STATUTORY FRAMEWORK FOR ACCOUNTING

A statutory framework for accounting constitutes the legal foundation that governs financial reporting practices within a specific jurisdiction. This framework is composed of a comprehensive set of laws and regulations established by governmental bodies or regulatory authorities to standardize accounting practices, ensuring consistency and reliability in financial reporting. Central to this framework are the prescribed accounting standards, which dictate the principles and methodologies entities must follow when preparing their financial statements. These standards, often aligned with international frameworks such as IFRS or GAAP, serve as a fundamental guide for recognizing, measuring, and disclosing financial information (Anantharaman, 2012).

In addition to accounting standards, the statutory framework outlines specific financial reporting requirements that entities must fulfill. This encompasses the types of financial statements to be prepared, such as balance sheets, income statements, and cash flow statements, as well as the frequency and format of reporting. To reinforce the accuracy and reliability of financial information, many statutory frameworks mandate external audits conducted by independent auditors. These audits, integral to the regulatory landscape, provide stakeholders with assurance regarding the integrity of the financial statements (Anantharaman, 2012).

The regulatory oversight embedded within the statutory framework is carried out by established bodies or authorities with the mandate to enforce compliance with accounting standards and financial reporting requirements. These bodies wield the power to investigate non-compliance and impose penalties, contributing to the overall integrity of financial reporting. Corporate governance guidelines are often integrated into the statutory framework, defining the roles and responsibilities of key entities such as boards of directors and audit committees. These guidelines aim to enhance accountability, transparency, and ethical conduct within organizations (Adjei, 2021).

Tax regulations are another integral component of the statutory framework, as financial statements form the basis for calculating tax liabilities. The framework typically accommodates different legal forms and business structures, tailoring accounting requirements to the specific characteristics of sole proprietorships, partnerships, corporations, or other entities. Beyond financial statements, the statutory framework necessitates disclosures that extend beyond the traditional accounting records. These may include details on related-party transactions, contingent liabilities, and other pertinent information, contributing to a more comprehensive understanding of an entity's financial position and performance (Adjei, 2021).