WEEK 2b: THE REGULATORY FRAME WORK

Depreciation

The decrease in the value of an asset over a period of time.

Straight line method

A method of depreciation in which the asset loses an equal value each year.

Reducing balance method

A method of calculating depreciation where a fixed percentage is applied to the remaining book value of the asset each year.

Financial Conduct Authority (FCA)

A regulatory body that oversees the Stock Exchange Listing Requirements to protect shareholders and investors.

Laissez-faire

The economic doctrine that markets function best when left alone and not interfered with by regulation.

True and fair view

An assessment that financial statements present an accurate representation of a company's financial position.

Generally Accepted Accounting Practice (GAAP)

Guidelines and standards for financial reporting that are accepted within the accounting profession.

IASB

International Accounting Standards Board, the body that develops International Financial Reporting Standards (IFRS).

Consistency concept

The principle that a company should use the same accounting methods from year to year to ensure comparability.

Financial Reporting Standards (FRS)

The standards that UK companies must adhere to for financial reporting.

International Financial Reporting Standards (IFRS)

Global accounting standards intended to make financial statements comparable across international boundaries.

Accounting scandals

Incidents where companies have misreported their financial situation, leading to loss of public trust.

Investment confidence

The level of trust that investors have in the integrity and stability of the financial markets.

Independent audit

An examination of a company's financial statements by an external auditor to ensure accuracy and compliance with standard accounting practices.

Asset valuation

The process of determining the current worth of a company's assets.

Market actors

Individuals or entities that participate in the buying and selling of financial securities.

Accounting manipulation

The deliberate misrepresentation or alteration of financial data to produce misleading financial statements.

Relevance

The quality of financial information that influences the decision-making of its users.

Reliability

The degree to which financial information can be depended upon for accuracy.

Comparability

The quality that enables users to identify similarities and differences between two sets of financial statements.

Understandability

The clarity of financial statements, making it easier for stakeholders to comprehend the information presented.