History attests to the influence of crisis and scandals as an impetus for regulatory intervention by politicians. After a series of scandals in the United Kingdom in the 1990’s, there was a dramatic shift in the structure of financial regulation that consolidated regulation responsibilities under the auspices of the Financial Services Authority. Today, in the aftermath of the financial crisis of 2007-2009, financial accounting standard setting finds itself entangled in political processes focused on restructuring the regulation of the world’s financial markets. The crisis has ignited worldwide debate on issues of systemic risk and the role played by financial regulation in creating and exacerbating the crisis. Proposals abound for how regulation of financial markets and financial institutions should be changed to mitigate the potential for such large-scale financial meltdowns in the future. The scope of regulatory issues under debate spans many aspects of the financial system, including the alleged role played by financial accounting standards in deepening the trajectory of the crisis. The crisis has energized politicians, regulators, and economists to scrutinize financial accounting standards as never before. Hence we will lay out basic arguments that have been put forward both for and against the regulation of the Financial Reporting System

Discuss the Arguments for and Against Regulating the Financial Reporting System PDF

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