MOI UNIVERSITY

SCHOOL OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

REG NO: BBM/1797/22

NAME: KANDA KIPRONO
COURSE CODE BBM 304
COURSE TITLE ADVANCED ACCOUNTING
TASK ASSIGNMENT
LECTURER RODGERS KIMUTAI
DATE DUE 9TH March 8, 2024
QUIZ 1
State 3 different regulatory influence of preparation of published financial account of a
quoted company and briefly comment on each of them. Comment on effectiveness of
this regulatory system.

1. Securities and Exchange Commission regulations: The SEC has strict

guidelines for the preparation and disclosure of financial statements for
quoted companies in order to protect investors and ensure transparency.
These regulations help to prevent fraud and manipulation of financial
information.

2. International Financial Reporting Standards : Quoted companies are

required to follow IFRS in the preparation of their financial statements to
ensure consistency and comparability across different jurisdictions. This
helps investors make informed decisions and also promotes international
harmonization of accounting practices.

3. Stock exchange regulations: Stock exchanges have their own set of rules
and regulations regarding the preparation and disclosure of financial
statements by quoted companies. These regulations help maintain the
integrity of the market and protect investors from misleading information.
QUIZ 2.

There are those who suggest that any standard setting body is redundant because
accounting standards are unnecessary. Other people feel that such standards should
be produced, but by the government, so that they are a legal requirement.

A) Discussing the statement that accounting standards are unnecessary for the
purpose of regulating financial statements.
1. Market discipline: Companies that provide misleading or inaccurate
information may face consequences in the form of reduced investor
confidence, negative market reactions and ultimately a loss of reputation
and value.

2. Flexibility and innovation: Companies may have more flexibility counter

their financial reporting practices to reflect their unique business models
and circumstances. This flexibility can promote innovation and better
alignment between financial statements and the economic reality of the
business.

3. Regulatory burden: Setting and enforcing accounting standards can be a

costly and resource-intensive process for both standard-setting bodies and
the companies required to comply with the rules.

4. Dependency on rules: Critics of accounting standards suggest that a

reliance on standardized rules may lead to a relying on mentality, where
companies focus on meeting technical compliance requirements rather
than providing meaningful and relevant information to users. This could
undermine the overall quality and usefulness of financial reporting.

5. Diversity: In a global economy with diverse business practices and

cultural norms, some believe that one-size-fits-all accounting standards may
not be suitable for all companies and jurisdictions.

While these arguments suggest that accounting standards may not be entirely
necessary for regulating financial statements, it is essential to consider the potential
drawbacks and risks associated with a lack of standardized rules, such as reduced
comparability, transparency, and investor protection. Striking a balance between
regulatory oversight and business flexibility is crucial to ensure the quality and
reliability of financial information.
B)Discussing whether or not the financial statements of not-for-profit entities should
be subject to regulation:
1. Transparency and accountability: , not-for-profit organizations receive
funds from donors, government grants, and other sources, and they have a
duty to accurately report on how these funds are used. Regulation of
financial statements for not-for-profits can help ensure transparency and
accountability.

2. Stakeholder trust: Donors, beneficiaries, regulators, and other

stakeholders rely on the financial statements of not-for-profit entities to
evaluate their financial health, performance, and impact.

3. Preventing misuse of funds: Not-for-profit organizations may be more

susceptible to mismanagement, fraud, and financial irregularities. They also
ensure compliance with legal and ethical obligations, and protect the
interests of donors and the public.

4. Comparability : Standardized regulations for not-for-profit financial

statements can facilitate comparisons between organizations, making it
easier for donors and stakeholders to assess their efficiency, impact, and
effectiveness.

5. Legal and regulatory compliance: Not-for-profit organizations are subject

to various laws and regulations governing their operations, financial
reporting, and tax-exempt status.