Accounting is described as "the process of capturing and reporting the results of a business's operating, investing and financing activities" (Phillips, Libby & Libby, 2003).
Accounting is designed to provide prospective shareholders, present shareholders and management with pertinent financial and business data so that accurate and proper business decisions regarding the organization can be made. Over the years, the United States has implemented several systems and laws, which guarantee the integrity and honesty of the financial records of an organization. This paper will briefly discuss four accounting regulatory bodies and how an organization complies with the standards of each regulatory body.
The Securities Exchange Act of 1934 was passed in reaction to the 1929 stock market crash and the Great Depression (Huddart, 2007). The main focus of this act is to protect shareholders. By amending current laws, forming new laws and enforcing those laws the Securities Exchange Act of 1934 also maintains the integrity of the securities market.
The Securities and Exchange Commission was formed to shield U.S. shareholders from misconduct concerning financial markets and securities following the Securities Exchange Act of 1934 (Huddart, 2007).
The Securities & Exchange Commission (SEC) is an autonomous, unprejudiced regulatory agency. The SEC is responsible for administering the federal securities laws (U.S. Securities and Exchange Commission, 2008). The U.S Congress formed the SEC in efforts to protect shareholders, prevent corporate abuse involving the offering a sale of securities and corporate reporting while regulating the securities market. The SEC protects shareholders through full public disclosure and fraudulent/ controlling systems within the securities division (U.S. Securities and Exchange Commission, 2008). In order to comply with the SEC all public organization's annual reports must include a report from management about the company's internal control over financial reporting, and are required to disclose their financial information to the...