Keep Your Head in the Clouds and Your Feet on the Ground
143derivative securities valuation, portfolio structuring, risk management, and
scenario simulation (Karatzas and Shreve 1998).
Organizations operating in the contemporary business landscape need
to link tightly strategic insight and financial rigor. Quantitative analysis
has brought efficiency and rigor to financial markets and to the investment
process and is becoming increasingly important in regulatory concerns. By
adding quantitative discipline to their number crunching, financial analysts
may avoid the psychological biases that can lead to judgment errors.
The association of rigor and finances is especially salient in accounting
where accuracy and rigorous regulations are the norm. The directors of a
company have a legal responsibility for ensuring that the company keeps
appropriate accounting records which enable them to report the financial
position of the business to investors, regulators and tax authorities. The
conceptualization can be illustrated with frequent collocations such as to
keep good accounting records, rigorous record-keeping, accounting
standards, generally accepted accounting principles, eligible costs,
eligibility period.
The conceptual metaphor FINANCIAL MANAGEMENT IS RIGOR
motivates not only language, but also business practices. A number of
professional activities taking place within the broadly understood financial
management are regulated, licensed and standardized by various
institutions as well as professional organizations. Professional accounting
bodies include, for instance, the American Institute of Certified Public
Accountants (AICPA) and the other 179 members of the International
Federation of Accountants (IFAC), including CPA Australia, the
Association of Chartered certificated accountants (ACCA) and the
Institute of Chartered Accountants in England and Wales (ICAEW).
Generally accepted accounting principles (GAAP), on the other hand,
accounting standards are issued by national regulatory bodies. In addition,
the International Accounting Standards Board (IASB) issues the
International Financial Reporting Standards (IFRS) implemented by 147
countries (Droms and Wright 2010).
Similarly, in the case of financial advisers in the United States, the
Financial Industry Regulatory Authority (FINRA) regulates and oversees
the activities of brokerage firms, and their registered representatives. The
Securities and Exchange Commission (SEC) regulates investment advisers
and their investment adviser representatives. Insurance companies,
insurance agencies and insurance producers are regulated by state
authorities.^ Investment Advisors may be registered with state regulatory
agencies, the Securities and Exchange Commission, or pursuant to certain
exemptions, remain unregistered.