The accounting profession has proclaimed to be self-regulatory and independent from the intervention of the federal governments. However, like any other profession it is also governed by profession’s own regulatory bodies. At present all countries have their own central accounting regulatory bodies in addition to working bodies. For example, in the U.S. the regulatory body is FASB with additional rules and regulations implemented through GAAP, AICPA and Issue Task Forces. Similarly, in the U.K. it is ICAEW that governs the accounting profession.
The standards followed by business operating in different countries also have variations. In the U.S. companies and accounting firms follow set of standards issued by FASB. However, after financial meltdown in the U.S. capital markets with accounting scandals emerging, a move towards convergence of accounting standards was initiated in a joint effort between FASB and IASB. IASB is an international accounting standards setting body and has almost 136 member countries which are following a single set of rules and regulations referred to as IASs and IFRSs.
The need for IASs was also heightened as the EU required all businesses operating in the territory to prepare their financial statements in accordance to IASs (McCarthy, 2003). The publicly listed companies are required to register themselves with securities exchange commission of any country when they plan to float their stocks on any capital market. Typically public limited companies are required to prepare and publish yearly financial statements including balance sheet, income statement, cash flow statement, statement of equity changes along with directors’ report and notes to financial statements.
In addition to yearly reports companies also prepare interim / quarterly reports and publish them for assisting shareholders view of the business and their investments. These reports are required to be verified by external auditors to add assurance to the completeness and accuracy of these financial statements.
McCarthy, I. N. (2003). Cooperation between FASB and IASB to Achieve Convergence of Accounting Standards. Review of Business .