How are accounts scrutinised?

Accounts are compiled, monitored and analysed by accountants. This is a slightly different role to auditors. One big difference is that accountants are constantly checking the books, whereas auditors do one big check after a set period of time, such as a financial year. Accountants are also often in-house, which means they are employed by the company whose accounts they’re overseeing. Auditors are usually external. 

Accountancy is a skilled profession. You cannot be one without being accredited, which requires passing a series of exams set by a professional body. That’s partly because accounts have to be done a certain way. Which ways of doing accounting are and aren’t permitted is signed off by independent regulators (i.e. organisations that are recognised as the rule-setters for the industry). The one for the UK and Ireland is called the Financial Reporting Council (FRC). 

Back in the ‘70s it occurred to these regulators that it would be handy if accountants all over the world were able to use the same accounting standards. The latest version of these global standards are known as the International Financial Reporting Standards (IFRS). They are used by 120 countries, including the UK. (American firms follow a distinct but very similar set of rules.) 

However, not everyone is convinced that this current accounting set-up is doing a good enough job. The accounting industry has been criticised for its methods being difficult to understand and for not focusing enough on stakeholders outside of shareholders, such as employees or the local community where the company is based. 

Shareholders, by the way, are the people who own shares - ownership stakes - in a company. They usually have some influence over the decisions a company makes and often are also entitled to part of the company’s profits. Lots of people are shareholders via their pensions, which are usually pooled and invested into company stocks by pension funds (the entities that look after your pension until you retire).