Solution 1.5 

Briefly describe the elements of the regulatory framework

The term regulation implies the imposition of rules and requirements. In an accounting context this would relate to the preparation and presentation of reports and statements for external parties. 

The objective of an accounting regulatory framework is to ensure adequate relevant disclosure, objectivity and comparability of accounting information to the external users of financial reports. Accounting and the preparation of financial statements and reports is therefore regulated through the following.

1.    The government, through the relevant legislation. In Ireland, this relates to the Companies Acts of 1963 and 1990, and the Companies (Amendment) Acts of 1983, 1986

2.    Regulation through the European Union. The EU issues directives to its member states to help ensure greater harmony in the presentation of financial statements. An EU directive requires the government of each member state to incorporate that directive into their laws. The EU’s 4^th directive concerned the preparation and presentation of the accounts of companies and this was made law in Ireland through the Companies (Amendment) Act 1986.

3.    The Stock Exchange listing requirements (yellow book) for companies listed on a publicly quoted exchange.

4.    The accounting standards issued by the accounting bodies.