accounting standards used by issuers to prepare financial statements should be of a high and internationally acceptable quality.
principle deals with the use of self-regulatory organizationsWhere the regulatory system makes use of Self-Regulatory Organizations (SROs) that exercise some direct oversight responsibility for their respective areas of competence, such SROs should be subject to the oversight of the Regulator and should observe standards of fairness and confidentiality when exercising powers and delegated responsibilities.
The Securities and Exchange Commissionprimary responsibility for securities and capital markets regulation in the United States and is an ordinary member of IOSCO

Section 3