Companies rely on accountants and auditors to ensure that the business is running efficiently, maintaining records accurately, and paying its taxes properly and on time (Bureau of Labor Statistics, n.d.). The financial information prepared, analyzed, verified, and communicated by accountants and auditors is used by creditors, stockholders, and possible investors to make various decisions such as extending credit, and selling or purchasing stock. The public relies on the accuracy of financial information; therefore, the information should adhere to government and regulatory rules. The regulations are set forth by some of the regulatory bodies which include the Securities and Exchange Commission (SEC), Financial Accounting Standards Board (FASB), Governmental Accounting Standards Board (GASB), and Public Company Accounting Oversight Board (PCAOB).
Securities and Exchange CommissionIn the United States the primary governing body which sets and enforces the regulations for public companies to follow is the Securities and Exchange Commission (SEC). The SEC was created in 1934 by Congress to "to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation" (U.S.
Securities and Exchange Commission, 2008, ÃÂ¶ 1). In order to comply with SEC standards, public companies are required to disclose important financial information to the public. The disclosures include annual reports on Form 10-K within 60 days of year-end, quarterly reports on Form 10-Q within 35 days of quarter-end, and current event reports on Form 8-K within four days of the reported event (Phillips, Libby, & Libby, 2006, p. 203) and a management report regarding the internal controls with respect to financial reporting.
Financial Accounting Standards BoardThe Financial Accounting Standards Board (FASB), established in 1973, is recognized by the Securities and Exchange Commission as the "designated organization in the private sector for establishing standards of financial accounting and reporting" (Financial Accounting Standards Board, n.d., ÃÂ¶ 1), called generally...