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Sir, there is a section in the above mentioned technical article that makes reference to laws and regulations that have a direct & indirect effect on the financial statements.
Just say sir that a firm that is governed by health & safety regulations, how will non compliance have a direct & indirect effect on the FS?
All businesses are required to comply with some laws or regulations whether tax, Companies Act, health and safety, environmental … the list is very long!
Examples of non-compliance (including failure to act) which have a direct impact on the financial statements include:
? Form and content of the financial statements (e.g. company acts, listing requirements, IFRSs)
? Industry-specific financial reporting issues (e.g. charities, pension schemes)
? Fraud, corruption and bribery
? Money laundering
? Tax liabilitiesExamples of indirect effects include going concern, business closure, fines/litigation etc which could include non-compliance with:
? The terms of an operating licence
? Environmental regulations
? Health and safety requirements
? Data protectionTaking health and safety as an example – on-compliance could bring fines or claims for damages – i.e. liabilities – actual or contingent which should be provided for or disclosed in the financial statements.
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