Accounting Regulatory Bodies Essay

516 WordsSep 28, 20083 Pages
Accounting Regulatory Bodies Regulatory bodies serve an important function by establishing and enforcing rules of accounting that companies must adhere to. They provide a level of assurance that companies are not falsifying financial statements that the public relies upon. For this paper, I will examine four accounting regulatory bodies, the Securities and Exchange Commission (SEC), Financial Standards Accounting Boards (FSAB), Governmental Accounting Standards Board (GASB), and Public Company Accounting Oversight Board (PCAOB). Securities and Exchange Commission (SEC) The SEC serves the public by overseeing all that is related to securities. It requires publicly held companies to disclose accurate financials. The SEC also strives to protect against fraud by using its authority to bring civil enforcement actions against companies or individual who violate security laws. There are rules that accountants must follow called Generally Accepted Accounting Principles (GAAP). To ensure compliance, the SEC requires the involvement of auditors. As stated by Phillips, Libby, and Libby ( 2006), “To ensure accountants follow GAAP when preparing their company’s financial statements, the SEC requires that each public company hire independent auditors to scrutinize its financial records.” (p. 19) Financial Standards Accounting Boards (FSAB) The FSAB develops accounting standards and is commissioned by the SEC. It is the establishment of these rules that govern the preparation of a company’s financial statements. The FSAB also provides guidance to companies with regards to implementation of the rules. The end result provides the public with credible financial statements with which informed investment decisions can be made from. Governmental Accounting Standards Board (GASB) The GASB develops accounting standards for the state and local governments. Its

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