ACCA Applied Knowledge · Business and Technology · The role of regulatory and professional bodies in promoting ethical and professional standards in the accountancy profession
A country's government is concerned that self-regulation has failed after several audit scandals. It sets up an independent oversight body with powers to inspect audit firms and impose penalties, while the professional bodies still run qualifications and set ethics codes. Which description best fits this arrangement?
This is statutory oversight of a self-regulating profession. Professional bodies keep qualification and ethics roles, but an independent, law-backed body inspects firms and imposes penalties. It is not pure self-regulation because outside enforcement exists, nor nationalisation, since the professional bodies retain their functions.
- APure self-regulation
- BStatutory oversight of a self-regulating professionCorrect
- CComplete nationalisation of the profession
- DVoluntary compliance with no enforcement
Explanation
The profession still performs key functions, but an independent body backed by law inspects and penalises, so it is a hybrid with statutory oversight. It is not pure self-regulation because outside enforcement exists. Nationalisation is wrong since the bodies keep their roles, and enforcement powers rule out voluntary compliance.
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