The AICPA have several publication that helps with guiding the accounting profession and to enhance the member’s technical and professional abilities. One thing that the AICPA requires of their Accountants and CPAs is to continue with professional education, so that they will stay abreast of all current accounting and business issues. The AICPA is considered the foundation of ethical reasoning in accounting because each individual in the accounting profession whether they are certified or not has the obligation to be ethical with the public in business dealings and having access to financial information. All
In addition to the new membership requirements, the Sox Act required that “the audit committee of an issuer shall be directly responsible for the appointment, compensation, and oversight of the work of any registered public accounting firm employed by that issuer,” and “The audit committee shall establish procedures for the ‘receipt, retention, and treatment of complaints’ received by the issuer regarding accounting, internal controls, and auditing” (AICPA, 2006, Section 301). The SOX Act was clearly looking to increase the responsibilities of audit committees, to include oversight and compliance, so that they may more closely monitor accounting practices, amongst other company procedures. In fact, the SOX Act also determined that “accounting firms must
The sole purpose of this is to improve their respective conceptual frameworks for financial accounting across the globe. The Financial Accounting Standards board (FASB) is an organization that develops generally accepted accounting principles (GAAP) within the United States of America. It was first designated in 1973 after replacing the Accounting principles board (APB) and the Committee on accounting procedure (CAP) which was part of the American Institute of Certified Public Accountants (AICPA). The International Accounting Standards board (IASB) on the other hand is a London based accounting standard which was set up in 2001. It is responsible for developing International Financial Reporting Standards (IFRS) and was previously seen as the International Accounting Standards Committee (IASC).
These are the tools that are used by managers of a business. This method is used to make sure that the business operates according to plan. In Needles (p. 265), internal controls are defined as management’s responsibility to establish an environment, accounting system, and control procedure that will protect the company’s assets. Internal controls can be classified as either detective or preventive. Preventive controls are used to prevent and/or minimize errors or irregularities.
The purpose of the AICPA Code of Professional Conduct includes responsibilities, the public interest, integrity, objectivity, independence, due care and scope and nature of services. Although all of these are important principles to adhere, I think that the three most important principles are integrity, the public interest and due care. As a CPA principle conduct, integrity distinguishes that public trust is served by being honest. Honesty is an ethical value which means we should express the truth as we know it without deception. Full disclosure supports transparency and the accounting professional should disclose all information that investors, owners, creditors, and the government need to know to make informed decisions.
The Financial Accounting Standards Board (FASB) started in 1973 to provide standards for private sector companies to prepare their financial statements. The Securities and Exchange Commission (SEC) recognizes the standards given by the FASB as authoritative as long as the FASB fully acts in public interest. FASB standards are used by companies in the United States and IASB standards are used for companies in other areas of the world (Schroeder, Clark, & Cathey, 2011). The International Accounting Standards Board (IASB) was formed in 2001 to promote the use of international accounting standards. The IASB was formed to replace the IASC.
Mr. President, everyone at LJB needs to understand the definition of internal control and what is required of them under the SOX law since this law requires a combined effort from top management and employees alike. Internal control “consists of all the related methods and measures adopted within an organization to safeguard its assets, enhance the accuracy and reliability of its accounting records, increase efficiency of operations, and ensure compliance with laws and regulations” (Kimmel, Weygandt & Kieso, 2009, pp. 327-328). In other words, effective internal control can help companies achieve established financial goals, prevent loss of resources, and prepare reliable financial statements. Under SOX, all publicly traded U.S corporations are required to maintain an adequate system of internal control by means of developing principles of control over financial reporting as well as continually verifying that these controls are working.
Enron was described as “House Of Cards” as it was built over a pool of gasoline. It all sort of became smoke and mirror. Louis Borget, former Enron's CEO was also exposed to be rerouting company’s money to offshore accounts. Once their schemes were discovered by the auditors, Kenneth Lay encourages them to "keep making us millions". However, the traders were fired once it was revealed that Enron's reserves were gambled away which nearly destroyed the company.
Internal controls are not only used for risk management but are also used to control accounting, such as budgets as well as qualitative and quantitative controls. The controls include all processes used by managers to guarantee the organizational goals are accomplished and procedures are followed. Internal controls are established to help identify risks the company may face and also reduce the possibility or impact of risk. Portfolio Approach The portfolio approach is used by a company to share or manage risk, sometimes the risks are transferred to third parties. The portfolio approach focuses on risk characteristics for each obligation, an asset or liability manager will evaluate and combine the risks by type to achieve a balance between
The board’s action depends on regulations, laws and shareholders in general meeting. The auditor's role is to supply the shareholders with an objective and external inspect on the directors’ financial statements which form the foundation of that reporting system. The objective of the audit Committee is to raise the standards of corporate governance and the level of confidence in financial auditing and reporting by indicating obviously what it sees as the respective liabilities of those involved and what it believes is expected of