Definition in Detail
The Accounting Council is a body created in 2012 that operates under the aegis of the Financial Reporting Council (FRC). Its primary responsibility is offering advisory guidance on matters related to accounting and financial reporting policy. It took over certain functions from the now-defunct Accounting Standards Board. Although the Financial Reporting Council holds the ultimate responsibility for issuing Financial Reporting Standards, the Accounting Council plays a pivotal role in their development, ensuring that the standards are up-to-date and effectively serve their purpose in regulating financial reporting practices.
Examples
Example 1: Development of New Standards
The Accounting Council might be involved in the development of a new Financial Reporting Standard (FRS) that addresses the reporting of climate-related financial disclosures. The council would provide expert advice and guidance to ensure the standard is comprehensive and relevant.
Example 2: Revision of Existing Standards
If an existing Financial Reporting Standard, such as FRS 102 (Financial Reporting Standard applicable in the UK and Republic of Ireland), needs amending to align with international standards, the Accounting Council would review the necessary changes and advise the FRC accordingly.
Example 3: Advisory Role
When the FRC contemplates introducing new regulations for the financial sector, they consult the Accounting Council for insights and expert evaluations of potential impacts on accounting practices and financial reporting.
Frequently Asked Questions
What is the main function of the Accounting Council?
The main function of the Accounting Council is to provide advisory guidance on accounting and financial reporting policies to the Financial Reporting Council (FRC).
When was the Accounting Council established?
The Accounting Council was established in 2012.
What body did the Accounting Council replace in terms of certain functions?
The Accounting Council took over certain functions from the former Accounting Standards Board.
Who is responsible for issuing Financial Reporting Standards?
The Financial Reporting Council (FRC) is responsible for issuing Financial Reporting Standards, although the Accounting Council plays a role in their development.
How does the Accounting Council contribute to the development of Financial Reporting Standards?
The Accounting Council advises the FRC on the formulation, revision, and relevancy of Financial Reporting Standards, ensuring they are effectively aligned with current financial practices and international standards.
Related Terms
Financial Reporting Council (FRC)
The Financial Reporting Council (FRC) is an independent regulator in the United Kingdom responsible for regulating auditors, accountants, and actuaries, and setting the UK’s Corporate Governance and Stewardship Codes. The FRC issues Financial Reporting Standards and collaborates with the Accounting Council for the development of these standards.
Financial Reporting Standards (FRS)
Financial Reporting Standards (FRS) are guidelines issued by the Financial Reporting Council that establish the principles for preparing and presenting financial statements. They ensure consistency, reliability, and transparency in financial reporting among entities.
Accounting Standards Board
The Accounting Standards Board was a predecessor body to the Accounting Council and part of the Financial Reporting Council responsible for developing and issuing accounting standards until its functions were transferred to the FRC and the Accounting Council in 2012.
Online References
Suggested Books for Further Studies
- Financial Accounting and Reporting by Barry Elliott and Jamie Elliott.
- Wiley GAAP 2021: Interpretation and Application of Generally Accepted Accounting Principles by Joanne M. Flood.
- International Financial Reporting: A Practical Guide by Alan Melville.
- Accounting for Non-Accountants: The Fast and Easy Way to Learn the Basics by Wayne Label.
Accounting Basics: “Accounting Council” Fundamentals Quiz
Thank you for exploring the intricacies of the Accounting Council. Your diligence in studying these fundamental concepts will aid in your mastery of accounting and financial reporting standards!
