In today's global business environment, companies must comply with various accounting regulations. Different regulatory bodies exist for establishing and monitoring these accounting regulations. The regulations protect investors, thereby contributing to the success of the companies.
The Securities and Exchange Commission (SEC)This commission is designed to shield shareholders, to sustain fair, orderly, and efficient markets, and to aid capital development. In the U.S. under the SEC, all investors get access to particular information regarding an investment previous to a purchase, for as long as they have it. The SEC obliges public companies to disclose significant financial and other data to the public. Companies achieve this with public disclosure of their financial statements. An excellent example of this is the Annual Report a company releases each year. Any member of the public may access the Annual Report, containing a company's income statement, statement of cash flows, auditor's reports, financial condition, and management's discussion and analysis.
Additionally, according to 1934 Securities Exchange Act, management of a company is required to establish and maintain "adequate internal control over financial reporting," (Proctor & Gamble, 2007, p 29).
The Financial Accounting Standards Board (FASB)The FASB develops and furnishes principles of bookkeeping and reporting in order to direct and inform the public. This includes companies, evaluators, and customers interested in financial data. Accounting standards are crucial for the economy because business decisions rely on trustworthy, concise, clear, and understandable financial information. The FASB has many amendments and statements under which companies must comply. One example is financial accounting and goodwill and other intangible assets. Statement No. 142 describes how those assets must be accounted for in financial reports when those assets are required. The reason for the creation of this statement with the FASB is that users of financial information claimed intangible assets are an increasing...