Lessons · Accounting · the one thing only a licensee may do
The one thing only a licensee may do
The reason the licence exists is that somebody outside a business -- a lender, an investor, a regulator, a buyer -- needs assurance about that business's figures from a person who is not the business. Giving that assurance in a signed report is restricted work, and the board's own word for it is the attest function. Learn that word, because it is the one the rules are written in: a page that never says the word audit is still about this if it says attest.
Hone is a place to practise a career, one idea a day. This is one of its lessons, written out in full and free to read without an account.
In beta. This lesson was written for Hone and has not yet been checked by a qualified accountant. Practice material, not professional advice. What that means.
What it is for
It explains every other requirement on this road. The education, the examination, the supervised experience and the ethics step all exist because a stranger will rely on a signature. Once that is understood, the requirements stop looking like arbitrary hurdles and start looking like the obvious things you would ask of somebody before trusting their name on a report about a company you are about to lend to.
How to think about it
Ask who is going to rely on the document, and whether they are inside or outside the business. Inside-only work is unrestricted. A report meant to travel to somebody outside, who will act on it, is the restricted kind.
Worked example
A management report for the ownerInside. Unrestricted.
A budget for the board of the same companyStill inside.
An audit report a bank will read before lendingOutside, and relied upon. This is the restricted work.
A review or other assurance engagement for a third partySame family, lesser degree of assurance, same reason for restriction.
Your turn
Name who the restricted kind of report is really written for.
Restricted work produces a report a party the business will rely on
Solve one, graded on the server
The trap
Thinking the restriction is about difficulty. Plenty of unrestricted work is harder. The restriction is about reliance by a stranger, which is a question of who gets hurt when it is wrong, not of how hard it was to produce.
Now you try
Next in Accounting
- When two sets of requirements are valid at oncewhen two sets of requirements are valid at once
- Which date decides, and why it is rarely the obvious onewhich date decides, and why it is rarely the obvious one
- Reading a board notice instead of a forum threadreading the board's own notice instead of a forum