COMPLIANCE AUDIT is the review of financial records to determine whether the entity is complying with specific procedures or rules.
FINRA is Financial Industry Regulatory Authority. FINRA is the largest self-regulatory organization for the securities industry in the United States. FINRA has primary responsibility for the regulation of NASDAQ and the over-the-counter securities markets.
RULES-BASED ACCOUNTING is where specific accounting rules are set forth and must be followed in order to comply with GAAP. For example, if an airline company leases a jet, the company must follow specific GAAP rules to determine if the transaction is an operating lease or a capital lease. The main difference being that a capital lease would have to appear on the balance sheet of the airline. Therefore, two virtually identical lease transactions could be classified entirely differently based upon how they follow the GAAP leasing rules. See also PRINCIPLES-BASED ACCOUNTING.
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