Regulatory Capture and its Impact

This assignment delves into the concept of regulatory capture, examining how regulatory agencies can become dominated by the very industries they are meant to oversee. It highlights the potential negative impacts of this phenomenon on the organizational environment and regulatory effectiveness within a country. The document encourages readers to critically evaluate the influence of industry lobbying and the importance of maintaining a balance of power in the regulatory process.

LITERATURE REVIEW ON
REGULATORY
ENVIRONMENT FOR
ACCOUNTING AND
FINANCIAL REPORTING

EXECUTIVE SUMMARY:
Present assignment defines about the regulatory environment for accounting and finance
reporting in India and United Kingdom effectively. This assignment refers to the perceived
issues of each system in the country in an effective manner and describes about how the
environment works in these nations effectively and there are some authorities who makes
decision for proper generation of several kinds of services in the company in sufficient form. In
addition, this investigation also defines about how these countries are getting progress after
adoption of IFRS in sufficient manner. This study also reveals about Regulatory capture theory
and its usefulness towards finance and accounting reporting as well.

Table of Contents
EXECUTIVE SUMMARY:............................................................................................................1
INTRODUCTION...........................................................................................................................2
Part A ..............................................................................................................................................2
1. The perceived problems of each system and need for regulator.............................................2
2. How the environment works in these countries......................................................................3
3. What is the country’s progress towards the adoption of IFRS ...............................................4
PART B............................................................................................................................................6
2. What characteristics might indicate that a regulatory might be captured? ............................7
REFERENCES..............................................................................................................................10
1

INTRODUCTION
In this documentation, the study defines about the regulatory environment for accounting
and finance reporting of two countries which is India and United Kingdom effectively.
Moreover, this assignment refers to the perceived issues of each system in the country in order to
make major decision in the country. Apart from it, this investigation also defines about these
country’s progress towards the adoption of IFRS within nations in sufficient form. Moreover, in
part B of this assignment, it describes about the regulatory capture theory is and why regulations
is useful for these countries in order to formation accounting and finance reporting in these
nations effectively
Part A
1. The perceived problems of each system and need for regulator
A regulatory framework for the preparation of financial statements is necessary for a
number of reasons effectively in order to make major decision towards the organisational
environment in the country in more relevant form. This is most necessary for United Kingdom
and India as well as in respect to identify the basic minimum information in the industry in more
relevant form. It is also necessary for economic environment of these countries in order to
examine the financial situation in the company in relevant manner (DRURY, 2013). The
regulator environment of accounting and financial reporting is essential for the growth in
multinational organisations and global investment in this area in increasing in international level
as well. It ensures that, the regulatory of the country make positive behaviour of organisations
and their directors towards their investors in the nation in relevant form. Financial reporting
standards is not enough for making regulate all its activities in the country in not sufficient for
us, there should be legal and market-based regulations in the country in more appropriate
manner. There are numbers of factors presented for the regulator environment of accounting and
finance within these countries in a likeness ways. There are some typical regulatory structure is
presented in the UK which is as below:
National financial reporting standards
 National law
 Market regulations
 Security exchange rules
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In case of the UK country, they have their own national financial reporting authorities
which furnish effective values of formation of financial reporting towards organisational
environment in the nation efficiently (Libby, 2017). The main section of legal provision in the
UK which is companies Act 2006. However, the regulator authority furnishing to the London
stock exchanges for companies in the country properly so that, they have their own financial and
accounting standards in which they need to maintain their reporting standard effectively.
In case of India, they have also adopted their own controller for accounting regulatory
which is Indian accounting standards that is directly followed by the financial reporting
standards. According to the company act 2013, the (national financial reporting authorities)
NFRA is tasked with the job of recommending accounting and auditing standards in India
effectively. The authority in the country also makes sure whether all the accounting and financial
reporting services provided by audit professional in the country are relevant or not. There has
some power to investigate by chartered accountants in the country by professional misconduct in
financial and accounting reporting effectively (Schaltegger and Burritt, 2010). This is mainly
checked by the CA firm in India. This make sure that, all audit quality in the country in
regulating in the country as per the government set up standard of finance and accounting in the
industry in more relevant form. Both the countries have their own regulator environment in order
to functioning of their separated financial and accounting reporting in the countries in more
sufficient form in order to check out the quality of audit effectively.
2. How the environment works in these countries
In case of India, there are several supreme authority presented, which is making
contribution in the nation towards set up accounting and finance standard properly and check out
at regular basis that they are working effectively in the nation. However, the central government
is a supreme authority who makes decision to formation of regulatory environment for
accounting and finance reporting in the nation in sufficient format. Moreover, they also make
sure that no other authorities in India are making interference in the works of accounting and
reporting in the country effectively (Kuperman, Gardner and Pryor, 2013). If they feel that, any
type of critical issues and matters misconduct at the workplace, as per the legislative provision
towards organisation sector, they can take initiative in respect to proper investigation for the
same efficiently. In the world, most of the countries are establishing their own regulatory
professionals standard for accounting and finance reporting and also set up their audit regulators
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effectively. This is approved by parliament authorities in the nation properly and they approved
for the same since few year ago. India is the only country which is regulating their safe audit
professional consideration which is self-regulated appropriately.
In case of UK accounting and finance reporting regulatory, there are several professional
bodies working in the country who are making contribution towards setting up accounting
standard of the company in relevant form. Institute of charactered accounts in England and
Wales. As a regulator for finance and accounting authority is the main professional body which
has major responsibility of enforcing standard of performance and conduct for member.
Financial Reporting Council (FRC) is only UK’s independent regulatory in the UK which is
liable for promoting high quality of corporate governance and reporting in the nation in relevant
form (Maskell, Baggaley and Grasso, 2011). This is the main body of setting a standard of
accounting and finance reporting in the nation and enhancing the independence of authorities in
the nation appropriately. Moreover, the major works for FRC is regarding maintaining a
sufficient framework of UK codes and standards for accounting, auditing and also making suire
that, corporate governance is implementing in sufficient fomr. There are three main governance
committees in the country presented here which are working well in the nation as following:
 Audit committee
 Nominations committee
 Remuneration Committee
There are various legislation provision needed for the nation in respect to ensure whether all
works being done by regulatory authority of UK towards accounting and finance reporting is
fairly done or not at the workplace efficiently. Moreover, as per the Companies act 2009, the
legal authority in the country have right to check out the working condition of these authorities in
the country effectively (Ferguson and Seow, 2011). The UK’s Companies act 2006, has been
established for the legal requirements aimed at the formation and operation of entities in the UK
towards accounting and audit authorities in the nation efficiently.
3. What is the country’s progress towards the adoption of IFRS
In case of the UK, the adoption of International Finance Reporting Standards by the UK
and EU members of standard is the main factor of progress of the country towards its accounting
and finance reporting system in sufficient form (Toth, 2012). The Institute Of Chartered
Accountants in England and Wales has been formulated accurate policies and regulators and
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standard–setters for the proper working of standard in the nation effectively. This is the most
beneficial for the country in respect to have proper improvement in transparency in cost of
capital and market liquidity as well in sufficient form. All the corporate companies in the UK
which is listed in the nation’s regulated markets must be required to have utilisation of IFRS
standard for proper functioning in the country in sufficient manner. Moreover, they have some
areas in which IFRS could only be reaped if the standards are adopted in full system in the UK
effectively. Fair presentation and compliance with IFRS is most beneficial for the country which
defines that financial standards must in ongoing concern in the organisations in effective manner.
(Demski, 2013). It is important for financial statements as a tool for communication in the
corporation in order to sustain in the life in more sufficient form. This is most beneficial for the
UK country in order to raise the growth rate of its international business around the world in
more effective form. It also attracts the international investor in the nation in order to investing in
its several capital venture in relevant manner. It leads to raise the Foreign Direct Investment
(FDI) volume in the nation in relevant form. As per its standard of accounting and finance
reporting, all authorities and corporate sector must be working according to it in the nation
efficiently.
In case of India, IFRS adoption is most beneficial for the government in the country in
order to sustain in the market in more relevant form. As per IFRS in the country, it have some
methods for preparation of financial statements utilising common set of accounting standards in
order to better understand the investment opportunities in the country for using different set of
national accounting standards of the country in more relevant form in order to sustain in the
market effectively (Peng and Janie Chang, 2010). With the assistance of IFRS standard of the
country, all organisational industries in India has been able to increase their capital from foreign
market at very low costing if it could make positive values on the mind of foreign investors in
respect to make sure that their financial statements comply with acceptance of its standards at
global level in the country in sufficient form. Hence, it could be said that all regulatory
authorities in the nation ought to be worked as per guidance of IFRS standard in context of
formation of accounting and financial reporting in organisations in relevant form.
PART B
Regular capture theory: This is most beneficial for the economic environment of UK as
well as India effectively. Regulator capture theory defines about to proper says of firm or an
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industry could be beneficial for the legislation if it captures the related regulatory body in these
nations in relevant form. In case of public interest theory, the government of the nation need to
find out essential companies and industries in the country which is producing harmful situations
in the country in relevant manner. In case of protection of those harm for social interest, the
government authority has right to save their interest in the company in order to sustain in the life
in more relevant form. These regulatory bodies might be government officers, legislation
provisions and guiding principles in the nation in relevant form. They provide proper guidelines
for the organisations in the nation in respect to taking proper action towards the public of these
countries in relevant form (Christensen and Feltham, 2012). Capture theory also refer to the
regulations are aimed to give advantage to first public of these countries but their its objective
has been failed because of team flews regulator are controlled by regulator will protect the
regular party effectively. At the once industries are succeeding in regulating and regulating could
no longer perform their roles to regulator in the country in relevant form. This is most beneficial
for the government in order to monitoring all functions of the corporate sector in the country in
relevant form. All interest related party have a rational expectation for another party in the nation
efficiently. It may take long time in order to making huge efforts for industries capture the long
regulators in the country in more relevant form. One of the main assumption of this theory is
that, the interest of a regulated party was harmed by a regulation the country. As per the
standards of these authorities, all the countries must have proper regulator authority in order to
proper evaluation of their organisational environment works in the country in more relevant
form. Regulatory capture is the method in which regulatory agencies come up to be dominated
by vary industries they were charged with regulating. Regulatory capture happens when a
regulatory agency formed in the public’s interest, this provides appropriate services to regulating
some effective agencies of organisations in the country effectively (Rahayu, 2012). The idea of
regulatory capture has been developed in relevant form on economic bases in the country
effectively. The regulatory capture occurs in the country because of several kinds of issues is
being arisen at the workplace in order to sustain in the market in more relevant form and also
making sure that, all outcomes of the policy formation to their resources in the company in
relevant format in order to proper running of accounting authorities in both countries in relevant
format. They have some areas by which effective development in which they can generate more
effective services in which they are making sure that, they have some areas by which effective
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development can be gained in relevant form. In both countries it is useful for proper formation of
policies towards organisational agencies when imbalance of focused resources devoted to a
specific policy outcomes is successful at capturing influence with the staff or commission
members of the regulatory agency, so that preferred policy outcomes of the specific interest
group are implemented in the organisation in relevant format (Grabski, Leech and Schmidt,
2011). They have some issues while formation of policy as per particular group of interest on
specific criteria of the business in order to completion of their each task in the company in actual
format. Regulatory capture could be useful for both countries authorities of making policies in
respect to proper formation of their issues in relevant format. Hence, it could be said that,
regulatory authority is most essential terms of India and United Kingdom both countries in order
to set up economic environment in these nations in relevant format and proper remoting of their
regulatory in these countries effectively.
2. What characteristics might indicate that a regulatory might be captured?
There are some fundamental factors must be addressed to creating of a successful
regulatory authority in the company in sufficient format in order to sustain in the life in more
effective format. Each specific countries muse need to establishment of a proper framework that
makes an effective regulatory as well as ascertain that relevant legal status is being formulated in
these both countries for proper development of their issues in the country in sufficient format.
The legal status of its regulatory authority would depend on the country’s political and legal
system in sufficient form. In case of proper formation of regulatory in the country, there are
some of other step is, appropriate formation of their issues in the company in relevant format in
order to creation of their issues in sufficient manner (Gelinas, JDull and Wheeler, 2011). All of
they have some areas by which effective authority must be formulated in the company in order to
making sure that, all of accounting and financial reporting works are being done as per the
regulator environment which is capturing in the country in relevant format. There are some
issues which arising in these countries is that, management of organisation and its administrative
structure in the country in relevant format. However, there are various kinds of regulatory
authorities is being worked in these countries in respect to proper development of their
accounting and finance section in both countries effectively.
Effectiveness: Regulatory which is being combined with other government initiatives
should make major focus on the government initiatives and also should be focused on the issues
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and achieve its intended policy objectives with minimum side-effects. The regulatory
environment of these countries must be in effective form which is making support to
implementation of proper innovation and complement towards their effective regulator climate in
both countries in sufficient form. Hence, it could be said that, in India and UK both countries
must have proper effectiveness towards their regulatory authorities towards finance and
accounting sections in these nations in effective form in respect to functioning of all activities in
relevant form.
Flexibility: The government regulatory authorities in these departments and agencies
must be encouraged to purpose of continuous making improvement and regulatory restriction in
order proper development of their issues in these environments in relevant format. Accounting
and finance get changes in frequent basis, so that, its authorities making sure that, all regulatory
environment must be in flexible format in order to making appropriate changes in their
authorities as per its new necessity in the regulatory environment in relevant format (Laudon and
Laudon, 2016). Flexibility also must be taken into accounts, when they have uncertain future
response from the government to its regulatory authorities in the country in relevant manner.
Hence, it could be said that, they must have proper flexibility as per changes in regulatory
environment of these countries in sufficient format.
Transparency: The proper development and enforcement of the regulatory must be
transparent with respect to proper development of their effectiveness in the country. The
regulatory environment of accounting and finance reporting must be transparent in order to make
appropriate changes in its authorities as per transparency requirement in these countries in
relevant format. So, it could be said that all of their regulation system must have transparent
structure in order to have proper formation of their issues in relevant format.
Cooperation: In case of relevant regulatory authority of finance and accounting
environment has been developed in these counties with the fully participation of their
government in it. There are several co-operations are needed for proper reflection of their
accounts in the country in relevant format. They have some areas by which efficient
development can be gained in sufficient manner in order to attain proper development of their
areas in sufficient format. In case of appropriate co-operation of government and concerning
agencies in the country, all of them indicate that regulatory environment must be captured in
order to have completion of each its function in both countries in relevant format.
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CONCLUSION
From this investigation, it is concluded that in case of India and United Kingdom, both
countries have huge needs of countries’ regulatory environment for finance and accounting
reporting efficiently. Moreover, this study also concludes about how these regulatory
environment working in these nations for making major decision towards its changes and
standards and there are some companies’ laws’ of these countries needed for making major
decision towards these systems effectively. Besides this, the assignment also concludes about
importance of regulatory capture theory and its usefulness in both nations in relevant form. This
study also review about to importance of financial and accounting regulatory for reporting in
these nations in sufficient form in order to proper running of their financial regulatory in these
sections in sufficient form. This study also concludes about The regulator environment of
accounting and financial reporting is essential for the growth in multinational organisations and
global investment in this area in increasing in international level as well. It ensures that, the
regulatory of the country make positive behaviour of organisations and their directors towards
their investors in the nation in relevant form. Financial reporting standards is not enough for
making regulate all its activities in the country in not sufficient for us, there should be legal and
market-based regulations in the country in more appropriate manner. There are numbers of
factors presented for the regulator environment of accounting and finance within these countries
in a likeness ways. Beside from it, this assignment also concludes about there are several
professional bodies working in the country who are making contribution towards setting up
accounting standard of the company in relevant form. Institute of charactered accounts in
England and Wales. As a regulator for finance and accounting authority is the main professional
body which has major responsibility of enforcing standard of performance and conduct for
member. Financial Reporting Council (FRC) is only UK’s independent regulatory in the UK
which is liable for promoting high quality of corporate governance and reporting in the nation in
relevant form. Furthermore, this assignment also concludes about As per the standards of these
authorities, all the countries must have proper regulator authority in order to proper evaluation of
their organisational environment works in the country in more relevant form. Regulatory capture
is the method in which regulatory agencies come up to be dominated by vary industries they
were charged with regulating.
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REFERENCES
Books and Journals
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Laudon, K. C. and Laudon, J. P., 2016. Management information system. Pearson Education
India.
Gelinas, U. J., Dull, R. B. and Wheeler, P., 2011. Accounting information systems. Cengage
learning.
Grabski, S. V., Leech, S. A. and Schmidt, P. J., 2011. A review of ERP research: A future
agenda for accounting information systems. Journal of information systems. 25. 1. pp. 37-
78.
Rahayu, S. K., 2012. The factors that support the implementation of accounting information
system: a survey In Bandung and Jakarta’s taxpayer offices. Journal of global
management. 4. 1. pp. 25-52.
Christensen, P. O. and Feltham, G., 2012. Economics of Accounting: Information in markets
(Vol. 1). Springer.
Peng, J. and Janie Chang, C., 2010. Applying XBRL in an accounting information system design
using the REA approach: an instructional case. Accounting Perspectives. 9. 1. pp. 55-78.
Demski, J., 2013. Managerial uses of accounting information. Springer Science & Business
Media.
Toth, Z., 2012. The current role of accounting information systems. Theory, Methodology,
Practice. 8. 1. p. 91.
Ferguson, C. and Seow, P. S., 2011. Accounting information systems research over the past
decade: Past and future trends. Accounting & Finance. 51. 1. pp. 235-251.
Maskell, B. H., Baggaley, B. and Grasso, L., 2011. Practical lean accounting: a proven system
for measuring and managing the lean enterprise. CRC Press.
Kuperman, G. J., Gardner, R. M. and Pryor, T. A., 2013. HELP: a dynamic hospital information
system. Springer Science & Business Media.
Schaltegger, S. and Burritt, R. L., 2010. Sustainability accounting for companies: Catchphrase or
decision support for business leaders?. Journal of World Business. 45. 4. pp. 375-384.
Libby, R., 2017. Accounting and human information processing. In The Routledge Companion to
Behavioural Accounting Research (pp. 42-54). Routledge.
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DRURY, C. M., 2013. Management and cost accounting. Springer.
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