Accounting, 3rd Edition

Chapter 10

Regulatory and conceptual frameworks

‘Regulation is like salt in cooking. It's an essential ingredient – you don't want a great deal of it, but my goodness you'd better get the right amount. If you get too much or too little you'll soon know.’

Sir Kenneth Berrill, Financial Times (6 March 1985), The Book of Business Quotations (1991), p. 47.

Learning Outcomes

After completing this chapter you should be able to:

• Outline the traditional corporate model.
• Understand the regulatory framework.
• Explain corporate governance.
• Understand the conceptual framework.

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Chapter Summary

• Directors, auditors and shareholders are the main parties in the traditional corporate model.
• The regulatory framework provides a set of rules and regulations for accounting.
• At the international level, the International Accounting Standards Board provides a broad regulatory framework of International Accounting Standards. This applies to all European listed companies, including UK companies.
• In the UK, the two main sources of regulation are the Companies Acts and accounting standards.
• Financial statements must give a true and fair view of the financial position and performance of the reporting entity.
• The ...