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Accounting: Ethics And Legal Obligation Essay

1097 words - 4 pages

Accounting is used by management to record company activities, that is why it is referred to as the language of business. Accounting serves as an important tool for business executive and even inventor. Accounting is used to communicate economical information about an organization. It is used to identify measures and communicate activities within an entity so that investors, management and organizations can use this information to make informed decision. On the long run the object of an accountant is to serve the public's interest and strengthen the financial status of an entity.Accountants are vital part of an entity, the information provided by accountant are believed to be accurate and honest. Therefore, accountants, both internal and external are required to be ethical and independent of other people influence. Accountant must not allow the pressures of making the numbers or meeting the expectations of upper management to prevent them from being honest in their reporting. Accountants are to promote and adhere to high-quality professional standards. The onset of corruption has caused management to start challenging some of their auditor's report to make sure they comply with the rules of accounting and financial reporting but also of integrity and ethics.In the wake of Enron, Qwest and World com, the ways accountants are viewed has changed dramatically. There are various laws and rules governing how company revenues are reported. In the past, accounting was a self regulated profession, but all the various illegal activity has caused the government to start digging deep into company financial statements. This has also caused the government to implement tighter rules on organizations. As indicated in an article on Government Entities, there was a recent statement issued by the American Institute of Certified Accountant on Statement of Auditing Standard (SAS) No. 69. The statement is in two hierarchs, one deal with the public sector of accounting and the other on deals with the private sector. One of the ways the government is planning to improve the reporting of company assets is by using Financial Accounting Standard Board.To that end, this paper will address the following accounting regulatory bodies; the Financial Accounting Standard Board (FASB), the Security Exchange Commission and Public Company Accounting Oversight Board (PCAOB).The Financial Accounting Standard Board (FASB) is the highest authoritative, private sector in the accounting profession in the US. The FASB has been around since 1973. The organization is responsible for establishing standards governing the preparation of financial reports. As mentioned earlier these reports needs to be accurate and they should be the true activities of the organization. It is highly important for accountants to follow this standard, because financial statement provides investors, creditors and auditors with comparable financial information.The mission of the FASB is to improve the use of the...

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