Question

Why acounting regulatory increases and what it means for the client and your firm? (500 words)

Answer 1

Accounting regulatory is very necessary and hence increases day by day.Accounting regulation is a legal framework ,standards and education.It provides us the security and benefits.Most of the public companies in the US operate under the US GAAP.It helps us to ensure that the needs of the users of financial statements are met with at least basic information.Mainly,Accounting regulation ensures that the information provided in the relevant economic arena is both comparable and consistent.It helps to increase the users confidence in the financial reporting process. In order to regulate the behaviour of companies and directors towards their investors.The main aim of accounting regulation is to ensure transparency,reliability,consistency and comparability of the financial statements, They do so by standardising accounting policies and principles of an economy.Hence the transactions of all companies will be recorded in a similar manner if they follow these accounting standards.The basic constraints associated with Gaap is objectivity,materilaity,consistency and prudence.The main reason for increasing accounting regulation is it provides a better platform for the client and the firm.The objective measures of the accounting regualtions helps to avoid unnecessary elements of the information provided by the client.It increases due to its nature and constraints. The element Consistency helps to provide information to both the clients and firm for the policies and procedures followed by the firms i.e. the method of the depreciation,consideration of financial year.Both the clients and firm are aware of the actions taken before or after as it is predescribed rules and regulations.The constraint of prudence helps us to ensure that firms should exercise a degree of caution in the adoption of policies and significant estimates such that the assets and income of the entity are not overstated whereas liability and expenses are not under stated.Accounting regulations clears the misunderstandings between the client and the firms and provides transparency.It predescribes the policies and procedures so that there is not a error of consistency.The accounting regulatory also provides reliability. The information that is provided should be reliable as it helps to both the client and firms.It better provided the comparability of the financial statements as it becomes easy for the clients to compare.