|
Accounting Police: Do
They Exist? by: John Day Who created accounting principles? Who sets and revises accounting standards? What if you donít follow all the rules, do you go to jail? Is there an accounting police force that investigates and arrests violators? It would seem that there must be some regulatory force to make sure that providers of financial statements conform to the rules. There is, up to a point, and here is how it works: Mainly, itís all voluntary and it works pretty well. First, double-entry accounting originated in Italy in the 1400ís, so its been around awhile. Accounting principles have evolved over the years just as have accounting standards. The reason why the system works is that the business community could not function if there was not commonality and consistency in financial statement reporting. It would be chaos, much like if there were no driving rules of the road. Therefore, in the United States, a body of experts known as the Financial Accounting Standards Board (FASB pronounced Fasbee) was established in 1973, which superseded another board called the Accounting Principles Board (APB). The FASB members go through a lengthy process of analyzing and reviewing problems in the accounting field that are brought to them. After much thought, they will make a pronouncement as to what they think the new or revised way of approaching the treatment of an accounting issue should be. They are a non-governmental organization that has private financing. A big supporter of FASB is the American Institute of Certified Public Accountants (AICPA). Many Certified Public Accountants (CPAs) belong to this prestigious organization and are obligated to abide by its guidelines and principles of behavior. Other countries no doubt have similar organizations that require high levels of accounting professional conduct. FASB established an accounting code called ìGenerally Accepted Accounting Principlesî or (GAAP). The assumption is that if a business financial statement is prepared according to GAAP, then the user of that financial statement could rely on or trust the information more readily than if not prepared according to GAAP. Those businesses that deviate from GAAP, and many smaller businesses do, cannot say that their statements are prepared under GAAP; in fact, they should inform the reader that they are not. However, let the buyer beware. One governmental body that has a policing function is the Securities Exchange Commission (SEC). It is primarily concerned with public companies because their job is to protect investors from unscrupulous acts. Recently, the SEC has gotten into the act of establishing accounting standards. It has its hands full today. Since most businesses use their financial statements to prepare their required income tax returns, the Internal Revenue Service (IRS) may audit those tax returns and review the financial statements upon which the tax returns are based. Not following the rules can get you in trouble with this governmental body. You can see that in many ways compliance to the principles and standards is a mixture of voluntary and regulatory behavior. Currently, there is an effort underway to set international accounting standards due to the inexorable globalization process. This is a massive undertaking that will take years, but it is obviously necessary and inevitable. |
|
© HitsWeb 2005-2006 - All Rights Reserved
accounting - Google News
accounting - Google News
accounting - Google News
Washington PostUS Calls for Accounting of Tiananmen Square Deaths, DetentionsWashington File, DC - 31 minutes agoWashington -- The United States urges China to provide a full accounting of those who were killed, were detained, or went missing during the Tiananmen Square ... US Urges China to Reassess Tiananmen Washington PostRSS FEEDS ON MSNBC.COM NewsweekUS urges China to reassess Tiananmen San Jose Mercury NewsReuters India - all 368 related
Accounting Manager - CorporateThe Spokesman Review, WA - 5 hours ago... organization, specializing in the development, manufacture and sale of high-temperature materials for industrial applications is seeking an Accounting Manager. ...
Cultural Revolution leaves void among number crunchersFinancial Times, UK - 26 minutes ago... killed. The supply of graduate number-crunchers, meanwhile, was cut off as accounting education at university was largely shut down. ...
A LOOK AT THE BOOKS: How GM juggled millions GM's road may get ...Detroit Free Press, United States - 12 hours agoBY JENNIFER DIXON. ? Virtually all of GM's accounting errors worked in its favor, which industry experts say suggests a pattern that would concern regulators. ... CASH FLOW: In 2004, professor called attention to GM's methods Detroit Free Pressall 2 related
Big accounting firms hurt publicSun-Sentinel.com, FL - 13 hours ago-- public accounting giants aided and abetted the officers ... However, the press reports are the tip of a big iceberg of lack of control of accounting practices. ...
OPTIONS FALLOUTSan Jose Mercury News, USA - 11 hours agoBackdating a stock option grant can set in motion a cascade of costly accounting errors, regulatory and tax penalties, and far-reaching financial consequences ...
Prof says Enron-style fiascoes lurk at local governmentsFort Wayne Journal Gazette, IN - 13 hours agoBy Stephanie Hoo. Imagine if an Enronesque accounting scandal crippled your local government. Teachers and police have to be laid off. Taxes shoot sky high. ... Similar scandal to Enron could hit cities, states Canton Repository (subscription)all 2 related
Leasing could be next for scrutinySun-Sentinel.com, FL - 14 hours agoNew York · The overlords of accounting are a brave, tireless bunch. ... Hum-drum as it may sound, lease accounting is not a topic to be taken lightly. ... FASB tackling lease accounting is overdue San Jose Mercury NewsAccounting used for leases next hot potato ALL BUSINESS BRUCE ... Wilkes Barre Times-Leaderall 20 related
Nats demand inquiry after new housing allegationsStuff.co.nz, New Zealand - 15 hours ago... close to completing an inquiry into the corporation's attempt to silence a previous whistleblower, and the former contractor's claims about accounting problems ... Housing NZ faces new allegations New Zealand Heraldall 5 related
IBM Introduces Tivoli Usage & Accounting ManagerIT News Online, India - Jun 3, 2006IBM has released Tivoli Usage and Accounting Manager, new software that assists customers in virtualizing their entire technology infrastructure by tracking ... IBM to Ease Billing for Virtualized Environments CIO Indiaall 2 related
Newsfeed display by CaRP