In certain cases, multiple regulatory bodies aff ect a company’s fi nancial reporting requirements. For example, in almost all jurisdictions around the world, banking-specifi c regulatory bodies establish requirements related to risk-based capital measurement, minimum capital adequacy, provisions for doubtful loans, and minimum monetary reserves. An awareness of such regulations provides an analyst with the context to understand a bank’s business, including the objectives and scope of allowed activities. Insurance is another industry where specifi c regulations typically are in place. An analyst should be aware of such regulations to understand constraints on an insurance company. Th e following are examples of country-specifi c bank regulators. In Canada, the Offi ce of the Superintendent of Financial Institutions regulates and supervises all banks in Canada as well as some other federally incorporated or registered fi nancial institutions or intermediaries. In Germany, the German Federal Financial Supervisory Authority exercises supervision over fi nancial institutions in accordance with the Banking Act. In Japan, the Financial Services Agency has regulatory authority over fi nancial institutions. In the United States, the Offi ce of the Comptroller of the Currency charters and regulates all national banks. In some countries, a single entity serves both as the central bank and as the regulatory body for the country’s fi nancial institutions. In addition, the Basel Accords establish and promote internationally consistent capital requirements and risk management practices for larger international banks. Th e Basel Committee on Banking Supervision, among other functions, has evolved into a standard setter for bank supervision. Th e various regulations that aff ect banks present a challenge for bank analysts. Which of the following statements is most accurate? A . As a general rule, it is suffi cient for an analyst covering an industry to be familiar with fi nancial reporting standards and regulations in his/her country of residence. B . An analyst should familiarize him/herself with the regulations and reporting standards that aff ect the company and/or industry that he/she is analyzing. C . An analyst should be aware that fi nancial reporting standards vary among countries and may be industry specifi c, but standards are so similar that the analyst does not have to be concerned about it.
In certain cases, multiple regulatory bodies aff ect a company’s fi nancial reporting requirements. For example, in almost all jurisdictions around the world, banking-specifi c regulatory bodies establish requirements related to risk-based capital measurement, minimum capital adequacy, provisions for doubtful loans, and minimum monetary reserves. An awareness of such regulations provides an analyst with the context to understand a bank’s business, including the objectives and scope of allowed activities. Insurance is another industry where specifi c regulations typically are in place. An analyst should be aware of such regulations to understand constraints on an insurance company. Th e following are examples of country-specifi c bank regulators. In Canada, the Offi ce of the Superintendent of Financial Institutions regulates and supervises all banks in Canada as well as some other federally incorporated or registered fi nancial institutions or intermediaries. In Germany, the German Federal Financial Supervisory Authority exercises supervision over fi nancial institutions in accordance with the Banking Act. In Japan, the Financial Services Agency has regulatory authority over fi nancial institutions. In the United States, the Offi ce of the Comptroller of the Currency charters and regulates all national banks. In some countries, a single entity serves both as the central bank and as the regulatory body for the country’s fi nancial institutions. In addition, the Basel Accords establish and promote internationally consistent capital requirements and risk management practices for larger international banks. Th e Basel Committee on Banking Supervision, among other functions, has evolved into a standard setter for bank supervision. Th e various regulations that aff ect banks present a challenge for bank analysts. Which of the following statements is most accurate? A . As a general rule, it is suffi cient for an analyst covering an industry to be familiar with fi nancial reporting standards and regulations in his/her country of residence. B . An analyst should familiarize him/herself with the regulations and reporting standards that aff ect the company and/or industry that he/she is analyzing. C . An analyst should be aware that fi nancial reporting standards vary among countries and may be industry specifi c, but standards are so similar that the analyst does not have to be concerned about it.
Analyst analyzes the companies and make the buy or sell call for the clients. So, the analyst should be aware of the regulations in a particular country because it will help the analyst to analyze the company in a better way. Regulations and reporting standards affect a lot of the financial position of the company such that decisions can vary. So, the analyst shall be careful while analyzing the company and get familiar with the regulations and reporting standards.
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