Prudential Regulation Authority and Realisation: Difference between pages

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The UK body responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms.  
'Realisation' refers to the conversion of assets, profits or losses into cash.


The PRA’s objectives are:
Realisation can occur either on the receipt or payment of cash, or at an earlier time when such receipt or payment of cash becomes virtually certain.


1. To promote the safety and soundness of these firms; and


2. Specifically for insurers, to contribute to the securing of an appropriate degree of protection for policyholders.
Generally accepted accounting practice allows the [[recognition]] of income and assets only when their realisation in the form of cash, or other assets that are readily realisable, can be assessed with reasonable certainty.


The concept of realisation arose for the protection of the creditors of companies, to ensure that sufficient cash was available to distribute profits without a company or other entity becoming insolvent.


The PRA's responsibilities in the UK were formerly undertaken by the Financial Services Authority (FSA).


The former FSA's other responsibilities were substantially transferred to the Financial Conduct Authority (FCA).
Only realised profits may be distributed under company law.  


The PRA is part of the Bank of England.


== See also ==
*[[Accruals basis]]
*[[Accumulated other comprehensive income]]
*[[Contingent assets]]
*[[Crystallisation]]
*[[Distribution]]
*[[Recognition]]
*[[Revaluation]]
*[[Unrealised profit]]


== See also ==
[[Category:Accounting,_tax_and_regulation]]
* [[Financial Services Authority]]
* [[Financial Conduct Authority]]
* [[CFTC]]

Revision as of 19:21, 21 December 2020

'Realisation' refers to the conversion of assets, profits or losses into cash.

Realisation can occur either on the receipt or payment of cash, or at an earlier time when such receipt or payment of cash becomes virtually certain.


Generally accepted accounting practice allows the recognition of income and assets only when their realisation in the form of cash, or other assets that are readily realisable, can be assessed with reasonable certainty.

The concept of realisation arose for the protection of the creditors of companies, to ensure that sufficient cash was available to distribute profits without a company or other entity becoming insolvent.


Only realised profits may be distributed under company law.


See also

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